Trump’s Executive Order is a Backdoor Privatization of Medicare

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Yves here. I expect to see more scathing analyses of Trump’s Medicare giveaway to insurers. This is a quick take that highlights the big issues. Needless to say, this executive order is a too-obvious effort to generate headlines that compete with the impeachment drama.

By run75441. Originally published at Angry Bear

Trump’s Executive Order is Backdoor Privatization of Medicare,” Social Security Works, Nancy Altman, October 3, 2019

I had to search around for someone who is an expert on Medicare Advantage Plans and Original Medicare. Nancy is one of those experts. Commercial Healthcare Insurance has been become more and more expensive over the years with copays increasing, deductibles increasing, and premiums going up. Todays commercial healthcare insurance costs a single person ~$7200 and a family ~$20,000 with the single person paying 18% of the premium and a family paying 31% of the premium. Approximately 36 million people make less than $25,000 annually (retail workers, personal care attendants, warehouse workers and others as well). In a crude calculation, xpostfactoid: “The past ten years of healthcare cost increase relative to wage increase might cost a full-time average wage earner with family coverage $3,000-$4,000 this year in added costs and decreased wages, or, say, 6-8% of income.”

Today’s Employer sponsored Healthcare Insurance is unsustainable. The same holds true for Medicare Advantages due to the commercial healthcare Insurance offering it as well as the healthcare industry providing the care. If you wish more detail on how commercial healthcare insurance has exploded in cost, my earlier post Health Benefits for 2019: Premiums Inch Higher, Employers Respond To Federal Policy offers more detail pictorially and in verbiage.

Past the leap is the President of Social Security Works, Nancy Altman’s statement on Trump’s Executive Order talking about Trump’s lies.

* * *

(Washington, DC) — The following is a statement from Nancy Altman, President of Social Security Works, on the Medicare executive order Donald Trump is signed today:

“Medicare Advantage is a hustle designed to allow for-profit corporations to suck up public dollars. For years, Republicans have shoveled money into Medicare Advantage plans and allowed them to offer benefits that traditional Medicare is forbidden from covering. This is a ploy to push seniors into Medicare Advantage plans instead of traditional Medicare. Medicare Advantage is stealth privatization intended to undermine traditional Medicare, which is an effective, popular government program and therefore loathed by Republican ideologues.

Under the Trump Administration, the thumb on the scale has turned into an entire arm. They’ve been flooding seniors’ inboxes with advertisements for Medicare Advantage. What these emails don’t mention is that Medicare Advantage plans often have narrow networks, restricting which doctors and hospitals patients are allowed to use. Worse, a recent government report found tt Medicare Advantage plans improperly deny care “in an attempt to increase their profits.” It’s no surprise that older, seniors are more likely to drop Medicare Advantage plans.

Medicare Advantage plans are also a terrible waste of public dollars. They have overcharged Medicare by $30 billion in the past three years alone.

Today’s executive order is yet another giveaway to the corporations that run Medicare Advantage plans. Ironically, the Trump Administration is framing the executive order as an attack on Medicare for All. In fact, the massive flaws of Medicare Advantage epitomize the need to get for-profit greed out of health care by improving Medicare and expanding it to cover all Americans.

Medicare, like Social Security, works. Republicans want to privatize both of them. We have to stop them and instead, expand both.”

The data is out there. I have brought much of it here to Angry Bear. Andrew Sprung at Xpostfactoid is looked to as an expert as well as others. If  you have a question ask. If I can not answer it, I can find out.

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  1. Lambert Strether

    > Medicare, like Social Security, works. Republicans want to privatize both of them. We have to stop them and instead, expand both.

    Of course, this would be a lot easier if liberal Democrats hadn’t been working over-time to blur #MedicareForAll’s branding, and oppose “choice” to single payer. Since “Medicare Advantage” is all about “choice” is it not? Neoliberal infestations always are.

      1. upstater

        Ain’t gonna happen. The Democrats are largely in the pocket of the private insurance companies. Cf. Obamacare.

        1. Carolinian

          Indeed. If Medicare Advantage is such a scam then why aren’t Democrats attacking it? Oh wait.

          It’s not good that Trump is further promoting this long time Republican scheme but it’s also not good that the Dem response to every problem is Trump Trump Trump. Perhaps the real flaw in impeachment is that we aren’t impeaching all of them. Newt Gingrich’s only good idea was term limits. It was, of course, the first thing he dropped on becoming speaker.

      2. Harrold

        Trump can just move funding from another program.

        Congress has abandoned their duty and not stopped Trump from doing this with his wall.

