FFS Medicare Overhead costs are ~2%. Medicare Advantage overhead costs are far higher. The same can be said for commercial healthcare costs paid by insurance companies. Neither MA administered healthcare or commercial insurance plans can compete with FFS Medicare for costs and care.
I will touch on a few reasons why on Medicare at the end of this article which came by way of Dale Coberly, the resident expert of today’s SS.
As Dale will tell you Social Security is 100% funded by citizen contributions to a Trust Fund. The TF is made up of special treasuries. If it has not started by now, soon the nation will be redeeming those treasuries and the TF will begin to decrease as was planned. With a degree of prudence, Social Security can be made secure after the depletion of the TF which was planned to be depleted and still, still be owned by Labor. Social Security does not need funding resulting from taxing the rich exclusively or a change in economic philosophy such as going to MMT. As Dale will tell you, it may take as little as a dollar per week to replace the TF in 2035 and eliminate shortfalls.
Few (if any) politicians will tell you this and some financial experts’ poo-poo the idea such a plan will work. Read on and catch Dale’s commentary in the Comment Section.
“Entitlement, Spending Cap Plans Linked by GOP to Debt-Limit Deal,” Bloomberg Government, Jack Fitzpatrick
Republicans in the House are planning to use a potential showdown next year over raising the federal debt limit to make changes in Social Security and Medicare, Bloomberg’s Jack Fitzpatrick reports.
The developing plan hinges on Republicans winning control of the House in the midterm elections, an outcome that is looking likely. Four GOP lawmakers who are vying for leadership of the House Budget Committee in the event of a Republican victory told Fitzpatrick, the need to raise the debt ceiling could give them the leverage they need to force Democrats to make concessions.
Rep. Jason Smith (R-MO), the senior Republican on the current Budget Committee,
“The debt limit is clearly one of those tools that Republicans — that a Republican-controlled Congress — will use to make sure that we do everything we can to make this economy strong,”
Republicans are still discussing exactly what changes they might try to enact. Rep. Lloyd Smucker (R-PA), who is interested in the top spot on the Budget Committee.
“What would we consider a win? What would we consider to be a fiscally responsible budget?”
Although the details are still up in the air, one theme is clear: House Republicans want to reduce federal spending, and the major entitlement programs are a target. Rep. Buddy Carter (R-GA) Carter said that Republicans’ “main focus has got to be on nondiscretionary — it’s got to be on entitlements.”
Shrinking the safety net: One option reportedly being discussed is raising the eligibility age for Social Security and Medicare, the two largest mandatory spending programs. Each faces financial squeezes in the coming years as the baby boomers age and continue to retire. Under current rules, the Social Security system would be forced to cut benefits starting in 2034, while Medicare could run short of funds by 2028.
Earlier this year, the Republican Study Committee released a plan to raise the eligibility age for Social Security to 70 and the eligibility age for Medicare to 67. The increases would be phased in over time and once the target is reached, the eligibility age would then be indexed to life expectancy. The lawmakers also called for increased means testing in the Medicare program, and a privatization option for Social Security.
Other options being considered include more stringent work requirements and income limits for what Smith called “welfare programs,” including the Supplemental Nutrition Assistance Program more commonly known as food stamps. And new caps on discretionary spending could limit spending increases over 10 years.
One thing that won’t be cut: defense spending. Rep. Jodey Arrington (R-TX) told Bloomberg that he wants to cut nondefense spending in order to provide more money for the military.
Henry Connelly, a Pelosi spokesman, said in a Tuesday statement to Bloomberg Government.
“House Republicans are openly threatening to cause an economic catastrophe in order to realize their obsession with slashing Medicare and Social Security,”
As House Republican leaders’ own words constantly reveal, dismantling the pillars of American seniors’ financial security is not a fringe view in the extreme MAGA House GOP. It is a broadly held obsession at the core of their legislative agenda.”
Reasons Why Overall Medicare Costs are Going Up
That may happen if Republicans can gain control of the House and the Senate. Looking at the issues for cost in Medicare. In 2020 (MedPac), differences in diagnostic coding caused FFS Medicare (CMS) to pay MA plans $12 billion more than it would have spent if the same beneficiaries had been enrolled in FFS Medicare.
Research demonstrated favorable selection of enrollees led to Medicare spending on private plans 5.7% higher in 1989 and 7% higher in the mid-1990s than spending would have been under FFS Medicare (Brown et al. 1993, Medicare Payment Advisory Commission 1998, Newhouse 2002, Riley et al. 1996).
Using data from 2007 through 2013 to test whether beneficiary risk scores grew faster in MA than in FFS. Cohorts of beneficiaries spending their first full calendar year of Medicare enrollment and subsequent years through 2013 in the same program (either FFS or MA). For example, one cohort pair consisted of beneficiaries who joined FFS Medicare in 2006 and then either (1) remained exclusively in FFS through 2013 or (2) switched into MA in January 2007 and remained in MA through 2013. Also examined five similar pairs of cohorts for beneficiaries whose first full years in Medicare were 2008 through 2012. Beneficiaries were assessed starting with their first full year of Medicare enrollment, so that the subsequent differences in the risk score growth between the cohort pairs could be attributed to differences in coding.
From year 1 to year 2, average MA risk scores increased by about 6 percent more than FFS scores across all cohorts For each subsequent year, average MA risk scores continued to increase more than FFS scores by about 1.5 percent across all cohorts.
Dale Coberly said he may add words on Social Security in the comments section.
“Why is CMS Overpaying Medicare Advantage Plans?,” Angry Bear (angrybearblog.com)
“Aggregate Medicare payments to Medicare Advantage plans,” Angry Bear (angrybearblog.com)
“Kip Sullivan and Ralph Nader Talk Tradition Medicare vs Medicare Advantage'” Angry Bear (angrybearblog.com)