Les Miserables

The debate over Medicare Advantage has an eerily similar feeling to it, much like a play that I think I have seen before but cannot truly recall. That may be because I been in the Washington, D.C. area for far too long. It goes something like this:

• Act I--A health care industry faces the prospects of major payment reduction over the next 10 years.
• Act II--The industry launches major lobbying and/or public relations campaign to influence Congressional debate on such proposal and notifies its customers that truly bad things --higher premiums, reduced benefits or a combination of both -- will happen if the proposal becomes law.
• Act III--Proponents of such payment reduction respond to the industry's campaign by highlighting how much profits are in this industry or how much compensation industry executives received last year or that the industry should be able to provide health care services for no more than what the government has paid for such services.
• Intermission--All parties regroup to review and modify lobbying strategies.
• Act IV--Congress arrives at a political compromise whereby the industry takes a smaller payment reduction over time. The industry can claim victory for staving off a larger reduction while proponents boast a win by wringing future profits out of the industry.
• Act V--The industry then adjusts its business model by passing on higher costs to beneficiaries, reducing benefits and closing service areas to achieve future profitability.
• Act VI--Customers are hurt in the end.

For me, the question is not if Medicare Advantage beneficiaries will be hurt, but how they will be adversely impacted by future payment reductions. Medicare Advantage health plans will respond to any payment reductions as most businesses do -- increase beneficiary cost sharing, reduce benefits or a combination of both. To assume otherwise would be to ignore fundamental business realities in today's health-care system. My sincere hope is that the Senate Finance Committee balances the interests of all competing interest groups to achieve a workable compromise. One such element of this compromise is to reward Medicare Advantage plans for improved patient outcomes. In the end, incentives for individuals, health plans and the government as payer need to be better aligned in a reformed health-care system.

By Raymond Martins  |  September 30, 2009; 2:26 PM ET  | Category:  Health Care Reform , Health costs , Insurance
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