Medicare for All or Medicare At All?

North Country Seniors Facing

Its Privatization & Threatened Demise

Jack Carney, DSW

Campaign for NY Health

Physicians for a National Health Plan

February 9, 2022

By 2030, traditional Medicare (TM) as we know it, particularly those of us who depend on it for our health care, just might cease to exist, marking the end point of fifty years of attempted privatization and the gradual transfer of Medicare’s Trust Funds and their management to private for-profit insurance companies. Lots of money’s at stake – over $900 billion in benefits were paid in 2020 to almost 63 million subscribers. Wall Street private equity firms are salivating.

Backstory: How did this happen? Can it be stopped? It began soon after the Medicare program became law in 1965, enacted to ensure that older Americans would have ready access to good health care as they aged and became ill. By 1973, Medicare had proved so popular that Nixon identified rising health care costs as a serious budget problem and took the following steps to contain them:

1st – he formulated basic operating principles, in effect today, aimed at containing costs:

— health care is a commodity governed by market forces of supply and demand;

–curb Americans’ – and their physicians’ — demand for health care, costs will decline.

 2nd – to accomplish this, he introduced legislation establishing mechanisms to govern market forces — Health Maintenance Organizations (HMO’s) and Professional Provider Organizations (PPO’s), market-based, private, for-profit enterprises, to serve as gatekeepers to healthcare for their subscribers. They would control costs by controlling demand.

They didn’t, proving unpopular because their healthcare provider panels were too limited. The quest then began, pursued by every President since, for a programmatic response to healthcare costs that have risen today to $4.1 trillion annually, $900B for Medicare alone. Traditional Medicare (TM) and expansion of its Parts A & B were never considered as preferred pathways to cost control and change, despite TM’s low managerial overhead costs of only 2% and the absence of a need for a profit margin. Change strategies were always guided by ideology, suggesting perhaps that good capitalists don’t necessarily make smart business decisions.

Medicare Advantage: Bush II made the next ambitious cost control attempt. In 2003, he proposed and Congress approved the Medicare Prescription Drug Improvement and Modernization Act (MMA), which established the Medicare Advantage program as Medicare Part C and a Prescription Drug plan as Part D. Both were designed to fill gaps in Traditional Medicare which has never offered dental, eye, hearing or prescription drug benefits. Again, both would be provided via policies purchased from private, for-profit insurance companies, to mixed reviews from subscribers. The Prescription Drug program has been singularly disappointing: drug costs remain exceptionally high – Part D programs are forbidden by law to negotiate lower prices with Big Pharma suppliers. Medicare Advantage, on the other hand, has proven very popular, with 29 million of Medicare’s current 63 million enrollees transferring their healthcare coverage to MA by 2022.

Industry journals, particularly Kaiser Health News, cite the positive experiences of those recently retired, newly enrolled and essentially healthy subscribers, who express their appreciation of MA’s additional benefits, dental, eyecare, hearing and pharmacy benefits, and the extra perqs like health club memberships. KHN goes on to report that once an enrollee becomes seriously ill, her/his situation changes, often dramatically – deductions and co-payments increase; and a limited provider network makes it difficult to access needed specialists. This last often requires MA enrollees to transfer back to TM, where specialty care is more readily accessible.

As has occurred with every cost-saving innovation, MA does not cut costs: MA’s average annual cost per enrollee exceeded TM’s cost by approximately $321 per person, $11.8K v. $11.5K in 2021. More dramatically, MA’s total program costs in 2019 exceeded TM’s by $7B, attributable largely to bonus payments and diagnosis upcoding, which awards additional funding to MA programs for enrolling seriously ill persons. Over the next 8 years, MA programs’ total costs are expected to rise from $348B in 2021 to $664B, attributable to increased enrollment  plus bonus payments and diagnosis upcoding. Growth in program size also brings with it an increase in monies needed for overhead, which includes program administration and profit set-aside, totaling 15% annually, all of which are paid by MA enrollment fees and by Medicare

In any event, the cat’s out of the bag. None of the several programs established to cut costs, including MA, has ever done so. As KHN has documented, the only sure way to reduce program costs is to reduce services, which a narrow provider network coupled with high deductibles and co-payments and frequent denials are designed to do. What’s really going on?

Direct Contracting Entities: The DCE’s constitute an initiative of the Trump Administration to which Biden has appeared to acquiesce. Their objective is to close down TM permanently., According to the plan currently being piloted by the Center for Medicare and Medicaid Services (CMS), the Federal agency which manages Medicare and Medicaid, step 1 obliges CMS to assign all its management responsibilities for Traditional Medicare to Direct Contracting Entities (DCE’s), a consortia of private insurance companies that will serve as intermediaries between Medicare enrollees and their health care providers, approving or disapproving all requests for care. The Medicare Trust Funds will continue to function as a bank, paying requests for reimbursement for services provided. MA programs will remain as they are.

In step 2, all 36 million persons currently enrolled in Traditional Medicare, with or without their consent and with no right to opt out, will automatically be assigned to one of 53 DCE’s charged with providing services in one of several large geographic areas. These GEO DCE’s will assume 100% responsibility for an enrollee’s medical services and will be financed similarly to MA programs, with certain key exceptions:

  • 1st – Payments for administrative overhead and profit set-aside will amount to 40% of all monies received, in comparison to 15% for MA programs and 2% for TM programs.
  • 2nd — More than half – 28 of 53 – are controlled by investors not providers.

In sum, all the programmatic shenanigans of the past 50 years have had one objective – privatize Medicare and its Trust Funds and leave them exposed to exploitation by Wall Street and other investors.

Pushback:  If DCE’s are implemented in accordance with CMS’s plan, Medicare for All, the perfect antidote to all this looting of public taxpayer money, will also be dead. How can we stop all this from happening?

Medicare for All  faces a long uphill battle and that’s another Op-Ed. Rest assured it’s not a Socialist program but a pragmatic approach to provide us all with universal access to comprehensive and affordable medical care. Take a look at the single payer article published a month or so ago in the Alamanack — ,

More immediately, you can join the petition and call-in initiative being sponsored by Physicians for a National Health Plan. The PNHP connection: google “PNHP DCE petition” or click on “Share our petition …”  below …

Share our petition with your colleagues!


Next, these are the elected officials you should contact in Washington asking them to do two things:

1st — pressure Biden (202-456-1111) and Secretary Xavier Becerra of Health and Human Services (1-877-696-6775) to put an end to the DCE pilot project. Also contact leading Congressional DCE opponents and ask them to pressure Biden and Becerra: Congresswoman Pramila Jayapal (202-225-3106); Senator Bernie Sanders (202-224-5141); Senate Majority Leader Chuck Schumer (202-224-6542). (Additional Washington, DC,  contact info can be googled.)

2nd – Pressure those same individuals to push the Medicare services section of the Build Back Better bill through Congress, either as a part of BBB or as a stand-alone bill. That section would allocate public tax monies to add to TM dental, hearing and eye care services. Such an addition would certainly entice a good number of MA enrollees to transfer back to TM and stop the DCE pilot in its tracks.


The struggle continues …

#PassNYHealth #Medicareforall  #buildamassmovement #SolidarityForever