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Here’s what we know about the latest reconciliation bill drama

According to an August 27 op-ed in The Washington Post, payors are up in arms over the proposed reconciliation bill—which includes Medicare reform to benefit patients. This could get ugly.

Change is a-coming, as it normally does during a new legislative year. This year, Congress is mid-debate on Biden’s bipartisan infrastructure bill and Democrats’ $3.5 trillion reconciliation bill, which includes Medicare reform.

Currently Medicare covers Americans 65 and older, plus those with disabilities. According to an article in The Washington Post, changes on the table include lowering the age threshold so more people can sign up, allowing the government to negotiate drugs with pharmaceutical companies and—even more critically—including coverage for dental, vision and hearing care.

First, it’s baffling that care isn’t already covered. Second, we know what you’re thinking—expanded coverage? Insurers must hate that. And you’re right. But the reason isn’t exactly obvious. The government foots the bill for Medicare, so why would private insurance companies care?

According to the article, “The expansion of Medicare benefits is a direct threat to Medicare Advantage plans, in which the government pays private insurers to administer Medicare benefits. The reason is that most Medicare Advantage plans do include those benefits, which is a huge draw for seniors to enroll in them instead of traditional Medicare.”

And Medicare Advantage, of course, is a major windfall for carriers: Gross margins for Medicare Advantage plans spiked 41 percent over its margins for the first half of 2019. That equates to, on average, $64 more per member per month.

Further, the Congressional Budget Office (CBO) estimates that the share of beneficiaries enrolled in Medicare Advantage plans will rise to nearly 51 percent by 2030—that’s a lot of profit potential.

But if good old-fashioned Medicare gets more competitive, it could eat into that market domination. Payors don’t want this to happen, even though it means some 38 million seniors will get better, more comprehensive care for their eyes, ears and teeth.

To put it in other words: Payors are lobbying against better healthcare, even though people will greatly benefit from it.

Money talks louder than morals, it seems.


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