Medicare Advantage

MEDICARE ADVANTAGE….Thanks to an obsolete formula embedded in the current law, doctors who see Medicare patients had their fees cut by 10% on July 1. The House has passed a bill to restore the cut, but the Senate has yet to follow suit. Robert Pear explains why:

[President] Bush and many Republicans oppose the bill because it would finance an increase in doctors’ fees by reducing federal payments to insurance companies that offer private Medicare Advantage plans as an alternative to the traditional government-run Medicare program.

Insurance companies and the White House argue that the bill would hurt beneficiaries who rely on private Medicare plans. America’s Health Insurance Plans, a trade group, ran television advertisements last week, urging Congress to “stop cuts to Medicare Advantage.”

Indeed. This would be the same Medicare Advantage that supposedly harnesses the power of the free market to operate more efficiently, yet still requires sizeable subsidies because it costs considerably more per person than good ‘ol big government Medicare. What’s at issue here is cutting those subsidies so that private Medicare costs only a little bit more than standard Medicare instead of the whole lot more that it costs now.

But that’s not in the cards. Forcing private insurers to operate as efficiently as the federal government is apparently asking too much of the GOP’s free market acolytes. Better to cut doctors’ fees instead.