No More Profit-seeking Middlemen in Our Medicare

by John M Repp

Medicare was passed in 1965 as a program to provide health care for seniors and disabled people. In the U.S. most people get their medical insurance from their employer as a benefit. But after retirement, or for those people who cannot work, the Medicare program has been a life saver. It was simple and efficient. 98% of its budget went to patient care.  

There were gaps from the very beginning. It did not provide for nursing home care, hearing aids, glasses, and dental care. In 1997, Medicare Advantage plans were allowed to be set up by traditional for-profit insurance companies to plug some of the gaps. Many of the Medicare Advantage plans are low-cost or no cost to seniors as they enroll, but when the policy is used, enrollees must pay some of the cost of their own care, with a limit at say $6000.   The real cost is paid by the government. The for-profit insurance company receives $1000 each month for each enrollee from the government.   Today, 42% of seniors are enrolled in Medicare Advantage plans.

During the Trump Administration a new for-profit middle-man scheme was developed to grab the 58% of seniors and disabled not covered by Medicare Advantage plans.  Called Direct Contracting Entities or DCE’s, the program will run from 2020 to 2026. Few people know about this. The DCE’s only need spend 60% on the care of their enrollees. The rest will be profit. We don’t know what the monthly cost to the government will be. Obviously, as with any for-profit plan for health care, there will be an incentive to restrict seniors care.

This is a pilot program, and the Biden Administration can stop it. At the same time as Pramila Jayapal is organizing for a Medicare-for-All program, she has written a letter to Health and Human Services Secretary Xavier Becerra to stop the DCE program immediately.  Citizens, senior or otherwise should visit Physicians for a National Health Program website and sign their petition to demand that Health and Human Services Secretary Xavier Becarra stop this program.