Privatized Medicare is Closer Than You Think

By Judy Gordon, DPSC Secretary

Medicare Advantage—private insurance with much looser rules than Traditional Medicare—can be enticing. Compared to Traditional Medicare, Medicare Advantage offers lower costs and extra benefits such as vision, hearing, and dental memberships. Medicare Advantage comes with serious pitfalls, however, especially if you become ill.

Under Medicare Advantage, network requirements frequently limit enrollee choice, seniors in poor health are discouraged from enrolling, and many enrollees are burdened with high out-of-pocket costs or denied benefits altogether when they need care the most. A Medicare Advantage customer seeking to switch to Traditional Medicare will likely face barriers to accomplishing this.

Medicare Advantage can provide inferior patient care and impose unexpected costs, while insurance companies rake in the cash.

Originally sold as a cost containment measure, it has become the opposite. Medicare Advantage costs taxpayers more than Traditional Medicare and is a cash cow for insurance companies. Medicare Advantage has captured around 40 percent of the Medicare market and continues to eat away at Traditional Medicare.

Traditional Medicare is speeding toward privatization in yet another way. The Trump administration introduced a pilot program called Direct Contracting, which would eventually enroll all Traditional Medicare beneficiaries into third-party Direct Contracting Entities.

Similar to Medicare Advantage, Direct Contracting provides a fixed payment to Direct Contracting Entities, which are for-profit companies that will cover part of each enrollee’s medical expenses. Both Medicare Advantage insurers and Direct Contracting Entities get to keep any portion of the payment that isn’t used, incentivizing them to skimp on care.

Traditional Medicare beneficiaries—without their knowledge or consent—may be automatically enrolled in Direct Contracting if their primary care physician happens to be affiliated with a Direct Contracting Entity. Rep.

Pramila Jayapal (D-WA) calls this program the “biggest threat to Medicare you’ve never even heard of.”

In response to criticism by some doctors, healthcare advocates, and members of Congress, the Biden administration has revised the program to address health equity and ease progressives’ concerns over the role of private equity firms in Direct Contracting Entities. Rebranded as “REACH,” the revised program has not mollified its critics.

While generating ever- increasing revenues for private entities, Medicare Advantage and Direct Contracting threaten quality healthcare for seniors, fleece taxpayers, and encourage insurance fraud. Our members of Congress need to know that seniors want affordable, quality Medicare, not government-facilitated enrichment of private corporations.