Health Care Reform and the Skinning of Seniors

The endgame is over for low-income senior citizens, but the national hoax continues.  Seniors in the state where I live don’t have to wait for the finale of “what is expected to be a bruising, full-scale health care debate after Thanksgiving” (AP) to find out how their health care costs and benefits will be impacted. No, the low-income elderly in Massachusetts already got notices in the mail, weeks ago, from their Medicare Advantage insurance providers announcing big premium increases for 2010.

In anticipation of the long-promised cuts in government funding to Medicare Advantage plans under any new health insurance makeover bill, the Medicare Advantage providers have jumped the gun, and already passed their predicted losses in profits onto the backs of their fixed-income elderly “beneficiaries.”  In my case, monthly premiums will go up 52 per cent.  Services for which there previously were no charges—like physical therapy, for instance—will now require the same $20 co-pay paid to physicians.  The cost of drugs will also see huge increases in the revised “formulary” which sets out restrictions on which drugs can be prescribed.  Low-income elderly also got letters from “Prescription Advantage,” a program that helped them with the cost of drug coverage, that “Effective January 1, 2010, Prescription Advantage will no longer pay any portion of your Medicare Part D drug plan premium.” They suffered a $5.6 million loss in government federal funding for next year. (Personal phone communication with PA staff.)

No one in the mainstream media or in Congress has been willing to talk openly about this one element of any new health insurance legislation that Obama and his bi-partisan buddies agreed to months ago.  At least as far back as July 2009, media coverage often led with Obama’s exclamations of his intention to “eliminate waste and inefficiency in Medicare,” by cutting “more than $100 billion in ‘unwarranted’ insurance company subsidies to Medicare.” (UPI, July 22, ’09).  Every week The President seemed to identify more waste that could be cut from Medicare Advantage programs to help pay for his health reform. (AP/ Espo & Werner, July 29, ’09).

As that amount continues to increase by $100s of billions, recent reminders that the now estimated $500 billion in Medicare “cost savings” will be taken out of the hide of poor seniors have been relegated to the final lines of press reports. For example: “To finance the expanded coverage Reid [Senate Majority Leader Harry Reid, D-Nev.]  proposed higher taxes as well as cuts totaling hundreds of billions of dollars in projected Medicare payments.  Hardest hit would be the private insurance Medicare plans, although providers such as home health agencies would also receive significantly less in future years than now estimated.” (AP/Espo, November 21, ’09). And, “About half of the bill Reid unveiled Wednesday would be financed by curbs in projected Medicare spending. While providers such as home health care agencies would absorb some of that, the biggest blow would fall on private Medicare plans.”  (AP/Espo, November 19, ’09).

This issue inspires no drama, no colorful debate, no headlines.   Targeting low-income elderly for cost cutting has always been the one objective upon which the Obama administration and both “sides of the aisle” are in complete agreement.  (See my articles: The Myth of Medicare for All,; Progressives Abet Obama-Fraud,; Doublespeak on Health Care,; Seniors on the Chopping Block,

Today, NPR’s “in-depth” discussion of who will pay for healthcare reform did not once mention the enormous contribution poor, aging citizens are being forced to make (“On Point” November 23, ’09).   The Obama administration, Congress, and the American public pretend not to be aware of the planned consequences for senior citizens; and worse, they ignore the fact that those hurtful consequences agreed to in close-door meetings with Obama’s chosen few have already been realized.  Frankly, Granny, they don’t give a damn.

Those who have not yet entered the growing ranks of enrollees in some form of Medicare, may not know that low-income seniors paying monthly premiums to Medicare Advantage plans also pay, in addition, the standard monthly premium for the wholly inadequate Medicare Parts A& B (sometimes called “Original Medicare” and more recently “FFS Medicare.”).  FFS Medicare does not cover monthly physical exams, nor eye exams, glasses, hearing exams, drugs, and a whole list of other medical services one would think the elderly in particular would require as they age.  That’s why we enroll in Medicare Advantage—to get comprehensive, affordable coverage of the basic services we need.  Whenever challenged about the impact on the elderly of drastically reducing funding to Medicare Advantage plans, Obama has repeatedly insisted that that $500 billion in cuts will have no effect on the cost or quality of services to seniors!  He repeatedly insisted those hundreds of billions of dollars in “cost savings” would only come from fraudulent and wasteful practices of Medicare Advantage programs that, he said, cost the government 14 per cent more than similar services provided by the original FFS Medicare.

