Curbing Medicare Overpayments To Private Insurers Could Benefit Minorities And Help Expand Children’s Health Coverage

Publication Date: May 2007

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Edwin Park; Robert Greenstein

Research Area: Health

Keywords: Economic projections; Federal budget; Health insurance; Health care costs

Type: Report

Abstract:

The budget resolutions approved by both the House and the Senate include up to $50 billion for expanded Medicaid and SCHIP coverage for millions of uninsured low-income children, provided these costs are offset. A proposal under consideration in Congress would help finance this expansion of children’s coverage by reducing the substantial overpayments to private health insurance companies that participate in Medicare. Not surprisingly, the insurance companies are waging an aggressive campaign to defend their overpayments, arguing that low-income and minority beneficiaries rely disproportionately on the private health plans in Medicare and that the overpayments are used to provide extra benefits not available through regular Medicare. But as explained below, the industry campaign, like most such lobbying efforts, does not provide a balanced assessment of the pros and cons of curbing the overpayments, either from taxpayers’ perspective or that of Medicare beneficiaries.