In an editorial published this past weekend, the New York Times attacked the federal government for continuing to subsidize private health plans that participate in Medicare. “If private health plans are supposedly so great at delivering high-quality care while holding down costs,” they ask, “why does the government have to keep subsidizing them so lavishly to participate in the Medicare program?”

According to the paper, approximately 20 percent of seniors participate in private “Medicare Advantage” plans. While these private plans have been praised for their lower costs and superior treatment, government subsides meant to help sustain them are putting a tremendous financial strain on the system.

“The authoritative Medicare Payment Advisory Commission estimates that the government pays private plans 12 percent more, on average, than the same services would cost in the traditional Medicare fee-for-service program,” the Times writes. “The private plans use some of this money to make themselves more attractive to beneficiaries by reducing premiums or adding benefits not covered by basic Medicare and siphon off the rest to add to profits and help cover the plans’ high administrative costs.”

The paper claims that these “handouts to insurance companies” will “erode the long-term solvency of Medicare.” What’s more, they say, those enrolled in the private plans are enjoying their lower premiums and added benefits at the expense of the majority of seniors, who are still enrolled in traditional Medicare.

The soaring Medicare costs are of great concern. Democrats had talked about ending the subsidies which would save the system about $54 billion over a five-year period and instead offering an expanded health-insurance program for low-income children, but as the Times states, “the insurance industry has mounted a furious lobbying campaign to head off any cuts.”

This entry was posted on Monday, April 23rd, 2007 at 4:02 pm and is filed under Legal News.