In a letter written last week to Acting Administrator Tavenner, Senators Baucus (D-MT) and Hatch (R-UT) expressed their support for Medicare Advantage and urged CMS to revise the rate notice issued on February 15, 2013 that would reduce Medicare Advantage payments.

“We support the participation and growth of high quality private plans in Medicare and believe they should continue to offer a diverse set of options for beneficiaries across the country.”

Witness the achievement of bipartisanship on healthcare spending – amazing.  Who said Washington was mired in gridlock?  The trick?  When it comes to spending lots of federal dollars on private insurance, and does so in a way that favors rural constituencies, bipartisanship can be achieved. [This is, of course, a simplification of a policy evolution that has been going on for four decades, but, in the last decade, Republicans have thrown aside goals of cost containment to embrace Medicare Advantage, and rural Democrats (e.g. Sens. Wyden, Cantwell, Baucus) have similarly become champions of a program that brings considerably more dollars to their states than traditional Fee-For-Service Medicare – thanks to rural floor payment rates.  In 2009, extra payments to rural floor counties was 13.9% of FFS.]

For the record, even with the cuts in CMS’s initial rate notice, payments to Medicare Advantage plans for 2013 will be 104% of spending on traditional Fee-For-Service Medicare – with the likelihood that payments would be higher when star-rating bonus payments are included.  Ah, the efficiency of market solutions.

Don’t get me wrong, I think there is a place for Medicare Advantage within the Medicare program, but it’s hard to deliver on the promises of market-oriented policies when the incentives for private plans to innovate and deliver superior care are skewed by overpayments.

Between 2004-2009, the first five years of Medicare Advantage, the program spent $44 billion dollars more on health coverage for seniors than if those seniors were enrolled in traditional Medicare.  It is a program that erodes the universality and original philosophy of a single-payer health insurance program for seniors.  Yet, here we are with bipartisan support for not only its continued expansion, but also for the continuation of extra payments.

 

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