Insurers, Republicans square off with Biden on Medicare ‘cuts’

The insurance industry and Republicans are using the debt ceiling fight and President Biden’s vows not to cut Medicare to fend off changes to private Medicare Advantage plans, which are popular among the public but have faced criticism about their costs to the government. 

So far this year, the Centers for Medicare and Medicaid Services has released two rules aimed at reducing overpayments to Advantage plans while increasing oversight — moves long recommended by nonpartisan government watchdogs and economists.

But those rules are being framed by Republicans as cuts to Medicare amid a debate over the solvency of the program, the 2024 elections and the national debt.

“Joe Biden is trying to gut Medicare benefits. Seniors can’t trust Democrats to protect Medicare,” National Republican Senatorial Committee spokesman Philip Letsou said in a statement last week highlighting an Avalere analysis, paid for by insurers, claiming a recent CMS rule could lead to “higher premiums” or “few benefits” for beneficiaries in 2024.

Ad campaign

Meanwhile, organizations representing Medicare Advantage plans are running ads accusing the White House of cutting seniors’ benefits — a tactic the industry has used before to avoid changes to the program.

“For 30 million seniors, Medicare Advantage is Medicare. Tell the White House not to cut it,” a narrator said in a recently launched ad from the Better Medicare Alliance, which represents Advantage insurers like Humana and UnitedHealth Group.

According to AdImpact, Better Medicare Alliance has spent $10.5 million on television ads in 2023, more than twice the next highest spending advertiser in the country, with D.C., Phoenix and Las Vegas the most targeted markets.  

But those attacks are disingenuous, experts and advocates say, pointing to long-standing recommendations from government watchdogs that Congress and CMS rein in overpayments to Advantage plans, which have enjoyed increased enrollment and profits over the past decade.

“Implying that what they perceive to be cuts to Medicare Advantage payments runs afoul of President Biden’s promise or pledge not to cut Medicare … that’s disingenuous,” said David Lipschutz, associate director of Center for Medicare Advocacy, a nonprofit that supports comprehensive Medicare coverage. “It’s conflating a stand against indiscriminate budget cuts to the Medicare program with a regulator trying to more accurately pay one of its contractors.”  

The industry and Republicans have focused their ire on two recent rules that dive into the weeds of how Advantage plans are paid by the government. 

A long-awaited rule finalized last month would claw back more than $4 billion in overpayments to plans over 10 years, enhance audits of plans going forward and make it easier for the government to recoup overpayments. 

As part of its annual payment updates to Medicare Advantage plans, CMS proposed earlier this month a 1 percent increase for 2024 — a smaller increase than proposed in past years that is being framed as a cut by the industry. 

That framing has frustrated Health and Human Services Secretary Xavier Becerra, who issued a rare statement targeting the industry Friday. 

“Any claim that this Administration is cutting Medicare is categorically false. Leave it to deep-pocketed insurance companies and industry front groups to characterize this year’s increase in Medicare Advantage payments as a cut,” Becerra said. “Disinformation being pushed out by high-paid industry hacks and their allies hurt Medicare beneficiaries and the Medicare Trust Fund.” 

America’s Health Insurance Plans, a trade association, said in a statement Friday evening they “respectfully disagree” with Becerra’s comments. “The Administration has stressed that protecting Medicare is a key priority. We agree, and so do the 30 million seniors who count on MA,” said AHIP President and CEO Matt Eyles.

In response to Becerra, Better Medicare Alliance in a statement cited the Avalere study, which estimated the 2024 changes proposed by CMS could result in a national decrease of $45 in rebates per member month. Rebates can be used to lower premiums for beneficiaries or offer extra benefits like gym memberships.

As part of its pressure campaign, the group launched a new website in February called “dontcutmedicareadvantage.com” with fact sheets claiming the administration’s proposal would cut benefits, impact premiums and “hurt seniors and Americans and disabilities.” 

According to the website Political Ads Tracker, Better Medicare Alliance has also spent $90,000 on Facebook ads since Jan. 15. 

Coalition for Medicare Choices, which is run by AHIP, has spent nearly $40,000 on Facebook ads since that date.

A growing alternative. Enrollment in Medicare Advantage plans, an alternative to traditional Medicare that is primarily run by private health insurers, has more than doubled since 2012, with 28 million beneficiaries — nearly half of the Medicare population — now getting their benefits through those plans.

Medicare Advantage plans are paid fixed amounts to pay for beneficiaries' care. Those amounts are “risk adjusted” to account for populations that have greater health needs, but CMS, government watchdogs and some members of Congress have argued that Advantage plans claim their patients are sicker than they actually are to gain larger payments from the government.

The Medicare Payment Advisory Commission estimates payments to Medicare Advantage plans were 104 percent of what traditional Medicare would have spent on those beneficiaries, partly because of risk adjustment payments.  

Insurers say the money is spent on extra benefits for patients that traditional Medicare doesn’t cover, like dental care and gym memberships.

'MediScare'

Messaging about Medicare cuts — called “MediScare” attacks by critics — are frequently deployed ahead of tough election cycles. But the issue has reared its head again as Republicans insist on reducing spending in exchange for raising the debt ceiling. 

Speaker Kevin McCarthy has said Medicare and Social Security are off the table, but Democrats have expressed skepticism. 

In turn, Republicans have argued it is actually Democrats and the Biden administration that are trying to cut Medicare by proposing changes to private Advantage plans.

"It's President Biden who is proposing to cut Medicare Advantage, a program used by almost 4 in 10 Arkansas seniors," Sen. Tom Cotton, R-Ark. tweeted earlier this month.  

Medicare Advantage has long enjoyed bipartisan support as more Americans sign up for it, with hundreds of lawmakers annually signing on to letters professing their support. But discontent has surfaced in recent years, with some Democrats sounding the alarm about the “privatization” of Medicare.

“We urge you to build on your current work to improve Medicare by fixing the harms to patient care and rapidly increasing costs within the Medicare Advantage program,” wrote 70 lawmakers led by Democratic Reps. Pramila Jayapal, Rosa DeLauro and Jan Schakowsky in a letter sent last week to CMS Administrator Chiquita Brooks-LaSure. “This will also save money that can then be used to reinvest in seniors’ and people with disabilities’ care.”