Private Medicare-Are Marketing Curbs Just the Beginning?
Guglielmo, Wayne J., Medical Economics
Last month, the Centers for Medicare & Medicaid Services took aim at the hard-sell and "unscrupulous" practices-cold calls, unsolicited pitches, churning-that some insurers have used to market their private Medicare health plans. Reactions to the proposed rules have varied.
AHIP, the health plan industry trade group, says the new rules will bolster beneficiaries' confidence in the information they get. FP John Murphy, president of the American Geriatrics Society, calls them "good first steps" to protect vulnerable seniors, although he adds that "end runs" are possible around any system we put in place. For its part, the National Association of Insurance Commissioners has been complimentary-to a point. While praising "all the positive changes," it faults CMS for not giving new regulatory authority to the states-something the industry itself is foursquare against. Criticism from Medicare advocacy groups has cut deeper. "Part D and the Medicare Advantage program are structurally flawed," says Robert M. Hayes, president of the Medicare Rights Center, which blames marketing abuses on plans' headlong rush for profits, made possible by generous government subsidies.
A hard look at extra costs
On average, private Medicare-Medicare Advantage, officially-costs the government 13 percent more per enrollee than traditional Medicare, according to government reports. The cost gap is especially wide between traditional Medicare and private fee-for-service plans, which unlike Medicare HMOs and PPOs permit enrollees to seek care from any physician willing to provide it. In return for the bigger subsidies, private Medicare plans were supposed to introduce efficiencies into the system, resulting in richer benefits and lower premiums for beneficiaries. In some cases, that's happened.
Still, Medicare advocates aren't convinced the government and taxpayers are getting a solid return on their investment. …