Q. People are switching from traditional Medicare to private plans because they think they’re getting a good deal. As more make the switch, what are the ramifications for Medicare itself?

By Gilbert Cranberg
gilcranberg@yahoo.com

Call it the riddle of AARP. It’s truly puzzling why an organization that represents some 38 million individuals 50 and over, many of whom depend on Medicare, would endorse a Medicare offshoot – Medicare Advantage – that siphons money from traditional Medicare and is seen by many as part of an effort to privatize Medicare.

AARP says in ads, “Discover the only Medicare Advantage health plan that carries the AARP name.” The plan is provided by UnitedHealthcare, among the nation’s largest for-profit health insurers.

Why should anyone drop out of popular, tried and true government-run Medicare and opt for a  private insurance plan? The chief reason is that Medicare has been grossly overpaying the private plans to cover seniors who desert traditional Medicare. The generous payments make it possible to lure seniors with attractive premiums and benefits. In some places they even rebate the $93.50 monthly Part B premium. It’s not unusual for Medical Advantage plans to offer enrollees free health club membership and zero premium for coverage that includes the Part D drug benefit without extra cost.

Of course, there is cost, including profits to the private insurer, but seniors are willing to enroll because it seems like such a good deal and because they may not realize that leaving traditional Medicare in the lurch weakens it for other seniors.

AARP understands all this. It criticizes the over-payments to Medicare Advantage. It declared recently, “The $54 billion in excess payments private Medicare Advantage plans in Medicare are due to receive should be used to improve the Medicare program by keeping premiums down as access to doctors is preserved...Congress should stop subsidizing private insurance companies in Medicare with excess payments.”

AARP added pointedly that the extra benefits offered by Medicare Advantage plans “are subsidized by taxpayers and through higher premiums paid by ALL Medicare beneficiaries....private insurance plans keep a significant portion of these excess payments for their own profits.”     

If you sense a disconnect between what AARP says and what it does by endorsing a Medicare Advantage plan that profits  when AARP members enroll, well, as I said at the outset, it’s a puzzle. AARP spokesmen say that the organization is working to eliminate the overpayments and that its mission is to improve the “Medicare Advantage marketplace.”

Perhaps the plan it endorses is a superior product, but AARP in effect is endorsing something it believes is too heavily subsidized. Its endsorsement amounts to a seal of approval for Medicare Advantage despite the serious misgivings AARP has expressed about it.

Reducing or eliminating the overpayments will be an uphill battle. The insurance companies are not only a potent lobbying force, they now have as allies millions of enrollees who benefit from the overpayments and aren’t bashful about defending what they see as their interests. AARP in effect is adding potential lobbyists in support of the insurance companies each time it induces a senior to join its endorsed Medicare Advantage plan.

If AARP succeeds in cutting the overpayments, a likely result could be higher Medicare Advantage charges or reduced benefits, or both, for AARP members who enroll. The plan AARP is touting says enrollees are protected against such changes for a year. Thereafter, those who follow AARP’s advice and buy the coverage could find that the organization’s lobbying on payments to Medicare Advantage has been at their expense.

If you read the small print at the end of AARP’s ad for Medicare Advantage you learn that “UnitedHealthcare pays a fee to AARP and its affiliate for use of the AARP trademark and other services.” I asked the AARP spokesmen how much AARP is paid for its endorsement of the plan. I was told that, as a “private business contract,” it won’t be disclosed. I said that AARP is a membership organization, and that, as a member, I believe I am entitled to the information. It was not disclosed.

Was AARP influenced to endorse a Medicare Advantage plan because of a financial tie-in? I do not know. I do know that the drain of money from Medicare by Medicare Advantage is harmful to a lot of seniors. AARP’s interest in stemming the drain is laudable, but its chances of success are iffy at best. A recent move in the U.S. House to cut the overpayments did not succeed.

I simply cannot fathom why AARP lends itself to what looks all too much like an effort to privatize a prize government program.

