The Case Against Medicare Advantage: a Talk With Dr. Ana Malinow
Earlier this year, the Journal of the American Medical Association (JAMA) published an article titled – Less Care at Higher Cost: The Medicare Advantage Paradox – by three medical doctors – Adam Gaffney, Stephanie Woolhandler, and David U. Himmelstein.
The authors say that we must get rid of Medicare Advantage plans and double down on traditional Medicare.
Fully 54 percent of all Medicare enrollees are now in the private Medicare Advantage plans. To mark the success, the health insurance industry trade group proclaimed that Medicare Advantage is “a good deal for members and taxpayers.”
“The first part of that claim is debatable, while the second part is false,” the authors responded. “Medicare Payment Advisory Commission (MedPAC), the nonpartisan agency reporting to Congress, recently estimated that Medicare Advantage overpayments added $82 billion to taxpayers’ costs for Medicare in 2023 and $612 billion between 2007 and 2024.”
To delve into the findings of the JAMA report and its conclusion, we rang up Dr. Ana Malinow, who is with the group National Single Payer, which wants to get rid of Medicare Advantage and replace it with a public financing system and a healthcare delivery system free of profit.
“The Medicare Advantage companies want to pick the healthiest patients out there, because you know that those patients traditionally are not going to cost you a lot of money,” Dr. Malinow told Corporate Crime Reporter in an interview last week.
Right now the Medicare Advantage plans are advertising massively. I’m on traditional Medicare. But on the other hand, I’ve had really high dental bills over the last year. I’m out tens of thousands of dollars because of it. Now, these Medicare Advantage plans are promising dental coverage. And traditional Medicare doesn’t cover dental. Had I chosen Medicare Advantage, my dental bills would have been paid for.
“Not necessarily.”
But they are promising that.
“Yes, but those extra benefits are not necessarily all that generous.”
If I had signed up with them, I wouldn’t have had at least part of my dental bills paid for?
“Probably not. They promise a lot of things. And it doesn’t mean they deliver on any of it. They will say – these are the dentists you have to go to. These are the procedures we will cover. The ones that we don’t cover, you will have to pay out of pocket, or you are going to have huge copays.”
They play this game with cherry picking and lemon dropping. Cherry picking means they pick the healthiest patients. Lemon dropping is they want to drop or avoid the least healthy and more costly patients. How do they go about that?
“They have been doing this for a long time. They have the tools of the trade to manage utilization.”
“How do they select for the healthy patients? They have very narrow plan networks. Say you have cancer and you know that the cancer center with your doctor is not included in that network, you are not going to choose Medicare Advantage.”
“Let’s take a relatively healthy 65 year old, as most are. And most people have this fantasy that they are going to stay healthy forever – I don’t have heart disease, I have a little bit of high cholesterol, maybe a touch of high blood pressure, but it’s totally under control. Do I really need to be paying all this money to stay on traditional Medicare, or should I go on a cheaper Medicare Advantage? And so the healthy patients are going to self-select into Medicare Advantage. And Medpac knows this. Healthy patients self-select for Medicare Advantage.”
“And the unhealthy patients self-select out of Medicare Advantage. Not only don’t they want narrow networks, but there is also prior authorization.”
“If you know you are a patient with healthcare needs, and you need a heart procedure or an MRI, you are going to have to fight tooth and nail, and your doctor is going to have to fight tooth and nail to get this procedure authorized. As a result, you are not going to select that Medicare Advantage plan. You are going to select traditional Medicare.”
“In the end, patients with healthcare needs end up self-selecting out of Medicare Advantage because at the end they will be paying more than traditional Medicare. The GAO looked into this and they found that seniors on Medicare Advantage who are in their last year of life switch into traditional Medicare at twice the rate of other beneficiaries on Medicare Advantage not in their last year of life.”
“So what we are seeing is healthy patients self-selecting Medicare Advantage at the beginning and then trying to switch over to traditional Medicare when they get sick at the end. So you have cherry picking at the beginning and lemon dropping at the end.”
“Some chronically ill patients have very high healthcare costs and some don’t. Take someone with diabetes who has good glycemic control, they don’t have serious consequences of diabetes. They turn 65 and say – I need to see an endocrinologist once a year and get my medication. And that’s pretty much it for me. The Medicare Advantage plans want to take care of that diabetic because of the whole issue of upcoding.”
“Medicare has to calculate up front the future cost of what this Medicare Advantage beneficiary is going to be. And Medicare is going to give you higher up front payments for these patients so you can stay in business. Medicare allows them to upcode – gives them more money for sicker patients. And Medicare Advantage companies jumped at that. They said – yes, we are going to take care of every single healthy diabetic. Instead of just the $1000 per month, we are now going to be getting $5000 per month for this healthy diabetic. Nobody knows that this is a healthy diabetic patient except for the Medicare Advantage company.”
