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Op-Ed: Direct Contracting poses a threat to Medicare for all

This piece originally appeared in the February 18, 2022 edition of the Woodstock Villager, in the Letters to the Editor section. Find a PDF of the full issue here.

To the Editor: I regularly attend Medicare for All CT virtual meetings, and recently learned of a situation that poses quite a threat to our endeavor to get Connecticut to adopt a Single Payer health care sys - tem. Even if the current system was to remain in place, this new development is not good for the health of folks on Medicare.

Dr. Susan Rogers, president of Physicians for a National Health Program, testified on Feb. 2 before the Senate Finance Committee (subcommittee on Fiscal Responsibility and Economic Growth) and gave them some sobering facts. Dr. Rogers is a general internist from Chicago, and as president leads more than 24,000 doctors who advocate for a single-payer Medicare for All health care system. She said the current threat to Medicare is very real.

Quoting from her testimony, she said, “What we now call Traditional Medicare was created in 1965 to provide a safety net for seniors and those with disabilities, many of whom lived in poverty....(it) is at risk of being sold off to the highest bidder, with no input from seniors, health providers, or even members of Congress. This privatization of Medicare began when President Nixon enacted the HMO Act in 1973, but exploded in 2003 with the creation of Medicare Advantage, the version of Medicare run by commercial insurers. The common thread among these privatization experiments is the theory that inserting a middleman between Medicare and health providers — and between providers and our patients — will somehow save money or improve care. It has failed at both. In fact, researchers estimate that Medicare overpaid Medicare Advantage insurers by more than $106 billion from 2010 through 2019. That’s money that could have been spent on seniors’ care.”

Now, after “decades of failure,” Dr Rogers said, “the Center for Medicare and Medicaid Services launched a new model of Medicare privatization, called Direct Contracting. Instead of paying providers directly, Medicare pays third-party middlemen called Direct Contracting Entities, or DCEs, a set amount to “manage” seniors’ health. DCEs are then allowed to pock- et what they don’t pay for in health services, a dangerous financial incentive to restrict and ration seniors’ care. If you haven’t yet heard of Direct Contracting, that’s by design. It was created in 2019 by the CMS Innovation Center, which is authorized to conduct payment experiments and scale them up to all of Medicare without input from Congress.”

One particularly upsetting aspect of this “Direct Contracting,” according to Rogers is that “Virtually any type of company can apply to be a DCE, including commercial insurers, venture capital investors, and even dialysis centers. Seniors in Traditional Medicare are automatically assigned to a DCE, without their full knowledge or understanding, if their primary care provider is affiliated with a DCE.”

Rogers said, “This new model assumes that DCE middlemen will somehow lower costs and improve coordination of care. But former CMS and CMMI officials estimate that DCEs may spend as little as 60 percent of their Medicare payments on patient care, keeping the other 40 percent as profit and overhead. How is this an improvement on Traditional Medicare, which spends 98 percent of its funds on care? As for coordination, primary care physicians like me understand that it is our responsibility to make care decisions in partnership with our patients, not answer to third-party investors. Medicare was designed as a lifeline for America’s seniors and those with disabilities, not a playground for Wall Street investors. If middlemen in health care actually saved money and improved outcomes, the U.S. wouldn’t have the most expensive and ineffective health care system in the world. We don’t need to put seniors through another failed experiment to prove this,” she concluded.

I hope all reading this letter research this subject, find out about the Direct Contracting Entities and join up with Medicare for All CT. What we need is a Single Payer system, not more interference from third parties who only aim to make money off of health care. Please write to your Congressmen on this issue today!


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