Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


AHIP Says Overhaul Measure Would 'Pull the Plug' on Medicare Advantage

By John Reichard, CQ HealthBeat Editor

March 19, 2010 -- The endorsements from health care lobbies seemed to be rolling in smoothly for the House Democratic leadership's reconciliation package Friday — until mid-afternoon, when America's Health Insurance Plans weighed in with a bombshell.

In its strongest statement to date on the impact of health care overhaul legislation on the private health plan side of Medicare, AHIP said the measure "will end Medicare Advantage as we know it."

The insurance lobby said the reconciliation package, HR 4872, would trim $202 billion from Medicare Advantage over 10 years.

"The last thing Congress should do is pull the plug on a program that enhances the health and financial security of 11 million seniors across the country," AHIP Press Secretary Robert Zirkelbach said in the statement.

Enrollment in Medicare Advantage has surged in recent years with plans receiving much more generous payments than providers in traditional fee-for-service Medicare. If plans slash benefits and start pulling out of the program, Democrats are likely to face many complaints from seniors. MA enrollment makes up 24 percent of total Medicare enrollment.

Zirkelbach declined to say whether AHIP would urge MA members to call lawmakers this weekend to complain or what plans it has for ads based on the claim that Medicare Advantage is headed for the ash bin.

"Seniors in Medicare Advantage are going to be shocked when they learn of the impact this legislation will have on their health care coverage," Zirkelbach said when the question was put to him.

Insurance industry consultant Robert Laszewski said "AHIP's assessment is correct. Compared with the Senate bill, the House is increasing the insurance subsidies while gutting the revenue that was to come from the controversial tax on higher cost 'Cadillac' plans. To pay for it all, House Democrats have increased the size and scope of the Medicare payroll tax on high income people and hit Medicare Advantage plans a lot harder."

"The Senate bill would have left some opportunity for health insurers to continue to offer this product but the latest proposal will likely mean a seven-year phase-out of the program altogether," he said. "While I expect AHIP to make a lot of noise about this in the next two days, it is really too late. The train has left the station on a health care bill that will end Medicare Advantage — at least a program with the better benefits as we have known it."

A retired Medicare Advantage plan executive who declined to be identified said, "AHIP has been activating and enlarging its senior grassroots network for some time and not just recently." But "I do not see this effort as having the potential to block House passage as the administration has effectively convinced the House Democrats that the MA program is overpaid, that it does not provide quality care and that it denies essential care to the elderly," the executive said.

Private health plans in Medicare originally were paid 95 percent of average rates for fee for service providers, but that percentage this year is expected to be 109 percent.

A section-by-section Democratic summary of the reconciliation bill says that it would freeze MA payments in 2011. Starting in 2012, payment differences compared with traditional Medicare would be narrowed. "Benchmarks will vary from 95 percent of Medicare spending in high-cost areas to 115 percent of Medicare spending in low-cost areas," the summary says. "The changes will be phased in over 3, 5, or 7 years, depending on the level of payment reductions. The provision creates an incentive system to increase payments to high quality plans by at least 5 percent."

Earlier in the day, the senior lobby AARP endorsed the reconciliation package, as did the American Medical Association and the American Academy of Pediatrics.

"For every American who has struggled without access to health insurance —and for all those at risk of losing their current coverage with the next job loss, illness or premium hike — this package presents the best hope to offer health security for them and their families," AARP said in a statement.

The AMA said the measure isn't perfect but should be passed because the status quo is intolerable. Asked whether the AMA had received assurances from Democratic leaders that they would push a permanent repeal of the flawed physician payment formula later this spring, AMA President James J. Rohack didn't answer directly. "We are pushing very hard in our communication to get this thing finished before this Congress adjourns," Rohack said.

Publication Details