At a recent Town Meeting on Health Care, my Congressman put the same spin on the aforementioned cuts when I asked him how he planned to protect my Medicare Advantage health insurance benefits. He responded, “Medicare Advantage costs the government and US taxpayers 14 per cent more than the same services under FFS Medicare. The cuts will only be from wasteful spending and fraud.”  I pointed out to the Representative the obvious fact that paying 14 per cent more for 95 per cent more coverage of essential medical services was a real bargain. However, what was not discussed in much more important: This excuse for skinning seniors is not only “spin,” it is such a distortion of the facts as to qualify for out and out lying to the American public.  To justify looting some of the most vulnerable and poor in our society— in order to finance the forced purchase of private health insurance by the rest of the population—the President, Congress and the Free Press have joined forces in spreading the myth that Medicare Advantage overcharges by 14 per cent compared with FFS Medicare.

Most of the statistics on health care costs are designed to overwhelm the consumer, encouraging them to believe they should leave interpreting the data up to political and corporate experts who have their own interests — not the consumers’ welfare — in mind.  Therefore, I refer you to some clearly understandable information provided by the “Report to the Congress: Medicare Payment Policy,” March 2009:  Close to one-quarter (23 per cent ) of Medicare beneficiaries are enrolled in Medicare Advantage plans which receive 23 per cent  of total Medicare funding.  Medicare Advantage plans include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-For-Service (PFFS) plans, and Special Needs Plans (SNPs).  Enrollment in Medicare Advantage is growing rapidly, and the greatest growth is in the HMO plans.  Medicare Advantage HMO plans are more efficient, according to the “Report to Congress,” and their cost of providing the same services is less than the cost under FFS Medicare.

So, where does the ‘politically correct’ commentary about Medicare Advantage costing 14 per cent  more than regular FFS Medicare come from?  From the manipulation of statistics.  The Report states: “MA [Medicare Advantage] plans provide enhanced benefits to enrollees, but, except for HMOs (which finance a portion of those benefits through bids below FFS), the enhanced benefits are financed entirely by the Medicare program and by beneficiaries—and at a high cost.  For example each dollar’s worth of enhanced benefits in PFFS [Private Fee-For-Service] plans cost the Medicare program more tan $300.”

Low-income seniors in urban areas are unlikely to enroll in these more expensive PFFS that allow you to go to any physician or specialist your want.  Most urban elderly purchasing Medicare Advantage are enrolled in the much less expensive HMO’s, where choice is limited to particular “panels” of physician groups and hospitals that have agreed to conditions of capitated payment and coverage set by the HMO.  Not only do the Medicare Advantage HMOs provide services more cheaply than does the original FFS Medicare, the Report makes it clear that “Quality is not uniform among MA [Medicare Advantage] plans or plan types.  High–quality plans tend to be established HMOs.”  HMOs continue to enroll the most beneficiaries of all plan types and, “We estimate that HMO bids were on average 98 percent of FFS [regular Medicare].  This suggests that HMOs can provide Part A and Part B services for less than the cost of FFS [regular Medicare].” HMOs bid to provide the same services at a cost savings of 2 per cent  below the regular FFS Medicare spending. (My emphasis throughout).

But remember that Medicare Advantage covers many services, like annual physical exams, that FFS Medicare does not. These services beyond what FFS Medicare cover are called “Enhanced Benefits.”  With regard to these services, the Report states, “In the case of HMO’s…their bids for the Medicare benefit package are below Medicare FFS spending, the program subsidy is 97 cents for each $1.00 of enhanced benefits.  In the case of PFFS plans, on average, the program subsidy is $3.26 for each dollar of enhanced benefits.  In other words, HMOs are the only MA plan type that finances any part of enhanced benefits through plan efficiencies:  3 cents of every dollar. Enhanced benefits in other plan types are completely subsidized by Medicare.”

And, finally, the Report concludes “Our analysis finds that some plans are able to cover the same services as the traditional Medicare Part A and Part B benefit at a lower cost—namely, HMOs, which cover these services on average at 98 percent of Medicare FFS expenditures.”  The fact of Medicare Advantage HMOs lower cost and higher quality gets lost in the final analysis because the Report is “concerned with the “average” cost of all the services offered by all the various Medicare Plans—those of the very costly PPOs, PFFS, SNPs , together with the very efficient HMOs.  Thus, “in the aggregate” they paint all Medicare Advantage costs as 14 per cent  more than those of FFS Medicare, and de-emphasize the fact that Medicare Advantage HMOs are more efficient than the original FFS Medicare.

