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Senior Citizen Politics
Rep. Dingell Blasts Medicare Advantage Plans’ Sales
Tactics at Hearing
Chairman of Energy and Commerce says Medicare
Advantage marketing practices are disgraceful
June 26, 2007 – A House subcommittee hearing today
opened with a blistering statement of charges and penetrating questions
from Democratic Congressman John D. Dingell, Chairman of the Committee
on Energy and Commerce. The hearing, held by the Subcommittee on
Oversight and Investigation, was entitled Predatory Sales Practices
in Medicare Advantage.
Dingell opened with, “I’ll be blunt. The Medicare
Advantage marketing practices that have come to the attention of this
Committee are disgraceful. But frankly, they come as no surprise to
those of us who have long questioned the structure of the Medicare
Advantage program.”
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Read more
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Included among his questions were –
● Why are Medicare payments for Medicare
Advantage beneficiaries, on average, 12 to 50 percent higher than what
Medicare pays for beneficiaries enrolled in traditional Medicare?
● Why should the vast majority of traditional
Medicare beneficiaries pay higher monthly premiums to subsidize Medicare
Advantage enrollees?
● Wasn’t privatization supposed to help contain
costs and allow more efficient delivery of quality health care?
Dingell said he does not believe Medicare Advantage
is containing costs and “there’s no evidence that it is providing value
to beneficiaries commensurate with its greater cost.”
“On the contrary,” he added, “as we’ll hear today,
the very structure of Medicare Advantage creates conditions ripe for
swindling the elderly and disabled.
“The real beneficiaries of this program are the
insurance companies, which have profited handsomely—Humana will
reportedly earn 66 percent of its net income from sales of Medicare
Advantage products this year.”
He said, “The unprecedented overpayments to the
insurance industry are part of the Administration’s agenda to privatize
the Medicare system. But so far, privatization has neither saved money,
nor brought verifiable efficiencies.
It has created, he says:
• Deep confusion over a bewildering array of plans;
and
• Armies of sales agents competing for commissions,
cash prizes, and trips to Las Vegas for those who sign up the most
seniors in the shortest time.
He gave the subcommittee a brief history of how the
Medicare Advantage plans have developed.
“Private managed care options to traditional
Medicare have been around almost since the creation of Medicare. With
the introduction of Medicare Plus Choice in 1997, Medicare health
maintenance organizations (HMOs) and preferred provider organizations
(PPOs) really took off. In order to encourage cost containment, private
insurers were reimbursed between 95 percent and 102 percent of the cost
of traditional Medicare.
“A number of the better run Medicare managed care
plans were able to offer additional benefits even at these lower
reimbursements. But after an initial surge in growth, many plans started
withdrawing from the market, citing inadequate payments from the
government.
“The Administration responded in 2003 by throwing
more money at the insurers to prime the Medicare privatization pump.
Insurers responded to the lure of big profits by launching a dizzying
number and variety of Medicare Advantage plans.”
He blamed the “overpayments” to the insurance
industry for serving serve as an incentive for the companies and agents
to aggressively market their products “without regard to seniors’ health
and financial well-being.”
As examples of what he called “shameful sales
practices by agents,” he said his committee has heard the following
stories.
• Brokers signing up people with Alzheimer’s and
psychiatric disorders;
• Brokers forging signatures and signing up dead
people; and
• Brokers telling people that Medicare sent them
that Medicare is being eliminated, and they must sign up or lose their
health coverage.
Below is a list of witnesses that testified before
the subcommittee. Their testimony is linked to their names.
Witness List & Prepared Testimony
(pdf files)
Mr. David Lipschutz
Staff Attorney
California Health Advocates
3435 Wilshire Blvd., Suite 2850
Los Angeles, CA 90010
Ms. Brenda Clegg-Boodram
Judiciary House
Washington, D.C.
Ms. Kathleen Healey
Director
State Health Insurance Assistance Program
Alabama Department of Senior Services
Mr. Francis S. Soistman, Jr.
Executive Vice President of Government and Individual Plans
Executive Vice President of Health Plan Operations Coventry Health Care,
Inc.
Ms. Peggy Olson
Healthwise Insurance Planning, LLC
Mr. Gary Bailey
Vice President
Medicare Operational Performance
WellCare Health Plans, Inc.
Ms. Abby Block
Director
Center for Beneficiary Choices
Centers for Medicare and Medicaid Services
The Honorable Kim Holland
Commissioner
Oklahoma Insurance Department
The Honorable Jim Poolman
Commissioner
North Dakota Insurance Department
Mr. Lee Harrell
Deputy Commissioner
Mississippi Insurance Department
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