- The Washington Times - Monday, December 28, 2009

MIAMI | Insurers constantly caution seniors that their Medicare Advantage perks such as hearing aids, dental payments and even gym memberships will fizzle if Democrats get their way and cut government subsidies for them.

But tens of billions of Medicare dollars funneled through insurers also pay for extras that never reach beneficiaries: multimillion-dollar salaries; executive retreats in Hawaii, Scotland and Cancun; and massive expenditures on marketing to lure more customers to the privately administered Advantage plans that serve as an alternative to government-provided Medicare.

The government-subsidized benefits that seniors on Advantage plans receive - often at premiums lower than Medicare premiums - are real and are legitimately in danger in some cases if Democrats succeed in their health care overhaul.

Medicare Advantage subsidies are on the chopping block to pay for the overhaul. Though there are marked differences between House and Senate versions, both bills would lower payments to private Medicare Advantage plans, which on average cost the government 14 percent more than traditional Medicare.

The harshest critics of the Advantage program say patients are exchanging hassle-free coverage for a plan with cheap perks that may ultimately deny them necessary treatment.

“They’re giving special benefits that are valuable,” said Mary Johnson, policy analyst for the Senior Citizens League, a nonpartisan, 1.2-million-member group. “But what people don’t understand are the trade-offs.”

Though AARP - which lends its name to a Medicare Advantage plan - and other senior advocacy groups support the Advantage cuts, it is likely that at least some seniors will see their premiums rise, benefits cut or plans close.

Despite the belief that Advantage plans offer broad savings for seniors, a Government Accountability Office report last year found wide differences depending on the plan, including home health service costs that could be up to 84 percent more than traditional Medicare.

A half-million Advantage enrollees were in plans with no co-pay for hospital stays. But an almost equal number were in plans with high hospital co-pays and no limits on out-of-pocket inpatient expenses, potentially costing patients thousands more.

The disparity was greatest for some of the sickest seniors, those who return to the hospital within 60 days of discharge, the GAO found. Under traditional Medicare, those patients would not pay any deductible. Under many Advantage plans, the deductibles can be steep.

Many of the perks offered by Advantage plans are relatively cheap. Vision coverage cost insurers $3.37 a person each month, on average, according to 2007 filings with the government. Hearing coverage cost less than a dollar.

Insurers participating in the Advantage program responded to inquiries by Senate Democrats that led to a report this month providing some fuel in their fight against the subsidies. The companies reported, on average, spending more than 15 percent of premium revenues on profits, marketing and corporate expenses, nearly 10 times the rate of traditional Medicare.

Meanwhile, Advantage companies were paying for multimillion-dollar corporate retreats in exotic locales and hundreds of their executives were being paid more than $500,000 annually. Government reports have shown Medicare Advantage providers continually outpace profit projections. The congressional review released this month showed 34 Advantage companies devoted $27 billion in government subsidies from 2005 through 2008 to profits, marketing cost and other corporate expenses.

Still, Advantage enrollment has burgeoned, doubling to nearly 11 million people in the six years since Congress approved lucrative subsidies to insurers that allowed them to expand their reach. About one in four seniors are now on private plans.

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