Taxpayers spend 22% more per patient to support Medicare Advantage

Original Article ↗ Hacker News Discussion ↗

Taxpayers are paying an estimated 22% more per patient for Medicare Advantage, the privately run alternative to traditional Medicare, largely due to payment rules that overcompensate insurers for administrative costs, profits, and aggressive diagnostic coding. Commenters argue this exemplifies how public–private partnerships in U.S. health care funnel public money to corporations while failing to deliver better outcomes, tying it to broader issues like employer-based insurance, the Affordable Care Act, and international models such as Germany’s and the U.K.’s. Many see expanded privatization—backed by current political agendas—as likely to deepen cost and access problems unless the U.S. moves toward some form of universal or more tightly regulated public coverage.

Medicare Advantage and Overpayment

  • Several commenters frame Medicare Advantage (MA) as a mechanism to siphon public Medicare funds into private insurers’ profits.
  • A cited MedPAC report: MA benchmarks ≈132% of what traditional fee‑for‑service (FFS) would spend on the same patients; plan bids ≈101% of FFS, with ~14% of bids going to admin and profit.
  • Conclusion from that report: MA’s lower medical costs vs FFS are offset by administrative costs and profit; most “extra benefits” are effectively funded by taxpayers, not true efficiency. Estimated overpayment ≈22 percentage points, or ~$83B in 2024.

Public–Private Partnerships and Corporate Profiteering

  • One camp argues most federal public‑private partnerships are “elaborate graft” enriching the wealthy, with Medicare Advantage as a prime example.
  • Others counter that not all PPPs are toxic, citing successful education/DoL programs, but agree healthcare PPPs are highly vulnerable to abuse and fraud.

US Healthcare System Problems

  • Strong sentiment that US healthcare is unusually expensive with worse outcomes (life expectancy, maternal/infant mortality, untreated conditions) compared to other rich countries.
  • Debate on causes: some blame regulation; others blame inability of public payers (Medicare/Medicaid) to negotiate prices widely; others emphasize limited providers and expensive technology.
  • Disagreement over how inaccessible US care is: some say “most Americans don’t have access”; others note EMTALA guarantees emergency care but concede major access gaps, especially in rural areas and non‑emergency care.

Comparisons to Foreign Models

  • Mentioned models: UK/Italy (nationalized), Germany (mandatory insurance with highly regulated public system plus optional private), and universal single‑payer more broadly.
  • Some prefer Germany’s regulated private model; others argue US political culture can’t be trusted with such a hybrid and should move to more fully public systems.
  • One commenter notes UK‑style rationing can feel utilitarian/nihilistic; others accept wait times as a worthwhile tradeoff for lower national costs.

Reform Proposals and Extremes

  • Moderated proposals:
    • Allow broader Medicare/Medicaid negotiation of prices.
    • Decouple insurance from employment, possibly via public funding and universal basic coverage.
    • Tighten profit caps for insurers (noting ACA’s 80% medical loss ratio already pushed some efficiencies).
  • More radical proposals:
    • End privatization of healthcare, nationalize providers/facilities, forgive medical student debt, and tightly allocate care using quality‑of‑life‑year metrics.
    • Critics argue these “all‑in” plans are impractical, under‑specified, and ignore complex edge cases (cosmetic care, cruise‑ship doctors, auxiliary staff, non‑mainstream therapies).

Politics, Elections, and Project 2025

  • Some link MA expansion to conservative policy blueprints (e.g., Project 2025) and warn of a push to make MA the default, causing a “death spiral” for traditional Medicare.
  • Others stress that election results do not demonstrate a clear public mandate for healthcare privatization; many voters strongly support Medicare, Medicaid, ACA.

Public Sentiment, Attention, and Escalation

  • Several commenters are pessimistic about sustained political attention, citing short media cycles and entrenched capital interests.
  • Others argue anger is already intense, referencing public reaction to a healthcare CEO’s assassination and growing hostility toward healthcare corporate leaders.
  • Disagreement remains over whether such events will translate into organized reform or remain isolated expressions of rage.

ACA and Employer‑Tied Insurance

  • ACA is praised for giving coverage options to people outside large employers and for income‑based subsidies and profit caps.
  • Some propose:
    • Let everyone choose ACA plans even if they have employer coverage, with employers contributing what they would have paid to group plans.
    • Ultimately break the employer–insurance link while maintaining or expanding ACA‑style public marketplaces.