Nor do I understand why the press does not regard any of the above as newsworthy. Medicare is important to readers, and AARP has big membership and influence. Yet what you just read came not from accounts in the mainstream press but by simply following up AARP’s ad for Medicare Advantage in my local newspaper.

Perhaps buyouts and the like have so shorn newsrooms of old-timers that few if any are left who relate to the concerns of seniors. If so, and if that explains why AARP and Medicare Advantage are a non-story, it would be a colossal blunder. What seniors lack in demographics that appeal to advertisers they more than make up in loyalty to newspapers as readers.

I recently attended a sales pitch for Medicare Advantage by a private insurance company, Humana, that has made a major effort to switch seniors from traditional Medicare. No one from the press covered it. But then, hardly a day passes without an insurer advertising similar sessions. The implications for Medicare in the drive to undercut it are enormous, and the press is missing the story.

Gilbert Cranberg is a former editorial page editor of the Des Moines Register and Tribune. E-mail: gilcranberg@yahoo.com

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AARP Endorsed Medicare Advantage Plan. Posted by Gary Fox, CPA, CMA - President, Senior Benefit Services 11/02/2007, 01:14 PM AARP is endorsing the United Healthcare Medicare Advantage Plan for one reason...money! AARP gets ENORMOUS kickbacks from those insurance products it endorses. Just because a product is ENDORSED by AARP does NOT mean it is the BEST product.In West Virginia there are 146 different MA Plans for 2008...and the AARP endorsed Plan is NOT the best in our professional opinion. They also "ENDORSE" a Medicare Supplement Plan which is over priced and is EXACTLY the same as Plans offered by other insurance companies. Why??? $$$$$$$ AARP members need to start thinking for themselves a whole lot more than they do now!

Posted by Carol Draime 05/11/2009, 03:24 PM My husband was admitted to the hospital in March of this year and had emergency surgery. A tumor was removed with part of his colon and 19 lymph nodes. My daughter was with him when he was admitted and she did not realize that his “Medicare” card was different. He was in the hospital for 2 days before surgery and in intensive care for 7 days, then discharged after 3 more days. After he was discharged, he had to return for surgery to implant a port for chemotherapy. During the pre-admission in the hospital office, he produced what he thought was his Medicare card. I said no Wayne, she wants your Medicare care. He insisted this was his new Medicare card and that AARP had taken over Medicare. Even the clerk at Providence hospital told me, “Oh yes”, Medicare has been taken over by AARP. At this point I nearly had a complete breakdown. I asked both of them just how stupid they were! I questioned my husband and he told me he got a letter from Medicare, or what he thought was Medicare because the envelope said Medicare-Medicare Complete on the return address. He said that he was to sign and return, which he did. Then he received his “New Medicare Card” with instructions to destroy his old Medicare Card, which he did. I called Medicare, but they could not discuss it with me because he was not with me to “OK” it. (I was at work, where I am every day Mon-Fri). My husband called AARP and was assured that AARP Medicare-Medicare Complete would cover everything Medicare would cover. Now, just so far, I owe the oncologist $680 and Providence Hospital $2,680. How can this be allowed to happen? God only knows what else I owe when all the bills arrive. I do not have this money! I need to get my husband back on the real Medicare and I need help to do that! How many older Americans are in this mess or worse because they were misled by the similarity of name? How can AARP be allowed to do this?

