Trump executive order moves toward privatizing Medicare

WASHINGTON, D.C. (Nov. 18, 2019) — Last month, President Donald Trump signed an Executive Order that he said would protect and improve Medicare, but advocates for the national health insurance program say it does the exact opposite and is a backdoor effort to privatize Medicare, a goal sought by Republicans — but opposed by Americans — for decades. The order does so by deliberately driving up Medicare costs and simultaneously promoting Medicare Advantage plans, which are essentially private insurance versions of Medicare, by allowing them to offer a much wider range of services.

“This Executive Order is another significant step in efforts to privatize Medicare, turning it over to private insurance corporations,” wrote Robby Stern, Chair of of Social Security Works-WA, to Washington state’s congressional delegation last month. He urged Congress to respond to the order by passing legislation requiring that services, payments and coverage be provided equally for all Medicare beneficiaries, whether they are in traditional Medicare or in Medicare Advantage plans.

In recent years when Republicans controlled both houses of Congress, they repeatedly pursued legislation that would privatize Medicare. But those efforts led by then-House Speaker Paul Ryan failed amid widespread public opposition. Now that Democrats control the U.S. House, it appears that Trump is taking many of those same privatization ideas, rebranding them as his own, and attempting to enact them via executive order.

Here is Stern’s full letter to the congressional delegation:

On October 3rd, 2019, President Trump issued an Executive Order (EO) entitled “Protecting and Improving Medicare for Our Nation’s Seniors.”

Rather than “Protecting and Improving Medicare…” the EO threatens to do incalculable harm to present and future Medicare beneficiaries. Congress should take steps to equalize the two Medicare programs to assure that there is an end to discrimination against the Medicare recipients who choose the traditional Medicare program.

According to the Center for Medicare Advocacy, the EO “exacerbates an existing imbalance between traditional Medicare and the Medicare Advantage (MA) program, and demonstrates the Administration’s ongoing efforts to maximize enrollment and the scope of coverage in MA plans.”  The Center for Medicare Services (CMS) has demonstrated a preference for MA plans. By authorizing private MA plans to provide services unavailable to the majority of Medicare beneficiaries who are part of traditional public Medicare, CMS is creating significant incentives for beneficiaries to select MA over the traditional public Medicare plan.

The October 3, 2019, EO mandates that CMS should further expand and enhance the services private MA plans may offer — benefits unavailable to approximately 70% of Medicare beneficiaries who are in public traditional Medicare. This EO is another significant step in efforts to privatize Medicare, turning it over to private insurance corporations. This goal is achieved by allowing the private plans to offer and advertise these additional benefits.

At the present time, private MA plans provide benefits that traditional Medicare cannot provide such as hearing, dental, and vision benefits, gym membership and transportation to and from appointments. Medicare beneficiaries are inundated with advertisements promoting private, and in most cases, for-profit MA plans that feature these additional benefits. The existing bias in favor of private MA plans discriminates against the majority of Medicare beneficiaries who choose coverage through traditional Medicare.

The Affordable Care Act, in response to MA plans being more costly to the Medicare system as a result of higher reimbursement rates, attempted to rein in excessive payments to MA plans. Unfortunately, these efforts have not stopped MA plans from costing the Medicare system more than traditional Medicare spends per individual.

A 2018 article in the Journal of the American Medical Association (JAMA) stated that some studies comparing MA plans to traditional Medicare “suggest that Medicare Advantage does not serve certain beneficiaries well, such as those with the greater illness severity.” The article concluded, “Despite the important and increasing role of Medicare Advantage plans, there is fairly little insight into the relative value Medicare Advantage provides to beneficiaries or the funder, the US taxpayer.”

We urge you to advance legislation requiring services and coverage be provided equally for all Medicare beneficiaries. Both payments and coverage need to be equalized. If that fails to happen, the Medicare traditional public plan is in jeopardy of dying on the vine, as the oldest, sickest and most expensive among us will end up constituting the majority of beneficiaries in the public program, which will financially sabotage the traditional plan. Medicare recipients will have no choice but to enter the private market and the goal of privatizing Medicare will have been achieved.

Thank you for your consideration of this critical issue,

Robby Stern
Chair, Social Security Works Washington

p.s. A more detailed analysis of the Executive Order of Oct. 3 can be found at the Center for Budget and Policy Priorities website.