Ad Audit: Do The Insurers’ Claims Add Up?

AD TITLE:Medicare Advantage Facing $100 Billion in Cuts

SPONSOR: America’s Health Insurance Plans (AHIP)

SUMMARY: Upset that the Senate Finance Committee health legislation would allow millions of people to continue going without health coverage, the insurance industry launched an ad campaign against the bill. Its aim: To convince seniors they’d be losers under the legislation – in large part because of a proposal to cut payments to Medicare Advantage, the private plan part of Medicare.

Seniors, the ad says, could be forced to give up “more than their fair share” to help pay for reform. But that argument, many health experts say, turns on its head the real Medicare inequity-that the government has for years so overpaid the private plans that many enrollees receive additional benefits, such as eyeglasses and dental care, that seniors in traditional Medicare don’t get.

BACKGROUND: Until this week, AHIP, the trade group for insurers, has been generally positive about efforts by President Barack Obama and congressional Democrats to overhaul the nation’s health care system. That’s due in large part to assurances from lawmakers that almost everyone would be required to get insurance.

Such a requirement would bring insurers millions of healthy new customers who would pay premiums but need scant medical care. Adding them to the pool, the industry figures, would offset the sicker people they’d be required to cover under the legislation.

But the committee, before approving the bill, weakened the individual-insurance requirement, making it easier for people to go without coverage. If too many healthy people skip coverage, insurers fear, the financial stability of their insurance pools – not to mention the size of their profits – would be jeopardized.

Earlier this week, insurance-industry groups released two studies arguing that premiums would rise sharply under the legislation. But the television ad takes an entirely different tack. It warns seniors in Medicare Advantage plans that their benefits could be reduced. The ads are airing in Missouri, Colorado, Kentucky, Louisiana, New Mexico and Pennsylvania.

AUDIO AND VISUALS (Missouri version): A female narrator speaks over a series of brief scenes, one in which an elderly man and a young child together page through a photo album, and another with a concerned-looking man going through paperwork at his desk at home. In two other scenes, an elderly woman sitting at an inside bench and then a man reading a newspaper on a park bench both stare grimly into the camera, giving the impression of disapproval.

“Most people agree that we need to reform health care,” the narrator says as a piano plays in a minor key. “But is it right to ask ten million seniors on Medicare Advantage for more than their fair share? Congress is proposing over $100 billion in cuts to Medicare Advantage. The nonpartisan Congressional Budget Office says many seniors will see cuts in benefits.” The screen shows the words “50% reduction in extra benefits.” The narrator concludes: “And Missouri is hit hard. Call your senators. Tell them we need health care reform that protects seniors.”

The screen shows the words “Protect Medicare Advantage” and a phone number for an AHIP office, where listeners are coached on what to say before being connected to their senators’ offices.

POLITICS: The insurers’ principal concern – that people will be able to wriggle out of the requirement to get insurance – isn’t likely to generate a lot of sympathy from the public. It’s a different story with Medicare Advantage, which is popular with many seniors thanks to its additional benefits. The ad also is a reminder to Democratic senators facing competitive races next year that seniors are a potent voting bloc.

ACCURACY: AHIP leaves out some important context. The $100 billion in proposed cuts would occur over 10 years, not immediately, and would amount to a 7 percent reduction compared to current law.

AHIP, in arguing that Medicare Advantage is being unfairly targeted, says that about one-quarter of the $404 billion in spending cuts in the Senate Finance bill would come from the Medicare Advantage programs.

But enrollees in the plans would hardly get the harsh treatment the ad suggests. At worst, they would end up getting the same benefits as people in the traditional Medicare program.

The government currently spends an average of about 14 percent more on members of Medicare Advantage plans than on beneficiaries in the traditional fee-for-service program. Those extra payments allow some insurers to offer perks such as low or zero premiums, eyeglasses, free gym memberships, dental care and blood pressure machines. “What’s unfair is they’ve been getting more all along,” says Marsha Gold, senior fellow at Mathematica Policy Research, a nonpartisan firm.

The CBO has projected that, if the cuts were enacted, people in Medicare Advantage would receive extra benefits averaging about $42 a month in 2019, about half what they’d get without the cuts. About 2.7 million people would leave the plans by 2019 and return to traditional Medicare.

A number of nonpartisan Medicare experts favor trimming payments to Medicare Advantage plans. The Medicare Payment Advisory Commission, which advises Congress, says it “is unfair to taxpayers and beneficiaries not enrolled in MA plans who subsidize those payments” and has recommended reducing the payments to encourage the plans to be more efficient-and also to help improve Medicare’s long-range financial picture.

When the narrator warns about “cuts in benefits,” many beneficiaries might think their entire benefits package is in danger of being halved, when actually it’s only the extra benefits – those that go beyond what’s offered in the traditional program – that are at risk. The ad flashes the phrase “extra benefits” on the screen, but it’s a distinction that the casual viewer could easily miss.