For years, Democrats have accused Republicans of wanting to slash entitlements such as Medicare and Social Security, but it is the Biden Democrats who actually cut benefits. Worse, they do it in ways that effectively cost taxpayers more.
The Biden administration is poised to squeeze Medicare Advantage plans yet again, but it should reconsider. Its proposal, due to be finalized by month’s end, continues the “worst of both worlds” approach of giving fewer choices to patients while indirectly but inevitably hastening Medicare’s insolvency.
Medicare’s permutations can be bewildering, so let’s simplify. In ordinary Medicare, the government pays a set fee to doctors for each covered medical service. Options, though, are limited, and many patients are unhappy with the quality and breadth of care. That’s why more than half of Medicare patients choose Medicare Advantage, which, within limits, allows them to get benefits with varying fee schedules through government-regulated private insurance markets. Of the 45% still in traditional fee-for-service Medicare, a significant number supplement coverage by paying out of pocket for something called Medigap, which covers costs for which Medicare doesn’t pay.
For Medicare Advantage, the Centers for Medicare & Medicaid Services pays insurers a flat fee subsidy per enrollee. Biden’s rule for the second straight year in a three-year plan, if this rule is adopted by April 1, would reduce the subsidy by 0.16%. Last year, the cut was 1.12%. This is even as costs rise by 3.1% in the overall economy and 7% in relevant healthcare sectors. This is one of numerous ways the administration is drawing reins steadily tighter around Medicare Advantage while not applying similar standards to regular Medicare and Medigap.