Career Health Care Executive Posted by Rich 08/25/2009, 01:24 AM I saw this coming when Medicare Part D which was designed by Big PHarma and the insurance carriers and passed with the GOP running roughshod over the congressional process, literally in the dead of night. Unfortunately for just about everyone but the insurance companies and Big PHarma, AARP just so happened to offer its endorsement to United Healthcare's Medicare Advantage Plan (the same one to which my Mother switched over my objections). Their credibility as an advocacy group for seniors went out the window with that move. They officially got in bed with the enemy, while somehow hoodwinking just about everyone into continuing to believe that they have the best interests of seniors, or anyone but their own interests at heart. Tonight, I heard a TV ad from the insurance companies encouraging the passage of health care reform. That was a big danger sign to me. Insurance companies would not spend the millions of dollars for TV advertising if it were not in their best interests. AARP has risen to that level in my mind, as well. If they endorse a bill, it will probably not be in the people's best interests, but the insurance companies'. I assume that Mr. Cranberg was being sarcastic when he stated that he could not figure out AARP's schizophrenic positions on this issue. It is as plain as the nose on my face what they are doing, and I, too, am amazed that no national media seem to get this. AARP should be made to disclose the amount of financial interest they have in the Part D program, and how many supplemental policies on top of that they have sold, and how much do they make from that? Where does that money go? Is it used to reduce the costs to other seniors? Have the Medicare Advantage Plans continued to have no premiums, no co-pays, drug benefits, reimbursement for Part B premiums? The answer is no. I think this needs to come to light in order for people to make a properly informed decision.

Good Article Posted by Sam 10/09/2009, 12:46 PM This is an excellent article and the author is right. We need more information to go out. I hope he does not stop. The paperwork is indeed too confusing as the woman related in regard to the very awful story about her husband. If they were misled, there are provisions, from what I understand, so that you can get back on original Medicare. I am dual citizen of another country. When I was forced onto Medicare and almost goaded into an Advantage plan I realized I may have to go back to my country of origin after living here alm ost all my life. I have to do this because I no longer feel I can trust the insurance companies. One tells me one things, someone else says something else and what is the Real Medicare and how can I afford it? It is all too confusing for a population that may not be able to process all the dense inforamtion. Tell others about this racket.

Posted by G. Encizo 11/02/2009, 12:07 PM I am one of those Medicare Advantage poicyholders and yes I do get better benefits than traditional Medicare. I pay for this added coverage pus i don't have to go thru the BS of filing with Medicare. Those who don't have Medicare Advantage plans seem to know everything. The reason is because you want socialized medicare. Be honest and say what you really mean. Don't try to put something over on us like aarp is. I also pay for Medicare.

Posted by linda lawrence 12/20/2009, 01:03 AM I HAVE A MEDICARE ADVANTAGE PLAN, AND I LOVE IT. I ONLY HAVE MY SOCIAL SECURITY TO LIVE ON. IF MEDICARE3 ADVANTAGE WAS NOT AROUND I COULD NOT EVEN AFFORD TO GO TO THE DOCTOR.IT IS NOT FAIR THAT THE PRESIDENT AND HIS DEMOCRATIC BUDDIES ARE TRYING TO DO AWAY WITH MEDICARE ADVANTAGE. REFORM IT, BUT DO NOT TAKE IT AWAY. I LIKE NOT HAVING TO FILL OUT CLAIM FORMS. AND I CAN AFFORD MY MEDICATIONS.

B.S. in Health Care Management Posted by Jean 12/29/2009, 09:49 PM All the Senior "Advantage" plans are government plans - All of them are paid with taxpayer money - The Government contracts with private insurance companies who take at least 15% profit off the top - first - for themselves. All the people enrolled in Advantage plans are delusional - they THINK they have private insurance but it is paid for by the government -which is you & me and in the process weakens the original Medicare. If you enroll in an Advantage plan you are not enrolled in Medicare. Subsidized by the taxpayers, overpament to these insurance companies runs into the billions of dollars. This is a bold-faced attempt to privatize Medicare. These plans are placed as big TV ads and a lure to get Seniors to enroll. The coverage in the plans vary widely from state to state and even county to county. If left in place the insurance companies will slowly but surely start withdrawing coverage because - this is important - the insurance companies first mission is to make a PROFIT - not to deliver health care. These are some of the billions of dollars at stake in this health care reform and I don't trust the companies to maintain this 'cadillac' coverage in the future. How can these Seniors deny health care coverage to the rest of the country by taking government dollars for themselves and think that others should get nothing. This is why you see outrage by some Senior groups - they are afraid of losing the good deal they have. Why this isn't being reported by some of the journalists in this country is a mystery to me. Submit a comment - Jump to top of list