• Blame/credit where it is not due

    One of the big debates in passing health care reform was about Medicare Advantage (MA).  You may remember that MA was initially created to see if private insurers could supply Medicare benefits to the elderly more efficiently; if they could, they could keep the extra money as profit.  Soon, however, they were asking for more money, then providing some more benefits, and then asking for even more money.  Today, MA usually provides more benefits at much more money, and it’s not what the program was created to do.  Austin has done some of the work showing the inefficiency.

    The PPACA says no more.  In the coming years, MA will be paid less, though not as much less as originally planned.  They will get the original level of money, and if they can make money with that – great.  It’s a return to original intent.  Some have argued, likely corretly, that this means some MA plans or the added benefits will go away.

    My personal feeling is, well, deal with it.  That’s what happens when you cut costs.  Everyone will still be able to get traditional Medicare.

    How this will all play out is up for debate.  Supporters of the law say it will all go fine.  Detractors predict chaos.

    There was a story in the Washington Post yesterday saying that the changes are – so far – going without a hitch:

    One of the most significant savings envisioned in the new health- care law – limiting payments to the private health plans that cover 11 million older Americans under Medicare – is, so far, bringing little of the turbulence that the insurance industry and many Republicans predicted.

    The thing is, not much that is happening to MA right now is due to PPACA.  In fact, if you bother to read all the way to the second page of the article, you’ll see that:

    The law’s deeper financial impact on insurers is scheduled to begin taking effect in 2012. That is when the law starts to ratchet down the increases in payments- by different amounts in different parts of the country – over several years. “It’s not going to be possible to keep currrent benefit levels and premiums where they are today when these massive cuts go into effect,” predicted Robert Zirkelbach, spokesman for America’s Health Insurance Plans, the industry’s main trade group. Congressional budget analysts predict that 3 million fewer people will be in Medicare Advantage by 2019.

    In addition, much of the current changes in MA are due to a 2008 law, not the PPACA.

    If you want my opinion, this is one of the aspects of the law I have the least problem with.  I have always disliked the added money going to MA.  If you are a believer that private companies can do better than the public sector, MA is the perfect way to find out – as it was originally intended.  Take the same amount of money, take the same people, see if you can do better.  If you can, I have no problem with your keeping the extra.  That is the future, and that’s what it was supposed to be.

    There may still be upheaval, as I personally doubt as many plans will be able to compete.  There may still be chaos.  Saying that there won’t is ignoring the time line of PPACA.  I wish more reporters would put that on the first page instead of burying it in the back.  I have said it before, and I’ll say it again: mistaken expectations have been, and continue to be, a real problem in health care reform.

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