Biased Reporting on Medicare Advantage Plans by the Chicago Tribune

The Chicago Tribune ran an article on 4/22/14 about the resignation of a top Medicare bureaucrat, Dr. Jonathan Blum.  According to reporter David Morgan and his editor Andrew Hay, Dr. Blum was responsible for a lot of reforms including “efforts to move the $635 billion healthcare program for the elderly and disabled away from costly fee-for-service medicine.” (my emphasis added)

I posted the following comment to the article on the Chicago Tribune’s Facebook page:

 Your biased reporting and editing calls fee-for-service practice “costly.” If that is so, then Medicare Advantage (Medicare HMO) care should be called “even more costly,” as numerous studies have shown it to cost from 11-22% more than comparable Medicare fee-for-service care. And that is why the Obama Administration tried to cut payments to Medicare HMO plans. But that didn’t work, no doubt due to heavy lobbying efforts.

It’s amazing that the reporter and his editor published such a biased comment, but it shows the true feelings of the media.  As I have said in these posts before, the national media believe with all their hearts that fee-for-service (“FFS”) medicine is the root of all evil in medicine. If only they could do away with FFS medicine, then they wouldn’t get any bills and they could afford a better lifestyle on their meager reporter’s salaries.

In writing such nonsense, reporters and editors not only show their biases, they also show their ignorance.

There is a mountain of published studies showing that Medicare HMOs – whatever they have been called for the last 30 years – have not saved taxpayers any money. In fact, they have always cost taxpayers more money than FFS medicine. Don’t take my word for it. Read all the studies – - starting with a Mathematica study in the 1990s. Here’s the link to the NY Times article from December 27, 1993:

That article says the HMOs cost 5.7% more than FFS medicine. But more modern studies of the plans that were renamed “Advantage” showed them to be from 11-22% more costly.

And in another display of biased reporting, they are almost always referred to a “private plans.” The media know that people dislike HMOs. So they call these plans “private plans” so as not to engender dislike for what these arrangements really are: HMOs.

Taxpayer dollars have been paid to Medicare HMOs run by the likes of Humana and UnitedHealth Group (and prior to that Secure Horizons) to enrich the HMO executives and lobbyists who sell this stuff. Fortunes have been made gulling the public and Congress who has been only too happy to accept the re-cycled taxpayer dollars — now called political contributions — to stay in office and further screw the Medicare beneficiaries enrolled in these plans.

The enrollees, particularly in places like San Antonio, where there are a lot of poor people, think they are getting something for nothing. The politicians make them think they are getting “free” goodies that come from rich folks and particularly rich doctors who can no longer give them a bill.

But it has all been a scam.

Virtually every study done on the cost savings of Medicare HMOs show they are more costly than FFS Medicare.  But you can’t make them go away. The Wall Street Journal frequently editorializes that Medicare HMOs give patients more choices? Choices of what?  Gym memberships?  Certainly not doctors and national treatment centers. The narrow networks everybody is deriding as a bad part of Obamacare plans got their start with the narrow networks of Medicare HMOs.

Here’s my financial analysis pearl of the day: If you want to see if funding is going to be cut to Medicare Advantage HMOs, just look at the charts of the stocks of Humana ( symbol HUM) and UnitedHealth Group ( symbol UNH). As long as those stocks keep going up, you’ll know that funding to them is robust and the defunding called for by the ACA is not going to happen. You can at both of these stocks and see that their stock prices have been going up steadily since the passage of the ACA.

I would bet that Dr. Blum goes to work for a company that benefits from Medicare Advantage stock prices or the policies that promote Medicare managed care.  He certainly did a lot to enhance the value of the companies that sell those plans.




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