Senate Democrats

Reid Spokesman: Humana Earnings Report Shows Motive For Opposition To Reform

Washington, DCSpokesman for Senate Majority Leader Harry Reid, Jim Manley, released the following statement today in response to news that Humana had a 65 percent jump in profit last quarter mostly due to their involvement with the Medicare Advantage Program:

“It’s no wonder why Humana has been misleading seniors about health insurance reform — they saw their profits rise 65 percent last quarter and want to make sure the gravy train doesn’t end.  The insurance industry is making billions by gaming the Medicare Advantage system, at the expense of seniors’ traditional Medicare coverage, and taxpayers are footing the bill.

“The American people have had enough, but unfortunately Senate Republicans have sided with insurers like Humana and are working to protect insurance industry profits over Americans’ health care needs. When we pass health insurance reform this year, this will all come to an end. Our seniors deserve better and American taxpayers should not be asked to pad the profits of the insurance industry.”

AMERICAN TAXPAYERS SUBSIDIZE MEDICARE ADVANTAGE

GAO: In One Year, Private Medicare Advantage Plans Reaped Over $1 Billion in Extra Profits. In a recent report, the GAO found that private insurers that participate in Medicare Advantage spent less on beneficiaries than they projected in 2005. This lower spending created a windfall profit for these plans of over $1 billion.  These additional profits were on top of the $35 billion in revenues these plans generated in the same year.  Medicare Advantage plans are supposed to use the additional payments they receive from the government to provide their beneficiaries extra benefits; instead, too much of this money is going, not to seniors, but to big insurance company profits. [GAO, 6/24/08 <http://www.gao.gov/new.items/d08827r.pdf> ]

Medicare Advantage Costs More Than Traditional Medicare.  The Medicare Payment Advisory Commission (MedPAC) found that in 2009, payments to private Medicare Advantage plans are 14 percent higher than the cost of insuring a beneficiary in traditional Medicare. That’s an increase from 2008, when private insurers received a 13 percent overpayment.Payments to Medicare Advantage plans are projected to cost $110 billion this year. MedPAC estimates that Medicare pays $12 billion more to provide Medicare beneficiaries with covered health benefits than it would cost to cover them in traditional Medicare and notes, “The Congressional Budget Office estimates the additional 10-year cost at more than $150 billion.” [MedPAC, 3/09 <http://www.medpac.gov/documents/Mar09_EntireReport.pdf> ; MedPAC, 6/09 <http://www.medpac.gov/chapters/Jun09_Ch07.pdf> ]

HUMANA CLAIMED CHANGING MEDICARE ADVANTAGE WOULD RESULT IN LOST BENEFITS



Humana Claimed Medicare Advantage Cuts Would Cause Seniors to “Lose Many Important Benefits.” Insurance industry giant Humana sent political letters to seniors participating in their Medicare Advantage program, in clear violation of the law. Humana said that “(L)eading health reform proposals being considered in Washington, D.C., this summer” would result in “millions of seniors and disabled individuals could lose many of the important benefits and services that make Medicare Advantage health plans so valuable.” The Centers for Medicare and Medicaid Services (CMS) instructed Humana to “end immediately all such mailings” and wrote, “CMS is concerned that, among other things, this information is misleading and confusing to beneficiaries, represents information to beneficiaries as official communications about the Medicare Advantage program, and is potentially contrary to federal regulations…”  [Humana letter to seniors, accessed 10/6/09 <http://big.assets.huffingtonpost.com/humanamailer.pdf> ; CMS letter to Humana, 9/18/09 <http://finance.senate.gov/press/Bpress/2009press/prb092109a.pdf> ]

AARP: “Up to the Insurance Companies” to Manage Reduction in Overpayments, “Entirely Within Their Realm to…Deliver Medicare Benefits at the Same Level They Do Now.”  David Sloane, AARP senior vice president for government relations, recently stated that Medicare Advantage enrollees could easily see no change in benefits under competitive bidding.  In responding to subsidy reductions likely to occur under competitive bidding, Sloane said, “It’s up to the insurance companies to decide how they want to manage.  We believe it’s entirely within their realm to continue to deliver Medicare benefits at the same level they do now.” [Washington Post, 9/28/09 <http://www.washingtonpost.com/wp-dyn/content/article/2009/09/27/AR2009092703277.html?hpid=artslot> ]

REPUBLICANS CONTINUE TO DEFEND HUMANA


McConnell Takes to the Floor  – Twice – to Defend Insurance Companies.
 Using a favorite Republican tactic, health insurance giant Humana sent political letters directly to their elderly clients, suggesting that health insurance reform would deny them basic benefits covered by Medicare.  Humana was informed that frightening clients with politically driven lies violated their contract to participate in the Medicare Advantage program – a program that costs Medicare beneficiaries and American taxpayers significantly more than regular Medicare and, just last quarter, resulted in $30 to $32 billion dollars in revenues for Humana.  On the Senate floor, McConnell demanded that the “gag order” on Humana be lifted and Humana’s non-existent right to lie be fully reinstated. [Centers for Medicaid and Medicare Services, CMS, 11/17/08 <http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=3368&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date> ; MedPAC, 3/09 <http://www.medpac.gov/documents/Mar09_EntireReport.pdf> , 6/09 <http://www.medpac.gov/chapters/Jun09_Ch07.pdf> ; Humana Press Release, 8/3/09 <http://phx.corporate-ir.net/phoenix.zhtml?c=92913&p=irol-newsArticle&ID=1316072&highlight=> ; Senate Floor, 9/22/09]

  • Republicans Threaten to Hold Up HHS Nominees Until “Gag Order” is Lifted. In a letter to the Secretary of Health and Human Services, Republicans declared politics far more important than both people and policy, and demanded that Humana regain their right to send seniors propaganda or no HHS nominee would be confirmed again.  While Republicans frequently enjoy blocking administration nominees, this letter is their first admission of putting the needs of an insurance industry giant over policy. [The Hill, 9/24/09 <http://thehill.com/blogs/blog-briefing-room/news/60237-gop-to-block-hhs-confirmations-until-gag-order-lifted> ]

Kyl Introduced an Amendment to Protect Humana’s “Right to be Wrong.” During the Finance markup of health legislation, Senator Kyl introduced an amendment (Kyl D6, cosponsored by Senators Enzi, Roberts, Crapo, Bunning, Cornyn, Hatch and Ensign) to protect the insurance industry’s interests. Kyl argued that the insurance companies “have the right to be wrong” in expressing their opinions to seniors enrolled in their plans. [Congressional Quarterly transcript, 9/23/09 <http://www.cq.com/display.do?dockey=/cqonline/prod/data/docs/html/transcripts/congressional/111/congressionaltranscripts111-000003208485.html@committees&metapub=CQ-CONGTRANSCRIPTS&searchIndex=0&seqNum=19> ]

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