Moving retirees to Medicare Advantage programs instead of existing retiree health plans and traditional Medicare coverage is privatization.
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Just before leaving office New York’s Mayor Bill DeBlasio worked out a deal with teacher union president Michael Mulgrew behind closed doors.
It was a new health insurance for 250,000 city retirees partly funded by the federal government. Although he promised better benefits and no change in health care providers, he said the city would save $600 million a year.
New York’s teacher retirees were furious.
The plan has been delayed and the secret deal may cost Mulgrew some votes in an upcoming union election.
Here’s the thing: When your boss or the union leadership says they’re saving money on a benefit, you can rest assured it is costing somebody something.
And it is probably making money for somebody else.
In this case, the one making money is the insurance industry.
A growing number of employers, both public and private, are moving retirees into Medicare Advantage programs. It means moving folks out of their existing health plan and out of traditional Medicare Advantage (MA) coverage.
As in the case of New York teachers, the MA plan is designed behind closed doors. Then, just as it does for private individuals choosing a Medicare Advantage plan, the federal government pays the insurer a set amount for each person in the plan.
While reducing the employer’s share of the cost of coverage, the plan may no longer include their current doctors and hospitals
The insurer may have new requirements or charges new fees to access benefits.
By moving to MA, the details and the costs are hidden.
And most importantly, another public system - Medicare - becomes privatized and handed over to the for-profit sector.
In traditional Medicare, the government pays doctors, hospitals, and other health care providers directly for patient care.
But Medicare Advantage is different. The government pays the insurance companies that sell Medicare Advantage policies a fixed amount every month for each member they sign up.
Services unused or denied is profit for the insurance companies.
With MA plans, the government spends 4% more than it does for someone in the traditional fee-for-service program, according to the Medicare Payment Advisory Commission, which advises Congress.
In 2019, CMS paid the plans $7 billion more than the cost of caring for those beneficiaries in traditional Medicare, a study by Kaiser Family Foundation found.
That is what DeBlasio and Mulgrew call savings.