    1. Amfortas the hippie

      “…this would be a lot easier if liberal Democrats hadn’t been working over-time to blur #MedicareForAll’s branding…”

      it would be a whole lot easier as well if we had actual journalism in this country.
      if this kind of reporting was on cable news, local tv news, lester holt, wapo, houston chronicle, etc etc…you’d have less confusion among the peeps, and politicians on both “sides” would never hear the end of it.
      if i can manage to explain this effectively in a ten minute ad hoc symposium in the damned feedstore(in red rural texas, no less!), the MSM has no excuse.

      1. kiwi

        It would be easier if the politicians laid out concrete plans that specifically show who pays what and what is covered. Bernie used to excellent at this.

        That said, I don’t even follow the article’s assertions. My Dad has an Advantage plan, and he never pays for any of his medical care, except for some Rx. He has never been charged for any procedure or office visit because it is all covered. (but vision and dental are not covered).

        I don’t know about the assertion that networks are narrow, because many providers accept a wide variety of insurers. So I haven’t had problems with care for my Dad.

        The dems really messed this up (probably deliberately). Public opinion was heading their direction, but then they had to muck it all up with all kinds of different ‘plans.’ Even employees are sick of paying for their crap plans and ready to look elsewhere (except for the unions apparently)

        But the dems blew it again (again probably deliberately) and left the field wide open for cooption by Trump.

        KISS – keep it simple, stupid. Sliding scale payments, complete coverage anywhere, make it clear that the employee and employer will no longer be paying for employment plans (this concept seems to disappear in the discussion – people seem to think that they will be paying more taxes on top of paying for their employer plan), one risk pool.

        Use transitional funding for dislocated workers due to disruption of private insurance – this program already exists from the Department of Labor.

        1. Anon

          My Dad has an Advantage plan, and he never pays for any of his medical care, except for some Rx.

          Has your dad ever gone to a hospital for any medical care? Does he require anything other than an annual “Hello, Doctor.” visit? Do you know what his monthly premiums are compared to other MediGap (insurance) plans? Do you know that Medicare Advantage plans function more or less like HMO’s and are generally (substantially) more expensive than standard Medicare + MediGap + Part D (drug plan)? Do you know that the narrow network of doctors is a reality; but maybe not evident in your situation?

          I avail myself of standard Medicare. (Open Enrollment begins again on October 15.) I review my personal health situation every year. And every year Medicare Advantage plans are the more expensive AND more restrictive option. You’ll understand fully after any medical emergency that requires the Advantage Plan to approve the level of care performed.

        2. Oh

          I think you need to read up on Medicare; narrow networks refers to locking up the insured to an insurance plan where you “select” a primary physician who refers you to other specialists. You’re also locked into the hospital that the insurance company has a contract with. If you need healthcare outside your area, you pay through your nose for health care.

          It’s time for Medicare for all per the proposed house bill by Premila Jaypal. It has no ifs and buts on coverage.

    2. marym

      … and also if the Democrats hadn’t always wanted to privatize Medicare (and Medicaid).

      Sell the “choices” on the exchanges and aren’t Medicare Advantage and the current non-M4A proposals basically Obamacare for Medicare?

      The Evolution of Private Plans in Medicare

      The Balanced Budget Act of 1997 (BBA) made significant changes to how Medicare paid risk plans in the new Medicare+Choice (Medicare Part C)[*] program. It scrapped the previous payment formula and largely reduced payment rates to plans.16 In response to reports of favorable selection, the BBA established new risk-adjustment measures based on health status and an annual enrollment period, with only one switch allowed outside that period.17

      The BBA also established new private plan options, including preferred provider organizations (i.e., plans that, unlike HMOs, allow beneficiaries to obtain services outside their provider network at greater cost to the enrollee); provider-sponsored organizations (i.e., plans operated by a provider group that delivers the covered services); private fee-for-service plans (PFFS) (i.e., private plans that can pay providers the same rates as traditional Medicare); or high-deductible plans with medical savings accounts…

      * Part C was the 1997 creation of Medicare Advantage, components of which (according to my extremely superficial reading) had been implemented on a trial basis in previous years.

      1. jrs

        Yea some of it actually dates back from when Medicare was first passed from what I’ve read, but it was greatly ramped up in 1997. Thanks Bill Clinton.

        The vast majority of new enrolls to Medicare go with Medicare Advantage at this point, and that’s not Trump. In fact going all Trump derangement on this issue (even though he really is terrible generally), is really ignoring the bigger picture: most new Medicare enrolls go with Medicare Advantage, so that’s inevitably the future merely “if present trends continue and nothing is changed”, Trump or no Trump. If new people turning 65 sign up for Medicare Advantage and the older people on traditional Medicare eventually die of old age, that’s just present trends projected …

        1. Anon

          The vast majority of new enrolls to Medicare go with Medicare Advantage at this point, and that’s not Trump.

