Reform's Medicare Advantage Plans Prove Better Value For Seniors, People With Disabilities

WASHINGTON, D.C. - Congressman Charles B. Rangel [D-NY] announced today a release of a report by the Government Accountability Office (GAO) that raises questions about the high administrative costs of many private insurance companies that offer coverage through Medicare Advantage (MA) plans. 

 "The Medicare administrative cost is less than 3%. This report shows that private Medicare plans have an administrative cost that is in the double digits," said Congressman Rangel. We cannot afford this kind of waste in Medicare and beneficiaries and taxpayers deserve a better deal."

The report found that one out of every three MA enrollees is in a plan that spends less than 85 percent of their projected Medicare payment on medical expenses, which means more than 15 percent of their projected Medicare payment goes to overhead and profit.

Additionally, the more market concentration there was in a given area, the higher the insurance companies' bids and subsequent costs to Medicare and taxpayers were.

Health reform contains new tools that will ensure that more of the insurance companies' payments go toward beneficiaries' health care, and less toward profits and bureaucracy. 

"Today’s report confirms why health reform is so vital to seniors and people with disabilities. Beginning in 2014 health insurance companies will be required to offer decent value for in Medicare beneficiaries and taxpayers.” added Rangel.

This report raises additional questions about the plan offered by House Budget Chairman Paul Ryan (R-WI), which would dismantle Medicare for those under 55 and turn the entire marketplace over to private insurance companies.

Click here for the full GAO report.