Congress Should Eliminate Subsidies For Medicare Advantage Plans, Editorial States

Main Category: Medicare / Medicaid / SCHIP
Article Date: 25 Apr 2007 - 6:00 PDT

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"Congress ought to eliminate the subsidies" for private Medicare Advantage plans "unless it is willing to subsidize the same benefits -- at enormous cost -- for the far greater number of people enrolled in standard Medicare," a New York Times editorial states. According to the editorial, the Medicare Payment Advisory Commission estimates that Medicare reimbursements for MA plans -- which cover extra benefits, such as vision and hearing tests and treatments -- are 12% higher than reimbursements under the fee-for-service program for equivalent benefits. MA plans use some of the subsidies to "make themselves more attractive to beneficiaries -- by reducing premiums or adding benefits not covered by basic Medicare -- and siphon off the rest to add to profits and help cover the plans' high administrative costs," according to the editorial. "Thanks to the big subsidies they get, such plans are often a good deal for beneficiaries, charging less for the same benefits or adding benefits without raising prices," the editorial states, adding, "The main losers are the beneficiaries in the standard Medicare program, whose premiums are roughly $2 higher each month to help pay for the subsidies, and the taxpayers who pick up part of the tab." The editorial states that the subsidies for MA plans "also erode the long-term solvency of Medicare, which needs to rein in costs, not increase them with handouts to insurance companies." The editorial concludes, "It is time to level the playing field and force private plans to really compete with traditional Medicare" (New York Times, 4/21).

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