Rolling Back Medicare Advantage

Connecticut public employees have just won a major victory over Medicare Advantage, the brand name for private-insurer HMO products for seniors. In 2017, in order to save money, Connecticut shifted all state retirees, some 65,000 of them, to Medicare Advantage and denied them the freedom to stay on traditional public Medicare. But now, thanks to rank-and-file protest and organizing, that policy has just been reversed.

A number of insurance companies sponsor Medicare Advantage plans. They have been criticized for using a variety of strategies to maximize profits by stinting on care, including heavy-handed case management, limiting choice of providers, and target-marketing to relatively healthy seniors with gimmicks such as health clubs, thus fragmenting the risk pool.

Worse, lobbying by insurers has led to a formula in which traditional Medicare payers subsidize these private Medicare Advantage plans to the tune of $82 billion over ten years, giving them an artificial price advantage. The plans appear to be great deals—until you get seriously ill.

One Connecticut retiree who was switched to a Medicare Advantage plan, James Russell, a former professor of sociology at Eastern Connecticut State University, did become seriously ill. In 2021, he was diagnosed with a rare form of lung cancer. His preferred hospital, MD Anderson in Texas, was in the network of United Healthcare, the operator of Russell’s Medicare Advantage plan.

After the successful surgery, MD Anderson referred him to a hospital in Portland, Oregon, where Russell now lives, for follow-up chemotherapy. But the Portland hospital was not in the United network, so Russell had pay out of pocket to commute to Texas for his chemo.

Russell was fortunate compared to Gary Bent, another Connecticut state retiree, who in 2022 was denied coverage by his Medicare Advantage plan for intensive rehabilitation recommended by his doctors after a brain surgery left him with severe mobility and cognitive impairments. Bent subsequently died.

Russell got in touch with Bent’s widow, Gloria, and the two founded Connecticut State Employees for Medicare Choice. As Russell told me, the group was unusual because it was entirely rank-and-file. “We were just agitationists, trying to get the unions and the state to do the right thing,” he said.

The state’s public employee union leaders had initially supported the shift to Medicare Advantage. They tend to be political allies of Gov. Ned Lamont, a progressive, who faced budget crunches. The shift to Medicare Advantage, effective in 2018, saved the state nearly $1.7 billion over the last five fiscal years, according to estimates from State Comptroller Sean Scanlon. That presumably relieved stress on other outlays dear to public employees.

Gradually, faced with a rebellion of rank-and-file retirees, some union leaders came around. The deal that the retirees made with the state will involve some cost-sharing. “Our strategy was to meet the state halfway,” Russell said.

Final numbers are still being worked out. But the deal will allow any Connecticut retiree who wants traditional Medicare to get it.

In the context of steady market share gains by Medicare Advantage, which now has over half of all people eligible for Medicare, this rare rollback is a major victory. Russell, Gloria Bent, and their group are now in touch with others around the country who want to resist and reverse the insurance industry takeover of America’s most important island of single-payer public health insurance.