          This is Trumpian on its face. In 2018 the percentage of eligible Medicare enrollment choosing Medicare Advantage was 34%. For some it is the only plan that works for their geographical location, for others their longtime doctors are in an Avantage plan. (There are several types of standard and Advantage plans available.) If you look at the data state by state Advantage enrollment varies wildly (CA~40%; WY~3%); Personal wealth, location, and healthcare options play a roll in selection.

          Ask someone you know who is using Medicare (and has access to the online options) and see for yourself what the costs for the standard and Advantage plans are in your area. I think you’ll find why two-thirds select standard Medicare not Advantage plans.

          (Be prepared to learn more than you ever imagined about a new medical insurance lexicon.)

          1. jrs

            Is this new enrolls though or overall enrolls? Because I think 1/3 is right for overall usage but not new enrolls. I’m talking new enrolls (people turning 65 and just getting on Medicare for the first time).

  2. Socrates Pythagoras

    No mention, of course, about how the Affordable Care Act, was a sop to the insurance companies that sought to create a guaranteed revenue stream for them. Filed under: “It’s okay if our guy does it, but….”

    1. Massinissa

      Seems to me like this is going to be worse though. And NC has covered how bad Obamacare is extensively.

  3. Reify99

    One scam of our Medicare advantage plan is to print an overly broad provider directory. One then picks a doctor, chiropractor, etc who appears to be in network, gets treated, but the provider is never paid.

    They are not bound by the provider directory they publish. Better than Bait and Switch!
    Just Bait and Wait!

    Note that I am manipulated into being an accomplice to this fraud. The insurance company tells me I owe nothing. We’ll see how that works.

    1. Amfortas the hippie

      that’s similar to how medicaid works(in texas, at least)….except that you can presumably get the care.
      i ended up cold calling every ankle reconstruction(?) specialist in texas trying to find one who accepted medicaid(none did)…because the corp that “administers” the medicaid in texas had a list of “providers” who ended up not belonging on the list.
      6 years later(now kicked off of medicaid), and i’m still walking around on a mangled ankle.

      (my regular doc(friend, 20+ years) suggested sadly, but also seriously, that i would do well to have an unfortunate chainsaw accident, or fall off the roof…so long as one of the orthopedic guys was working the er at the time. er can’t turn you away, and it is theorised that, given the shape of my ankle on a good day, any relatively catastrophic injury to it would necessitate major fixing…cue the nearest gop-er or vichy dem to tell me again how everything’s just fine, and i should eat my bootstraps and count my blessings that i don’t live in Cuba)

  4. sharonsj

    I watched a discussion about this on youtube and I lasted two minutes. The stupid interviewer asked a so-called expert about Trump’s executive order. The guy ignored it and talked about how people get health insurance through their jobs–and the woman interviewing him never said a word. How effing stupid do you have to be to know that Medicare is meant for retired people who don’t work? Or that corporate “news” isn’t news?

  5. Watt4Bob

    I listened to the last half of “Inteligence-Squared” a feature on NPR yesterday.

    The show takes the form of a debate, with audience voting on an issue, both before hearing the debate and after, with the debating team making the most impact on the audiences opinion after the second vote is tallied being declared the winner.

    Yesterdays debate topic was “Shall we abolish private health insurance and adopt Medicare for all?”

    What I heard was all of the final comments by all 4 debaters, 2 for, and 2 against.

    What struck me dumbfounded were the points made against M4A by CEO & President, Pacific Research Institute, Sally Pipes.

    They include every false and misleading point made by the Health Insurance industry, fewer options, rationing of care, higher taxes, long waits to see a doctor, less choices, the list goes on and on.

    But the real stand-out was her contention that her own Mother, who had stage 4 metastasized cancer, had been denied a timely colonoscopy under Canada’s healthcare system “because there were younger patients who needed the service, and the fact that they had longer lifetimes ahead of them meant they got priority, and her Mother would have to wait.”

    She added that two weeks later her Mother died.

    Need I point out that a colonoscopy would have had no impact on her Mother’s condition at that late stage of the disease, in fact I’d be willing to bet that many doctors would consider subjecting her Mother to a colonoscopy at that point to be cruel, and pointless.

    Doctors, please pipe up if I”m wrong.

    After the second vote, it was determined that the anti-M4A debaters had won the debate because the second vote revealed the audience who had been something like 34% opposed to M4A, now were 51% opposed.

