Medicare Advantage plans were set up by private insurance companies ostensibly to give older Americans more benefits and a better plan than traditional Medicare. The problem is that these plans are subsidized by the federal government. Once those subsidies go away, believe me, the plans will too. It happened before in the late 1990s when the federal government cut the subsidies. The great irony here is that traditional Medicare is actually a very cost efficient program that has offered a consistent benefit that all Americans have come to rely on, for their parents and for themselves.
Medicare is far from perfect but it is cost efficient. Less than 5% of the cost goes to administration as opposed to private Medicare Advantage programs that devote 20% to 25% to administrative costs and to profits. So where is the "advantage" to private plans? When the subsidies are lifted, Medicare will once again be a "government" program. With the negative publicity around the private plans, this seems like a great time for Medicare to promote itself as a cost saver and life saver. Here, the federal government could take a page from the private insurers in how to market the program.
Everyone is looking for service providers of all kinds to demonstrate how they are saving money while improving service. If the head of CMS (Centers for Medicare and Medicaid Services) produced and aired a two minute infomercial, on national TV, on why traditional Medicare is a great value, it would produce a landslide of goodwill and of transfers from private insurers back to traditional Medicare.
AARP should not be a model for how to promote Medicare. According to a recent New York Times article, AARP is being investigated for deceptive marketing practices with regard to their supplemental medical insurance plans. While this is embarrassing for the long-time advocate of retired Americans, it underscores the excesses and inefficiencies of the free market solutions to healthcare that have been flogged for the last eight years by the Bush administration. The Medicare Part D drug benefit was so heavily skewed towards the interests of large pharmaceutical companies that it barely passed a Republican dominated Congress in 2004.
A top priority of any attempt to reform the U.S. healthcare system should be full transparency. By that I mean hospital costs, physician costs, medical test costs, insurance costs, physician consulting contractswith pharmaceutical and medical device companies, etc. I will give you an example from my own experience. I went for my annual eye exam at the ophthalmologist. In addition to checking my vision, I have an exam done for retinopathy which frequently accompanies diabetes, since I am diabetic. The year before, the exam cost me $100. This time, the exam cost over $400 dollars. The reason? The ophthalmologist has installed a fancy new camera to take a snap shot of my retina. It is not necessary to diagnose retinopathy but the reimbursement for it is quite high. In other words, she now makes a lot more money per visit. I only found this out when I got the much higher bill and inquired about it. Next visit, I will skip the fancy camera.