Last week Katharine Raley, who heads the Ventura, CA, office of the state’s Health Insurance Advocacy and Counseling Program, got a warning call from a representative of Blue Cross. The insurance rep told Raley that an industry-backed advocacy group called the Coalition for Medicare Choices would be phoning beneficiaries in the county about a planned 2.3 percent reduction in federal payments to Medicare Advantage plans. “She was afraid beneficiaries would be nervous that the cuts would penalize them,” Raley said.
Raley explained that HICAP’s advice to seniors would be not to worry. And she contacted Tom Kisken, a staff writer for the local Ventura County Star who had been receptive to Medicare stories in the past, to offer some context about the industry’s claims. But no story on the Coalition for Medicare Choices has appeared in the paper. In fact, with a deadline looming Monday for the Center for Medicare and Medicaid Services to set the new rates, and both public and behind-the-scenes lobbying efforts picking up by the day, there have been very few reports in mainstream outlets—or even in more specialized publications, for that matter—about a story manufactured in the PR shop of America’s Health Insurance Plans (AHIP), the health insurers’ trade group.
The Coalition for Medicaid Choices’ campaign features ordinary seniors in slick, scary TV ads now playing around the nation, urging viewers to call their elected officials to stop the cuts. But the Coalition is not a true grassroots group. It’s a product of AHIP, which has pulled out all the stops in its effort to stop the rate adjustment, putting the Coalition’s 1.3 million members with Medicare Advantage plans to work ginning up letters, emails, and phone calls to legislators.
One of the eight press releases AHIP has sent out since Feb. 19 boasts, “More than 40,000 Seniors Have Contacted Congress to Oppose CMS’ Proposed Cut to Medicare Advantage.” The proposed rate cuts are part of an annual review undertaken by CMS, but along with other cuts and new taxes included in the Affordable Care Act, a typical Medicare Advantage beneficiary will see monthly premiums rise between $50 and $90, the release warns. (That estimate comes from Oliver Wyman, a consulting firm which has generated similar numbers for AHIP in the past—most recently for the insurers’ Time for Affordability campaign that got the press stirred up about young people paying more for insurance under the ACA.)
AHIP’s campaign seems to be having an impact. An article yesterday by Jennifer Haberkorn (behind the Politico Pro paywall) stated that lawmakers in both parties “have heard the sharp warnings from the insurance industry,” and over 120 members of Congress “are asking CMS to reconsider changes.” Given how the industry has approached this battle—in effect, using a sham consumer group to launch a nationwide PR campaign aimed at scaring seniors and protecting the status quo—it’s puzzling that more media outlets around the country have not looked more closely at this story, explaining who the players really are and offering context about the proposed policy changes.
One of the few outlets that has done so is the niche Medicare NewsGroup, where reporter John F. Wasik offered a comprehensive take earlier this week. While AHIP’s PR campaign focuses on costs for seniors, Wasik put it this way: “What’s really at stake is the financial impact of reduced subsidies to insurers’ bottom lines.” Some $11 billion is at stake next year for insurers.
One of the factors behind the proposed payment cuts is overpayment to Medicare Advantage plans in prior years. Insurance companies sell Medicare Advantage plans as a managed care alternative to Medicare, and most have done quite well, thanks to these overpayments. The Medicare Payment Advisory Commission, which advises Congress, found in 2007 that the government was paying insurance companies on average 13 percent more than it cost to provide the same benefits under traditional Medicare. Barack Obama came to the White House vowing to end those overpayments.
These overpayments have allowed Medicare Advantage plans, which provide regular Medicare benefits and fill in the coverage gaps, to also offer seniors a bunch of extra benefits like dental care, chiropractors’ visits, and free gym memberships. It’s no wonder they’ve become popular, despite drawbacks like limited provider networks and large copayments that many seniors don’t discover until they get sick. (In fairness, these excess payments aren’t the only factor behind the planned cut, Politico’s Haberkorn reports.)