    Of all the IQ2 debates I’ve listened to, this one featured the blatant lies and misrepresentations, and had the worst, most depressing result.

    The Health Insurance industry is spending immense amounts on their defense of the indefensible, and it is being far-reaching, and successful.

    Go Bernie!

    1. Arizona Slim

      If you have stage 4 anything, further screening tests are a waste of time and money. It’s time for palliative care.

      1. Amfortas the hippie

        well…except for some cases, like my wife. they knew she had stage 4 colon cancer, but did the colonoscopy to get a better handle on what they were dealing with.
        if Pipe’s mom was a mere 2 weeks from her end, it was too late anyway…and would have been an unecessary cruelty to subject her to that.
        as for the “rationed care” pseudoargument: we already have rationed care…and i am a victim of it…along with “long wait times”: i waited 6 and a half years for a hip replacement.
        the pro big insurance healthcare-as-industry people have no factual leg to stand on…only lies and innuendo.
        and fear of the purposefully obfuscated unknown.

    2. run75441


      It used to be you had to plan for about an hour-plus of being scoped. This has changed over the years, and they are doing this at a much faster pace. The last go around for me included an endoscopy too. Two different scopes of course :). It goes relatively fast and you are out during the procedure. With mine, I was given fentanyl which plays with your head and memory. Maybe there is an alternative to the two days of prep before this procedure as that is all I can think of which would be cruel.

      As you must know, this is for discovery which was the issue for me.

      Some words on Med4All? Kocher and Berwick had an interim step of phasing private commercial healthcare insurance out before moving to Med4All. This entailed getting control of healthcare costs which we are experiencing today. The driver of todays healthcare insurance costs has been hospitals with their inpatient and outpatient costs. Inpatient went up 42%.

      Pharma has also been a big driver of costs also. Exclusivity of drugs has played a role in this with even generics being limited. The TEVA generic for EpiPen was delayed due to the inability of not being used in the same manner as Mylan’s EpiPen. Mylan complained to the FDA about the Teva pen not being used in a similar manner as detailed in EpiPen instructions so it could not be called a generic. That cost a couple of years.

      From a JAMA Open Network post I wrote for AB here is a tidbit. A JAMA study/report/article pointed out how 49 drugs had either doubled or increased 50% in cost from 2012 to 2017.

      Data was obtained of 35 million individuals from the Blue Cross Shield Axis (data base) for the time period of January 2012 through December 2017. The researchers reviewed prescribed drugs exceeding $500 million in US sales or $1 billion in worldwide sales.

      Within the identified parameters of 2012-2017 sales, 132 brand-name prescription drugs were identified. 49 of the 132 top-selling drugs exceeded 100 000 pharmacy claims, substantial cost increases among these drugs was experienced within the inclusion parameters with a 76% median cost increase, and 48 of the drugs had regular annual or biannual price increases.

      Thirty-six of the 49 drugs were available since 2012. Twenty-eight had experienced an increase in insurer and out-of-pocket costs exceeding 50% and 16 more than doubled in price. Five more which included Novolog, Humalog, and Lantus (insulins) and tumor necrosis factor inhibitors such as Humira and Enbrel experienced highly correlated price increases coinciding with some of the largest growth in drug costs.

      This was not just name brand drugs incurring such increases. Right behind them and even though they were generics of lesser costs, they still experienced similar increases in costs during the same period of time. Novartis CEO is introducing a drug called Kymriah at $425,000 per dose and supposedly a one time usage.

      There is nothing stopping ACOs from cornering a particular market or pharmaceutical companies from increased pricing. The 21st Century Cures Act touted by Biden in Grand Rapids, MI while praising Republican Congressman Fred Upton at the expense of a Democratic Candidate who almost beat him is still controversial here in Michigan. The act was a huge give-away to the healthcare industry of a similar magnitude as the recent executive order on Medicare.

      We have a lot of work to do before we get to single payer Med4All. I think people will follow since commercial healthcare insurance is becoming more expensive.

      It has been a while since I have talked to you. I see Wooley on occasion and some of the others. Still talk about manufacturing throughput. I am down at Loyola at month end talking to 4th year students. Thinking of heading west around Denver where my daughter and one of my sons live or at least get within a couple of hours of them. I am ready for change. It has been busy.

      Hope all is well

  6. antidlc

    Lambert: Since “Medicare Advantage” is all about “choice” is it not? Neoliberal infestations always are.

    Wendell Potter:

    Lawmakers who wrote the Affordable Care Act fell for the health insurance industry’s insistence that Americans want “choice and competition.” Having worked in that industry for two decades, I know the real reason insurers and their allies kept reciting the “choice and competition” mantra was to scare lawmakers away from even daring to give serious thought to a single-payer health care system.

