On Bill Moyers Journal Friday night, David Beckmann, who heads the hunger advocacy group Bread for the World, recalled his visit with Senate Majority leader Harry Reid. Reid told Beckmann, “Look, I’ve been here thirty-five years. I think the two best organized interests in the United States are the insurance companies and the commodity groups,” meaning the people who produce corn, soybeans, etc. Reid said the obvious—that these special interests have very powerful friends on both sides of the aisle and it would be difficult to make changes in the commodity system that Beckmann was hoping for. Reid might well have added that it is also going to be really hard to change the American way of health care, a fact of life that the press is yet to truly illuminate.
A glance at what health insurers spent in the past year to get their way with lawmakers—mostly on one key issue—shows why. That issue may not be as sexy as the latest candidate gaffe, but it’s far more important. It is the question of continuing overpayments to insurance companies for their role in private Medicare Advantage plans.
A quick refresher: Medicare recipients can get their benefits from either traditional Medicare or from private Medicare Advantage plans, which in turn are paid by the government to provide the benefits. Last year the Medicare Payment Advisory Commission (MedPac), a neutral outfit that advises Congress, said that Medicare was paying sellers of these plans on average 12 percent more than it cost to provide the same benefits under traditional Medicare; it paid sellers of a special type of plan called private-fee-for-service plans 19 percent more. So a middleman—the insurance company—is getting a large cut. And for what, really? This year MedPac says the overpayments are 13 percent and 17 percent. And what is worse: the commission says these overpayments contribute to Medicare’s worsening long-term financial problem.
The insurance companies, of course, think the system is just fine, and they spent heavily to keep the status quo. Health Plan Week, an insurance industry trade pub, took a hard look, revealing that overall health insurance payments to lobbyists soared last year and are likely to grow again in the next couple of years as health reform becomes the biggest issue. A large percentage of that money, the magazine found, was focused on the Medicare Advantage issue, which was front and center last year. Analyzing disclosure forms from the Senate’s public records office, Health Plan Week found that fifteen health plans paid lobbyists more than $22 million in 2007, up from $18 million in 2006, a hefty chunk of change by any measure. WellCare Health Plans, a big seller of Medicare Advantage products that has gotten in trouble with regulators for its questionable sales practices, quadrupled its spending to $320,000 and paid half of that amount to the Washington law firm to plead its case on Medicare issues. Health Net and Tufts Health Plan more than doubled their spending, while insurance biggies like CIGNA and UnitedHealth Group substantially increased their lobbying budgets. Blue Cross and Blue Shield plans spent nearly $10 million.
The Health Plan Week story is instructive. It shows what money can buy. Given the millions that insurers spent, it’s hardly surprising that attempts last year to get rid of the overpayments failed. Meanwhile, predictions of even greater spending this year and next should prompt journalists to closely watch the Medicare Advantage story.