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WSJ Examines Insurance Lobbyists' Fight to Stop Medicare Advantage Cuts

Budget analysts: Congress could save $54 billion over 5 years if it reduced Medicare Advantage reimbursements


Daily Reports


April 30, 2007 - The Wall Street Journal on Monday examined how insurers are working to stop the proposed cuts to Medicare Advantage payments. As part of its lobbying campaign, America's Health Insurance Plans on Monday is scheduled to introduce a "minority advisory committee" -- made up of more than 30 black, Hispanic and Asian-American leaders from 16 states, the Journal reports.


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Read more on Politics for Senior Citizens


Medicare Advantage, which was expanded under the 2003 Medicare law that also created the prescription drug benefit, is a "prime target" for Democratic lawmakers seeking offsets for their plan to increase SCHIP funding by $50 billion over five years, the Journal reports.

House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.), a leading advocate for Medicare Advantage cuts, has argued that the government's payments to private Medicare Advantage providers are excessive compared with what it would cost for the government to provide direct coverage.

According to budget analysts, Congress could save $54 billion over five years if it reduced Medicare Advantage reimbursements to the same level as those for the traditional fee-for-service program.

The Journal reports that private insurers "still think private enterprise will improve health care -- the idea that attracted [the support of] President Bush," but their "far more prominent argument this year is that cutting Medicare Advantage payments would be tantamount to cutting Medicare itself."

Targeting Minorities

The industry specifically has lobbied minority lawmakers, contending that Medicare Advantage acts as a safety net for Medicare beneficiaries with incomes ranging from $10,000 to $20,000 per year who lack Medicaid or other supplemental coverage to cover out-of-pocket expenses.

The AHIP minority committee will include politicians, union officials, pastors and representatives from the National Association for the Advancement of Colored People and the League of United Latin American Citizens, each of which sent letters to Congress in March opposing Medicare Advantage cuts.

Meanwhile, Louis Stokes, a former Democratic representative from Ohio who headed the Congressional Black Caucus, has been lobbying on behalf of UnitedHealth Group, telling caucus members that Medicare Advantage plans benefit minority and low-income people by helping them monitor chronic diseases and reducing their reliance on emergency departments.

Democratic Response

The Journal reports that Stark and other Democratic leaders "support helping lower-income seniors with out-of-pocket costs," but they have argued that direct government funding would be more efficient. Stark said that some insurers are trying "to cover up their excessive costs and their questionable quality." Democratic leaders also argue that Medicare is designed to provide a uniform benefits package to all beneficiaries, rather than a variety of benefits that are offered only in certain parts of the country.

In addition, Democratic members of the House Ways and Means Committee in an April 20 e-mail said that private insurers' lobbying efforts have implied that a disproportionate number of Medicare Advantage beneficiaries are minorities, although the proportion of minorities in Medicare Advantage and traditional Medicare "differs little" (Lueck, Wall Street Journal, 4/30).


"Reprinted with permission from You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at The Kaiser Daily Health Policy Report is published for, a free service of The Henry J. Kaiser Family Foundation. © 2006 Advisory Board Company and Kaiser Family Foundation. All rights reserved.”


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