Why can’t politicians, journalists, and talk show experts read the “Report to Congress” on Medicare Advantage and figure this out for themselves.  Why do they walk in lock-step agreement with Obama that it is necessary to gut the higher quality, cheaper and more efficient HMO Medicare Advantage program to pay for a big hunk of the cost of privatizing nation-wide health insurance?  And why have the private providers of Medicare Advantage, and huge insurance lobbyists like AARP been on board with this deal from the very beginning?  Why are the providers of Medicare Advantage insurance plans not objecting to the cuts, but already passing their anticipated losses on to elderly subscribers in the form of outrageously higher premiums, co-pays, and drug costs?

Yes, why would AARP and other private health insurance companies go along with this scam? In his article “Cashing In, Selling Out: AARP’s Tradition of Betrayal,” Stephen Lendman exposes the myth that AARP is a nonprofit dedicated to improving the quality of its members’ lives. He quotes the Physicians for a National Health Program calling AARP “part of the problem, not part of the solution.”  AARP, he says, is “largely profit-driven, offering 17 types of insurance reaping hundreds of millions annually in royalties.  Millions more from selling drugs; other products and services including mutual funds; plus federal subsidies exceeding $80 million annually; and annual membership dues…[from] 40 million members.”  He adds that AARP is “also active on Capitol Hill with a 50-person staff and a 2008  $28 million lobbying budget, much like major corporations and for the same purpose – profits at the expense of member interest, unaware how they’re ill-served by an organization claiming to be their advocate.”

As you and I will never see the numbers, we can only imagine the trillions of dollars in new profits the private insurance companies and pharmaceutical industry plan to reap when every American is forced to purchase a private insurance plan on the “free market”.  The very idea of providing a consumer product—with no price regulation or cost controls attached– that every citizen in the nation is required by federal law to purchase must have those CEOs on quite a high.  In the closed-door horse-trading that went on, the decision to give up government funding of seniors’ Medicare Advantage, in return for a lucrative new national  “market,” should have been a relatively painless one. Not only did it cover Obama with the illusion of being hard on private insurance companies while watching out for the “American taxpayers,” all parties involved no doubt knew they could count on the passivity of aging, anxious and insecure Medicare Advantage enrollees to absorb any short-run losses in corporate income.  Making a killing in the short run is the first rule of American Capitalism.

The entire scheme is, of course, just one more bailout for large corporations experiencing declining rates of profits in recent years.  As AP’s Calvin Woodward points out, “The insurance ‘industry’ like other parts of the economy has been in trouble for sometime, in spite of their skyrocketing premiums.   Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries.”  Woodward gives several examples, including “HealthSpring, the best performer in the health insurance industry, post[ing] 5.4 percent.   That’s a less profitable margin than was achieved by the makers of Tupperware, Clorox bleach and Molson and Coors beers.” (AP/Woodward, October 21, ’09)

The President is doing the job his big money backers nominated him to do.  It is the same job any other President faced with an economic crisis must do:  Facilitate the transfer of as much of our national wealth and resources as is possible over to large private industries, while cutting spending on public programs through policies that reduce the consumption of working people, the unemployed, children, the poor and elderly — without causing public unrest or revolt — and, thereby, hopefully increase capital accumulation and  profits enough to encourage investment in expanded production and recovery in the “real economy.”  With all the silly charges of health care  “socialism,” it may be necessary to remind ourselves that our economy continues to be a Capitalist economy.  Capitalism is based on production for profit.  No profit, no production. As I said in my article “Whose Consumption Drives the Economy?  The Multi-Trillion Dollar Question:”

“Government spending on public works programs detracts from capital that could be spent in private profit-making industries. Military production has become big business for many private, for-profit, contractors. The US is the largest producer and distributor of military weapons in the world…But the real problem here is that, under our economic system (Capitalism), public (nonprofit) spending on domestic programs that directly benefit you and me will not jumpstart capitalist (for profit) production. It never has.

