The Medicare Advantage ripoff every American should know about

President George W. Bush and Republicans (and a handful of on-the-take Democrats) in Congress created the Medicare Advantage scam in 2003 as a way of routing hundreds of billions of taxpayer dollars into the pockets of for-profit insurance companies.

Those companies, and their executives, then recycle some of that profit back into politicians’ pockets via the Citizens United legalized bribery loophole created by five corrupt Republicans on the Supreme Court.

Just the overcharges happening right now in that scam are costing Americans over $140 billion a year: more than the entire budget for the Medicare Part B or Part D programs. These ripoffs — that our federal government seems to have no interest in stopping — are draining the Medicare trust fund while ensnaring gullible seniors in private insurance programs where they’re often denied life-saving care.

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Real Medicare pays bills when they’re presented. Medicare Advantage insurance companies, on the other hand, get a fixed dollar amount every year for each of the people enrolled in their programs, regardless of how much they spent on each customer.

As a result, Medicare Advantage programs make the greatest profits for their CEOs and shareholders when they actively refuse to pay for care, something that happens frequently. It’s a safe bet that nearly 100 percent of the people who sign up for Advantage programs don’t know this and don’t have any idea how badly screwed they could be if they get seriously ill.

Not only that, when people do figure out they’ve been duped and try to get back on real Medicare, the same insurance companies often punish them by refusing to write Medigap plans (that fill in the 20% hole in real Medicare). They can’t do that when you first sign up when you turn 65, but if you “leave” real Medicare for privatized Medicare Advantage, it can be damn hard to get back on it.

The doctors’ group Physicians for a National Health Program (PNHP) just published a shocking report on the extent of the Medicare Advantage ripoffs — both to individual customers and to Medicare itself — that every American should know about.

The report, titled Our Payments, Their Profits, opens with this shocking exposé:

“By our estimate, and based on 2022 spending, Medicare Advantage overcharges taxpayers by a minimum of 22% or $88 billion per year, and potentially by up to 35% or $140 billion. By comparison, Part B premiums in 2022 totaled approximately $131 billion, and overall federal spending on Part D drug benefits cost approximately $126 billion. Either of these — or other crucial aspects of Medicare and Medicaid — could be funded entirely by eliminating overcharges in the Medicare Advantage program.

“Medicare Advantage, also known as MA or Medicare Part C, is a privately administered insurance program that uses a capitated payment structure, as opposed to the fee-for-service (FFS) structure of Traditional Medicare or TM. Instead of paying directly for the health care of beneficiaries, the federal government gives a lump sum of money to a third party (generally a commercial insurer) to ‘manage’ patient care.”

With real Medicare and a Medigap plan, you talk with your physician or hospital and decide on your treatment, they bill Medicare, and you never see or hear about the bill. There is nobody between you and your physician or hospital and Medicare only goes after the payment they’ve made if they sniff out a fraud.

With Medicare Advantage, on the other hand, your insurance company gets a lump-sum payment from Medicare every year and keeps the difference between what they get and what they pay out. They then insert themselves between you and your doctor or hospital to avoid paying for whatever they can.

Whatever you decide on regarding treatment, many Advantage insurance companies will regularly second-guess and do everything they can to intimidate you into paying yourself out-of-pocket. Often, they simply refuse payment and wait for you to file a complaint against them; for people seriously ill the cumbersome “appeals” process is often more than they can handle.

As a result, hospitals and doctor groups across the nation are beginning to refuse to take Medicare Advantage patients. California-based Scripps Health, for example, cares for around 30,000 people on Medicare Advantage and recently notified all of them that Scripps will no longer offer medical services to them unless they pay out-of-pocket or revert back to real Medicare.

They made this decision because over $75 million worth of services and procedures their physicians had recommended to their patients were turned down by Medicare Advantage insurance companies. In many cases, Scripps had already provided the care and is now stuck with the bills that the Advantage companies refuse to pay.

Scripps CEO Chris Van Gorder told MedPage Today:

“We are a patient care organization and not a patient denial organization and, in many ways, the model of managed care has always been about denying or delaying care – at least economically. That is why denials, [prior] authorizations and administrative processes have become a very big issue for physicians and hospitals...”

Similarly, the Mayo Clinic has warned its customers in Florida and Arizona that they won’t accept Medicare Advantage any more, either. Increasing numbers of physician groups and hospitals are simply over being ripped off by Advantage insurance companies.

Not only is the Medicare Advantage scam a screw job for healthcare providers and people who are on the programs and are unfortunate enough to get sick, it’s also preventing Americans from getting expanded benefits from real Medicare.

As the PNHP report notes, for real Medicare to provide comprehensive vision, dental, and hearing benefits to all Medicare recipients would cost the system around $84 billion a year, according to the Congressional Budget Office.

Instead, though, the Medicare system is burdened with at least that amount of money in over-payments to Medicare Advantage providers — over-payments that have no health benefit whatsoever and merely inflate the companies’ profits.

A hundred billion dollars in excess profits can be put to a lot of uses, and the health insurance industry is quite good at it. The former CEO of UnitedHealth, “Dollar” Bill McGuire, for example, made off with over $1.5 billion dollars for his efforts.

And, because five corrupt Republicans on the Supreme Court legalized political bribery with their Citizens United decision, some of these companies allocate millions every year (a mere drop in the bucket) to pay off loyal members of Congress and to dangle high-paying future jobs to high-level employees of CMS who have the power to keep the gravy train going and thwart prosecutions.

As PNHP noted:

“Medicare Advantage is just another example of the endless greed of the insurance industry poisoning American health care, siphoning money from vulnerable patients while delaying and denying necessary and often life-saving treatment. While there is obvious reason to fix these issues in MA and to expand Traditional Medicare for the sake of all beneficiaries, the deep structural problems with our health care system will only be fixed when we achieve improved Medicare for All.”

We’re on the edge of the open enrollment period for Medicare, and the Advantage scammers will be carpet-bombing America with advertisements over the next few months. Representatives Pocan, Khanna, and Schakowsky have introduced the “Save Medicare Act” that would ban Advantage companies from using the word Medicare in their advertising.

They made a video about it that’s well worth sharing with friends and family:

As Schakowsky, Khanna, and Pocan note, “Only Medicare is Medicare.” Don’t be fooled by the Medicare Advantage scam.

And now that you know, pass it on and save somebody else’s health!