The nation’s biggest health insurers are gaming a giant program to provide health coverage to seniors, exploiting the privatization of Medicare Advantage plans to rake in profits with schemes that have drawn fire from federal prosecutors.

The sustained, costly campaign by insurers to maximize their profits not only leaves older, vulnerable patients at risk of reduced care, it also imperils the overall health of the entire Medicare system, the New York Times  found in its investigation, reporting this [see chart above, courtesy the newspaper]:

“Medicare Advantage, a private-sector alternative to traditional Medicare, was designed by Congress two decades ago to encourage health insurers to find innovative ways to provide better care at lower cost. If trends hold, by next year, more than half of Medicare recipients will be in a private plan. But a New York Times review of dozens of fraud lawsuits, inspector general audits and investigations by watchdogs shows how major health insurers exploited the program to inflate their profits by billions of dollars. The government pays Medicare Advantage insurers a set amount for each person who enrolls, with higher rates for sicker patients. And the insurers, among the largest and most prosperous American companies, have developed elaborate systems to make their patients appear as sick as possible, often without providing additional treatment, according to the lawsuits. As a result, a program devised to help lower health care spending has instead become substantially more costly than the traditional government program it was meant to improve.

“Eight of the 10 biggest Medicare Advantage insurers — representing more than two-thirds of the market — have submitted inflated bills, according to the federal audits. And four of the five largest players — UnitedHealth, Humana, Elevance, and Kaiser — have faced federal lawsuits alleging that efforts to over diagnose their customers crossed the line into fraud. The fifth company, CVS Health, which owns Aetna, told investors its practices were being investigated by the Department of Justice.”

The companies denied wrongdoing and sought to downplay the newspaper’s findings, arguing that federal investigators have mistaken billing disputes as being more serious than they are.

Still, the stakes are high in the politically fraught effort to rein in what has become one of the biggest federal expenses and a giant program to protect the health and well-being of a powerful group of vulnerable voters: Americans 65 and older. As the newspaper reported:

“The government now spends nearly as much on Medicare Advantage’s 29 million beneficiaries as on the Army and Navy combined. It’s enough money that even a small increase in the average patient’s bill adds up: The additional diagnoses led to $12 billion in overpayments in 2020, according to an estimate from the group that advises Medicare on payment policies — enough to cover hearing and vision care for every American over 65. Another estimate, from a former top government health official, suggested the overpayments in 2020 were double that, more than $25 billion. The increased privatization has come as Medicare’s finances have been strained by the aging of baby boomers. But for insurers that already dominate health care for workers, the program is strikingly lucrative: A study from the Kaiser Family Foundation, a research group unaffiliated with the insurer Kaiser, found the companies typically earn twice as much gross profit from their Medicare Advantage plans as from other types of insurance.”

Insurers have taken advantage of seniors’ wish to get more for less in their health coverage and made the privatized version of Medicare seem alluring, the New York Times reported:

“For people choosing between traditional Medicare and Medicare Advantage, there are trade-offs. Medicare Advantage plans can limit patients’ choice of doctors, and sometimes require jumping through more hoops before getting certain types of expensive care. But they often have lower premiums or perks like dental benefits — extras that draw beneficiaries to the programs. The more the plans are overpaid by Medicare, the more generous to customers they can afford to be.”

It is striking to read the consumer complaints about the Advantage program from participants commenting on the newspaper story. They say that the promised benefits fall short, with doctors and hospitals declining services because the program pays too little, too late, or raises too many obstacles to needed care. These complaints are growing and have been reported on by the newspaper and other media.

The New York Times’ deep dig into the privatized Medicare program has harsh words for federal regulators at the Centers for Medicare and Medicaid Services (CMS), noting that much of the effort to deal with potential fraud and abuse in the Advantage program has fallen to federal prosecutors working with corporate whistleblowers. The U.S. Justice Department civil division says fraud in Medicare is among its top prosecutorial priorities, the newspaper reported, adding:

“In contrast, regulators overseeing the plans at [CMS] have been less aggressive, even as the overpayments have been described in inspector general investigations, academic research, Government Accountability Office studies, [independent advisory] MedPAC reports and numerous news articles, over the course of four presidential administrations. Congress gave the agency the power to reduce the insurers’ rates in response to evidence of systematic overbilling, but CMS has never chosen to do so. A regulation proposed in the Trump Administration to force the plans to refund the government for more of the incorrect payments has not been finalized four years later. Several top officials have swapped jobs between the industry and the agency. CMS officials declined interview requests. In a statement, the CMS administrator, Chiquita Brooks-LaSure, said the agency recently sought feedback on how to improve the program.”

The newspaper emphasized that any efforts, outside of courtrooms, to address serious problems found in its investigation would run into huge political challenges — not only from wealthy, powerful insurers but also from a mighty gray lobby. Seniors vote with disproportionate strength, and their ire can be readily aroused by even the whiff of an attack on social safety net programs that aim to protect them.

In my practice, I see not only the harms that patients suffer while seeking medical services, but also the damage that can be inflicted on them by bankrupting and dangerous drugs. Too many patients struggle these days to access and afford safe, efficient, and excellent health care. This has become an ordeal with the skyrocketing cost, complexity, and uncertainty of treatments and prescription medications.

For seniors, Medicare can be a welcome relief from the nightmares they have experienced for a lifetime in dealing with health insurance — a vital, fundamental way to share the risks of the financial burden of medical services and to get crucial, affordable care.

But, once again, “reformers” have created huge complications by arguing, incorrectly the growing evidence is showing, that private business somehow inherently can do stuff better than government can. Regular Medicare is far from perfect, and taxpayers must always look at it skeptically, chasing out fraud, waste, and abuse in this important health program for seniors.

Who with any experience thinks U.S. health insurers are fault free and deserving of trust bordering on gullibility? Patients have learned the hard way to be skeptical (but not cynical, please) about every aspect of the U.S. health care system, the world’s most expensive. It won’t be easy to clean up what looks like a Herculean mess in Medicare Advantage. We cannot, however, let insurers’ pursuit of the almighty buck, or the whining of the richest few about paying more taxes to support all the rest of us in our old age deter us from safeguarding a safety net of senior life. We have much work do to shore up Medicare.