Biden’s Actions Will Harm Medicare Beneficiaries

I n his State of the Union address, President Joe Biden exclaimed, “If anyone here tries to cut Social Security or Medicare or raise the retirement age, I will stop them!”

He failed to mention that there is a caveat: It doesn’t apply to Medicare Advantage.

Medicare Advantage (MA) is the program via which beneficiaries choose a private insurance plan to provide their Medicare benefits.

By April 1, the Biden administration will finalize what, on paper, looks like a 2.4 percent increase in funding for MA for 2025. But that increase won’t keep up with rising costs. Health-care inflation is sure to grow this year, and the Medicare trustees project a 6 percent increase in Medicare costs for 2025. Thus, the payment increase for MA will, in effect, amount to a 0.16 percent cut. That comes on top of a 1.12 percent cut for 2024.

It will be the MA beneficiaries who will suffer.

“There’s a number of ways plans could respond to these cuts,” said Joe Albanese, senior fellow at the conservative Paragon Institute. “They may not enter certain markets or exit specific markets, reducing choice for consumers. They can make changes to the benefits such as reducing the supplemental benefits they offer that are not in traditional Medicare. And they could also raise the cost-sharing for policyholders.”

MA plans do a better job of coordinating care for patients than traditional Medicare. One side effect of poor care coordination is the use of inappropriate medication. That can cause harmful drug interactions that lead to hospitalization. The use of inappropriate medications is 40 percent lower in MA plans compared with traditional Medicare, according to a recent Inovalon/Harvard study. Not surprisingly, rates of preventable hospital admissions and readmissions are considerably lower among MA plans. The cuts jeopardize that.

The cuts are also myopic from the perspective of taxpayers. At best, they save some money in the short term. But a recent study from research firm Avalere found that MA plans do a better job than traditional Medicare at managing the costs of hospitals and skilled nursing homes. MA enrollees spent 36 percent fewer days in the hospital and 14 percent fewer days in skilled nursing facilities compared with those in traditional Medicare, according to that study. If traditional Medicare performed as well as MA plans, the Medicare trust fund would be solvent for an additional 17 years.

The political Left never gives up on socialized medicine, and targeting MA plans is one part of reaching that goal. For example, Donald Berwick, an administrator of Centers for Medicare and Medicaid Service (CMS) during the Obama administration and longtime advocate of government-run health care, recently claimed that MA plans were putting profit over patients, adding, “I would like to see MA slowed or stopped right now.”

Indeed, the Biden administration is siding with the more extreme elements such as Berwick by pushing these cuts. On Tuesday, a group of House Democrats released a letter urging the Biden administration to “ensure that the 2025 Medicare Advantage Final Rate Notice accurately reflects increases in health care utilization and costs.” That follows a similar letter from a bipartisan group of senators that included Chuck Schumer and Amy Klobuchar.

The Biden administration has targeted MA from the get-go. Under Biden, CMS has employed “secret shoppers” to catch MA plans in policy violations. In one instance, insurer Elevance Health lost $190 million in bonuses for failing to answer a phone call.

It is cracking down on “upcoding,” a practice in which MA plans supposedly make patients look sicker than they really are to get higher payments from CMS. The evidence for upcoding is tenuous at best.

CMS adjusts the premiums it pays MA plans so that insurers receive higher premiums for sicker enrollees. CMS incorporates billing codes to make those adjustments. The reason is that hospitals and doctors use billing codes to bill insurers for treating patients. Hospitals and doctors use more billing codes for sicker patients since they receive more treatment. The Biden administration eliminated 2,000 of these codes last year, making it more difficult for MA plans to cover sicker enrollees.

Yet if MA plans are so bad, then why are the majority of beneficiaries choosing such plans instead of traditional Medicare? By the end of 2023, 51 percent of beneficiaries — 30.8 million — were in MA plans. That’s projected to be 54 percent by the end of this year.

For those that want to reduce, if not eliminate, private insurance in health care, it is a huge impediment to have more and more Medicare beneficiaries enroll in MA plans. The Biden administration is doing its best to stop that.