A couple nights ago, a friend and I sat at dinner next to a table of two older couples going on and on about health care reform and how they were going to get screwed. It took everything I had not to interject and straighten them out, but my friend pointed out that I was – in fact – eavesdropping, and it would be best if I just tried to let it go for the time being.
Insurers participating in the Advantage program responded to inquiries by Senate Democrats that led to a report this month providing some fuel in their fight against the subsidies. The companies reported, on average, spending more than 15 percent of premium revenues on profits, marketing and corporate expenses, nearly 10 times the rate of traditional Medicare.
Meanwhile, Advantage companies were paying for multimillion-dollar corporate retreats in exotic locales and hundreds of their executives were being paid more than $500,000 annually. Government reports have shown Medicare Advantage providers continually outpace profit projections. The congressional review released this month showed 34 Advantage companies devoted $27 billion in government subsidies from 2005 through 2008 to profits, marketing cost and other corporate expenses.
As I’ve said before, cutting overpayments to private insurers does not mean a cut to Medicare Advantage benefits UNLESS that’s what private insurance companies CHOOSE to do. It’s up to them. If they get less government subsidy money, they can cut marketing, salaries, overhead, administrative expenses, lobbying, advertising, corporate retreats, bonuses, etc. before they touch benefits. They might not, but that’s not the government’s fault. That’s all on private insurance companies. Plain and simple.