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Why Obamacare Can’t Lower Costs

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Posted on May 9, 2014

By Kip Sullivan

(Page 3)

But Medicare Advantage is raising, not lowering, Medicare’s total costs. According to the latest report from the Medicare Payment Advisory Commission, a panel established by Congress to prepare recommendations on how to improve Medicare, Medicare Advantage increases costs per enrollee by at least 4 percent compared with costs under the traditional program, and probably more (other estimates indicate the Medicare Advantage program raises costs much more than 4 percent). The reason for the uncertainty is that Medicare Advantage insurers “upcode” far more aggressively than do doctors treating patients under the traditional Medicare program. “Upcoding” means the insurance industry tells Medicare its enrollees are sicker than they really are in order to induce Medicare to pay them more.

Medicare’s experience with privatized insurance is a harbinger of what the country can expect from the ACA—more insurance industry control over doctors and hospitals, higher administrative costs, an aggravation of the underuse problem, and higher expenditures on health care. How soon will Obama and the Democrats figure this out? Again, Medicare suggests an answer. The superior performance of the traditional Medicare program over Medicare Advantage should long ago have caused Congress to terminate the Medicare Advantage program. But Congress has continued wasting taxpayer dollars on Medicare Advantage insurers for decades despite receiving numerous warnings from Medpac and other government agencies.

Why is that? The short answer is the insurance industry has the power to propagate the myths discussed in this article—overuse is the main problem, prevention will save money, and it has a secret sauce for reducing spending without aggravating underuse—and our political leaders, in the face of that power, are willfully gullible, gutless or both.

Kip Sullivan is an attorney, activist and writer whose work has appeared in The New York Times, The Nation, The New England Journal of Medicine and the Los Angeles Times.

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