“With all the romantic (and a relatively few actual) recollections of FDR’s limited public works programs, it was WWII that provided Roosevelt with the authority to significantly increase employment; retool, redirect and plan industrial production. The US government has not been able to withdraw entirely from its role of propping up and intervening in the private economy. While postwar Europe created programs providing all citizens with healthcare, education, retirement, lengthy vacation time and other government-guaranteed benefits, the US left provision of the larger part of those services to the private sector. In our current economic recession, there will again be only a minimal amount of spending on domestic programs that benefit the citizens rather than private corporations. And that limited public spending will depend on how much ‘public unrest’ is feared…. the US increases competitiveness in the Capitalist world by lowering real wages, eliminating pensions, cutting employer-provided healthcare, and making higher education so expensive even two-income ‘upper middleclass’ families struggle to pay tuition. With this in-your-face everyday reality, it is difficult to understand how so many continue to believe that ours is a “consumer-driven” economy. Working people’s consumption of everyday necessities is being cut, while billions of taxpayer dollars goes to “bail out” financial institutions who have no incentive to loan those funds to low income people (or to companies) now that most of the fraudulent transactions and speculative securities are supposedly under closer scrutiny.”  (See also: Greenspan’s Higher Power,, Their Assets; Our Debts ).

Well, the senior sell-out is now a done deal.  And the “debate” over whether employers, insurance companies, or upper-income couples will be taxed (not!) to help pay for the cost of Obama’s health insurance makeover, sets the stage for more dramatic acting-out.  Backroom bargaining with the loyal “opposition” will abound, similar to the deal Sen. Mary Landrieu of Louisiana bragged about making in return for her holdout vote: “‘I’ve decided that there are enough significant reforms and safeguards in this bill to move forward, but much more work needs to be done.’ She also touted the $100 million included in the legislation to help her state cover its costs under Medicaid, the state-federal health care program for the poor [sic; poor children and disabled].” (AP, Espo, November 21, ’09).  We can look forward to more circus theatrics around whether a DOA “Public Option” will be run by the government or privatized, opted-in or out.

Last week there was a meeting at my town Senior Center, intended to explain the new Medicare and Medicare Advantage options.  Most of the attendees had gotten the letters advising them of big increases in the costs of their Medicare Advantage insurance plans. None of us had expected to see these painfully predicable results before the ink was even dry on that diabolical insurance bill. (Apparently they wanted to make sure we had the holidays to prepare for more belt-tightening and budgeting in 2010.) Their was much discussion about joining the original Medicare plan that is cheaper but does not cover physical exams, or eye exams, glasses, hearing exams, drugs, etc.  I honestly hate to say, “I told you so!”  I hoped that if I wrote and talked and yelled enough, this would not happen.  Magical thinking aside, I predicted months ago that low-income elderly would be forced into the option all the “progressive” physicians and other liberal professionals have been begging for: “Medicare For All.”   The original FFS Medicare — the worst health insurance imaginable —  requires additional “supplemental plans,” or  ‘”free care” and “safety net” dollars (only available in Massachusetts for those poor enough to qualify), just to cover basic medical needs. This original Medicare plan is accepted by a shrinking number of physicians at federal and state subsidized hospitals and community clinics which are also experiencing huge cuts in Federal and State funding for low income patients.

No, Granny, they aren’t going to “pull the plug on you” without your permission; and there will be no “death panels” by that name. (Those fabricated threats were the kinds of distracting theatrics Obama and the “progressives” love to entertain rather than focus on the issues or details of real reform proposals.) The actual plan is more insidious and noxious.  Your “tin-plate” Medicare Advantage HMO policy will become as expensive as last year’s gold-plated option.  And you will, according to design, eventually have to enroll in the Original FFS Medicare—the most limited, inadequate health insurance available.  Maybe there is some consolation in realizing that with the deepening depression in our real economy, our aging population, and the declining “middle class,” many of those who don’t give a damn, will sooner or later also be forced to join the “beneficiaries” of the worst medical insurance plan in the economically developed world: Medicare For All!

MARY LYNN CRAMER, MA, MSW, LICSW, a low-income senior enrolled in a Medicare Advantage HMO plan, has a background in the history of economic thought, and clinical social work.  She can be reached at


Mary Lynn Cramer, MA, MSW, LICSW has degrees in the history of economic thought and clinical social work , as well as over two decades of experience as a bilingual child and family psychotherapist. For the past five years, she has been deeply involved in “economic field research” among elderly women and men dependent upon social security, Medicare, and food stamps, living in subsidized housing projects. She can be reached at: