As we have seen in previous blogs the significant amount of savings that Medicare Advantage offers, why is our government going to shrink the plan or eliminate it? The Affordable Care Act is supposed to take $715 billion dollars away from Medicare to fund the ACA. That’s what the bill says. The way to do that is to divert the money earmarked for Medicare Advantage to the ACA. That also means that additional money will be diverted from Medicare in the forms of Doctor, hospital and other reimbursements to the ACA.
The other reason is also very simple. CMS believes they are more efficient than private insurance and have actually published documented proof that CMS is more efficient than private insurance. What CMS failed to consider is how they arrived at that conclusion. CMS uses government accounting principles to determine cost. They do not use AICPA auditing procedures or costing. If they did it would conclusively prove that private insurance is more efficient and effective than CMS.
AICPA auditing standards capture all costs applied to the job and that determines the effectiveness of the project. Government accounting procedures diverts certain costs to other projects. An example is the cost of a building that houses CMS claims processing personnel. The cost of the building is applied to the federal government building fund, not to CMS directly. Thus, those costs don’t count towards the actual project. (I guess the old adage that figures lie and liars figure is alive and well in the federal government.) Nor do other significant costs. Thus the government can claim they are more efficient and cost effective over private insurance. Also, the federal government does not count the $60 billion per year in fraud that they admit exists. I suspect it is higher than the $60 billion and could actually be more than double that amount.
Consider the savings per month on the cost of Medicare Advantage of $35,600,000 per month or $432,600,000 and add the $60,000,000,000 in fraud savings and you have some significant money to help with the federal deficit.