The bipartisan push to privatize Medicare

We need to educate Democrats on how, why it happened to build a defense against complete Medicare privatization

By WENDELL POTTER

(June 1, 2023) — Hindsight, they say, is 20/20. So to understand how the health insurance industry has made such rapid progress lately in privatizing Medicare, let’s turn the clock back eight years and pay close attention to an announcement by the industry’s largest PR and lobbying group, which should have set off alarm bells within the single-payer movement.

On July 15, 2015, America’s Health Insurance Plans (AHIP) announced it had hired Marilyn Tavenner to succeed Karen Ignagni, the organization’s longserving CEO. Ignagni was leaving big shoes to fill. A few years earlier, she had worked behind the scenes to make sure the Affordable Care Act would open new doors of opportunity for health insurers, even as it would outlaw some of the business practices that had essentially guaranteed industry profits – like “rescinding” patients’ coverage when they got sick and refusing to sell policies to people with preexisting conditions.

What should have alarmed anyone working to improve and expand Medicare to cover all of us was the fact that Tavenner was leaving her role as President Obama’s administrator of the Centers for Medicare & Medicaid Service (CMS) to lead AHIP. Looking back, it’s now clear insurers had come to understand that their future profits would depend on their ability to lure millions of America’s seniors into their Medicare Advantage plans.

By hiring Tavenner, insurers were buying her intimate knowledge of the Medicare program and how CMS and Washington work. Just as important, they were buying the close relationships she had developed with politicians on both sides of the political divide in D.C.

Two years earlier, the Senate Finance Committee, then led by Sen. Max Baucus (D-Montana), had voted unanimously to approve Tavenner’s nomination to lead CMS, setting the stage for the full Senate’s 91-7 confirmation vote on May 13, 2013.

PSARA will host “Pulling Back the Curtain: Lies, Fraud, and Naked Profiteering in Medicare Privatization Schemes,” a webinar featuring author Wendell Potter, will be held at 5 p.m. on Monday, June 5. Get more information and register here.

The ease with which her nomination sailed through was in stark contrast to the treatment Dr. Don Berwick, President Obama’s first nominee to head CMS, received by lawmakers. Republicans balked at the nomination largely because Berwick had previously expressed admiration for the UK’s National Health Service. Unable to secure enough votes for confirmation, Obama appointed Berwick during a Senate recess in 2010. As a recess appointee, Berwick could only serve a year or so without Senate confirmation. Knowing confirmation was not in the cards, Berwick stepped down in late 2011, paving the way for Tavenner, who had served as a deputy administrator, to take the CMS reins.

Tavenner joined AHIP at a time when insurance company executives had become increasingly aware that the commercial health insurance business, which for decades had been the major book of business for almost all of the big insurers, had stagnated. This was especially true in the employer-sponsored health insurance space – the percentage of employers offering coverage to their workers had been declining for years. As recently as 1999, 69 percent of U.S. employers offered coverage to their workers. By 2021, only 59 percent did.

The handwriting was on the wall, for those who paid attention to the wall: insurers needed a new cash cow, and taxpayer-supported public programs – Medicare in particular – fit the bill.

With Ignagni’s departure, insurers needed to be sure they were represented in Washington by someone who knew their way around town, who was known, liked, and respected on Capitol Hill by staffers as well as members, and, especially, who understood the vast bureaucracy that is CMS.

Tavenner’s tenure as the CMS administrator was relatively short, but by the time she left for AHIP in early 2015 (and was succeeded by former UnitedHealth executive Andy Slavitt), insurers had a strategy largely in place to accelerate the privatization of Medicare, a long-time dream of many Republican lawmakers, and to get Democrats to unwittingly go along with it.

But it wasn’t just Tavenner who insurers tapped that year to help implement their Medicare privatization scheme. In April 2015, the Better Medicare Alliance, an outfit launched a few months earlier by insurers but that claimed to be a coalition, recruited former Democratic Rep. Allyson Schwartz of Pennsylvania as its first CEO.

Together, Tavenner and Schwartz got scores of Democrats on the Medicare Advantage bandwagon. They made certain that the federal government would overpay private insurers billions of dollars every year. And they persuaded members of Congress and CMS officials to look the other way as insurers used aggressive and misleading marketing tactics to attract seniors into their MA plans.

Insurers’ investments in Tavenner and Schwartz paid huge dividends. When they assumed their new industry-paid roles in 2015, 16.8 million people were enrolled in Medicare Advantage, or about 31 percent of all eligible Medicare beneficiaries. In the eight years since then, enrollment in Medicare Advantage plans has nearly doubled to 31.19 million. And earlier this month, we got the dreaded news that more than half of eligible beneficiaries are now enrolled in a private Medicare replacement plan.

I detailed all this history to make the point that it is not enough to advocate for single-payer, Medicare for All health care. What the movement desperately needs is a defense.

I’ve been writing and talking about the disadvantages of Medicare Advantage for years – like the piece I wrote in 2015 about how my own mother’s decision to return to traditional Medicare undoubtedly saved her life – but until the last year or so, Medicare Advantage didn’t seem to be of much concern to most advocacy groups.

As a consequence, dozens of Congressional Democrats were more than happy to sign an industry-generated letter expressing support for Medicare Advantage. Last year, more than half of House Democrats – including co-sponsors of the Medicare for All bill – signed the industry letter. That changed this year only after a few advocates, including Diane Archer of Just Cares, Alex Lawson of Social Security Works, and yours truly, began a concerted effort to persuade Congress members not only to refuse to sign the industry letter but to sign an alternative letter calling on the Biden administration and CMS to crack down on rampant fraud and abuse in the Medicare Advantage program.

That’s what defense looks like. So many Democrats have now told industry lobbyists they won’t sign their pro-MA letter that the industry has decided not to even circulate the letter this year. That, folks, is huge.

Let’s face it. While single payer advocates have been arguing for Medicare for All for decades, the industry has been putting far more points on the board than we have. Our lack of defense has enabled insurers to run up the score and get far too close to their goal of completely privatizing Medicare and, as I have written many times, making record profits along the way.

I’m not suggesting that advocates stop fighting for Medicare for All – an offense is essential, after all – but that equal energy be given to making it abundantly clear to everybody that Medicare Advantage is neither Medicare nor an advantage.

Wendell Potter is a retired insurance agency executive who has devoted his retirement to exposing industry fraud and abuse. He is the founder of the Center for Health and Democracy. This column originally appeared in PSARA’s Retiree Advocate newsletter and is posted here with the author’s permission.

PREVIOUSLY at The Stand:

Feb. 23 — PSARA aims to stop Medicare privatization (by Jeff Johnson)
April 5 — Traditional Medicare: The promise is in peril (by Lisa Dekker)
April 13 — Rise of Medicare Advantage: The creation of a myth (by Rick Timmons)
May 4 — Piercing the myth: How privatizers got their mitts on Medicare (by Kip Sullivan)