    And I also know that insurers benefit from the marketplace confusion that “choice and competition” can create. I can assure you that some insurers are counting on you becoming overwhelmed by all the choices and picking a plan that might appear at first glance to be a bargain. But beware: if you’re not careful and pick a plan without really kicking the tires, you very possibly will be buying something that could wind up costing you much more than you ever imagined if you get sick or injured.

    1. Watt4Bob

      ‘Choice’ in many cases means something like;

      1. Totally adequate product.
      2. Needlessly more expensive product.
      3. Ridiculously more expensive product.

      People is sales are taught that when given a choice between ‘Good, Better, Best‘ the consumer will most likely choose a higher price option thinking it’s the ‘smart‘ choice.

      So give them choices!

  7. antidlc

    Medicare and Medicaid are increasing sources of revenue for insurance companies:

    This all matters to insurers because more and more of their revenue and profits are coming from the Medicare and Medicaid programs. When Aetna announced a few weeks ago that it planned to buy Humana, which has more than three million Medicare Advantage members—second only to UnitedHealthcare—Aetna and Humana executives said 56 percent of revenues from the combined company would come from the government programs.

    Indeed, some of the firms would not be growing at all if it weren’t for their government business. When Aetna announced second quarter earnings earlier this month, the company noted that its membership in Medicare and Medicaid programs was up 8 percent over the same period last year. By contrast, its commercial membership was down from last year.

  8. juliania

    This conversation is a good reminder that both presently ruling parties are basically on the same page as far as those to whom they bestow benefits. Thank you, Yves.

  9. Big Tap

    Don’t know if I missed reading it but MediGap coverage is also from private health insurance companies just like Medicare Advantage. Supposedly the best MediGap plan is Plan F (or so I’ve heard) but it will no longer be offered as of January 1, 2020 to new enrollees. Also doesn’t original Medicare cover only 80% of approved expenses?

  10. Christopher Herbert

    We have a corrupt system that is already the most expensive on the planet. We need to take the system out of the private capitalistic market.

  11. Paul P

    The Alliance for Retired Americans, Social Security Works, and
    the National Committee to Preserve Social Security and Medicare are three organizations i know of that are fighting for Medicare. They focus on seniors and don’t have a grassroots activist base.
    The Alliance is union sponsored and claims 4 million members, but, as a long time member, I get email alerts and petitions to sign, but never an invitation to form or join a visit to a representative.
    There are 14 million union members in the US. With family and friends, the Alliance membership should be targeted at a minimum of perhaps 3x the 14 million members. Were they organized on Congressional district basis … well they are not. But, the potential to fight the attacks, as Lambert recommends in the first comment
    is enormous, but fallow.

  12. run75441

    Yves is too fast for me sometimes. As more information became available, I did do an update to this post at Angry Bear and added this information:


    Thursday and I had to search around for someone who is an expert on Medicare Advantage Plans and Original Medicare. Nancy is one of those experts. Friday and Andrew Sprung has his commentary Trump’s Bid To Destroy Medicare up on xpostfactoid blog.

    and later:

    As I have written other times, Medicare and Medicaid have been instrumental in reducing excessive U.S. healthcare costs. Medicare and Medicaid set the prices paid to providers with provider input and commercial healthcare insurance uses those prices to set their payouts. Medicare hospital rates are an approximate half of those paid on average by commercial healthcare insurance. Rates paid to physicians average about 78% of commercial insurance rates. In high-demand specialties and in regions with fewer providers; commercial healthcare insurers often pay four, five and six times Medicare rates. If you remember from Kocher and Berwick’s article, they proposed setting commercial Healthcare (while it still exited in the interim) payouts at 120% of Medicare rates.

    This action by Trump and Republicans is a huge giveaway to the commercial healthcare insurance sector and the healthcare industry. Right now Medicare Advantage uses Medicare rates. If they can beat Medicare Rates, they keep the difference. If they can not meet the rates, the consumer pays the difference. What Trump has done is reverse the format. Medicare Advantage Negotiated Rates will be used to set Medicare Fee For Service rates to providers.

    Medicare as it is today, so will be Medicare4All with some substantial and positive changes such as pharma negotiation, lower payout to providers, etc. If both are priced in a similar fashion as Medicare Advantage, it will be no different than commercial healthcare. It will be the same.

    As for the Medicare recipients past 65 years of age who were clapping as Trump signed his Executive Order, I could only think of Soylent Green for them. Without Medicare, many of us would not be in existence.

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