“Healthy diabetics self-select for Medicare Advantage. The patient will say, I know there is only one endocrinologist in the entire network, but I only need to go and see them once a year.”
“The sick diabetics, the ones with all of these severe consequences of diabetes, they look at the narrow networks and say – only one choice of endocrinologist? And I have to see them once a month? I’m sticking with traditional Medicare.”
“That’s why traditional Medicare takes care of the sicker patients. They also end up taking care of the wealthier patients, because traditional Medicare is so much more expensive up front than Medicare Advantage.”
The report says that as a result of what you are describing, Medicare Advantage programs are being overpaid, they are wildly profitable. And it’s not just lawful upcoding.
In 2022, the New York Times published an article titled – The Cash Monster Was Insatiable: How Insurers Exploited Medicare for Billions by Reed Abelson.’
In it, Abelson shows how major health insurers exploited the program to inflate their profits by billions of dollars.
“The government pays Medicare Advantage insurers a set amount for each person who enrolls, with higher rates for sicker patients. And the insurers, among the largest and most prosperous American companies, have developed elaborate systems to make their patients appear as sick as possible, often without providing additional treatment,” Abelson wrote.
“As a result, a program devised to help lower health care spending has instead become substantially more costly than the traditional government program it was meant to improve.”
“Yes, the Times found that eight of the top ten Medicare Advantage companies, eight of the ten have overbilled the government. And five of them have been accused of fraud by the U.S. government.”
And those eight are the three big ones – UnitedHealth Group, Humana and CVS – then Elevance, Blue Cross Blue Shield of Michigan, Cigna, Highmark and Scan Group. Much of this is alleged criminal behavior.
“Yes and they just pay the fine. It’s the cost of doing business. They know they are going to get fined, they pay the fines or settlements and they continue doing what they are doing.”
As of today, 54 percent of all Medicare enrollees are in Medicare Advantage. Where is that number heading?
“By 2030, it will be sixty percent.”
And that’s because of this massive ad blitz?
“Part of it is advertising. But the other part is that it is less expensive for seniors. Medicare is very expensive. And a lot of people just don’t have the choice and they choose the cheaper option. Why is it cheaper? Because the Medicare Advantage plans are being overpaid by the taxpayer. So yes, they can be a little bit more generous and they can be a little less expensive. And they drum up more business. And they get overpaid. That’s why they are so successful. And the reason they are so successful is not because of the ads, but because they are being overpaid by the federal government.”
The authors of the JAMA article conclude with this: “A smarter, thriftier way to expand benefits and lower out-of-pocket costs is possible for all Medicare beneficiaries, but first, we must eliminate Medicare Advantage and double down on traditional Medicare, covering all enrollees in an expanded and improved Medicare program. That would be a good deal for patients and taxpayers.”
What’s wrong with that conclusion?
“This is a very incremental way of getting to national single payer. To eliminate Medicare Advantage, you are going to face fierce opposition. And let’s say by some stroke of magic we get rid of Medicare Advantage. We are still going to face 80 million people who are underinsured and uninsured. We’re still going to have 100 million people in medical debt.”
President Biden has said he would veto single payer if it came to his desk. Kamala Harris four years ago said she favored it, but no longer. Congress is mum in an election year. Bernie Sanders almost won the Democratic Party’s nomination by promoting single payer, but since has folded into Biden’s no single payer tent.
Okay, so we know it’s a political year and single payer is too hot to handle.
“And the Congressional Progressive Caucus pulled reforming Medicare for All from their 2025 agenda.”
And why did they do that?
“It’s an election year. And when the agenda was released, President Biden was still the candidate. And he vowed to veto single payer if it came to his desk. The Democrats lack all moral courage, all spine. And they cannot oppose the Democratic candidate.”
“Kamala Harris would not sign a single payer bill either. The only way any president would sign it is if millions of people mobilize and push for it. It’s not going to come from the top down. Unfortunately our presidential candidates are bought by these corporate interests.”
“I was totally disappointed when Bernie dropped single payer.”
Is your group pushing for a national health service?
“Not in so many words. The authors of the JAMA report wrote an interesting article in The Nation magazine titled – Medicare for All is Not Enough. A publicly financed system without a public delivery system is not going to be enough. They called for community ownership of our healthcare system. For now, we are calling for community governance. But we will see.”
This first appeared in the Corporate Crime Reporter.
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