Medicare Advantage plans may face cuts
http://hosted.ap.org/dynamic/stories/U/US_MEDICARE_ADVANTAGE_PLANS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-02-22-03-52-55Feb 22, 3:52 AM EST
Medicare Advantage plans may face cuts
By RICARDO ALONSO-ZALDIVAR
WASHINGTON (AP) -- Cuts are on the table next year for Medicare Advantage plans, the Obama administration says. The politically dicey move affecting a private insurance alternative highly popular with seniors immediately touched off an election-year fight.
The announcement gave new ammunition to Republican critics of President Barack Obama's health care law, while disappointing some Democratic senators who had called on the administration to hold rates steady. Insurers are still hoping to whittle back the cuts or dodge them altogether.
Late Friday after financial markets closed, Medicare issued a 148-page assessment of cost factors for the private plans next year. It included multiple variables, some moving in different directions, but analyst Matthew Eyles of Avalere Health estimated it would translate to a cut of 1.9 percent for 2015, a figure also cited by congressional staffers briefed on the proposal.
"There's nothing to like here if you're one of the plans," said Eyles.
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because private enterprise is SO much more efficient. 
That is not how it worked out.
Private health plans, now called Medicare Advantage plans, were first allowed to participate in Medicare because some policymakers believed they could provide better services at a lower cost than traditional Medicare. In fact, because it was anticipated private plans would be so efficient, the government initially paid them five percent less for each beneficiary they enrolled than it would have cost to cover that same beneficiary in traditional Medicare.
In 25 years time, the powerful health insurance industry lobby has been extremely successful in turning this rationalization on its head. Instead of paying private plans less to reflect the efficiencies they argued would save the government money, Medicare now pays them significantly more than it would cost to cover the same beneficiaries through traditional fee-for-service Medicare. In fact, today the government pays an average of 14 percent more to cover a beneficiary in a private Medicare Advantage plan than it would cost to cover that same beneficiary in traditional Medicare.
The ACA cut costs by eliminating subsidies for Medicare Advantage. But of course, Republicans don't care about saving money, they only care about making Obamacare look bad.
