Chart of the Day: Cherry Picking in the Medicare Market

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Supporters of plans to voucherize Medicare often point to Medicare Advantage as a model. MA providers bid for Medicare contracts and are typically paid a set amount for each beneficiary they sign up. In theory, because MA providers compete against each other (and against traditional Medicare), they have an incentive to provide services more efficiently, offering seniors greater benefits and better care per dollar spent.

That’s debatable, but Austin Frakt points us to a new study that makes it an even more dubious claim. The chart on the right is the key evidence, and it requires a bit of explanation. For each year since 1999, it shows the average cost of patients who switch in and out of Medicare Advantage. In 1999, for example, Medicare patients who switched in to MA plans had average costs (in the previous six months) that were 80% of the average. Patients who switched out of MA plans had average costs (in the subsequent six months) that were 40% higher than average.

This same dynamic has held year after year. What it means is that, somehow, MA plans find ways to attract patients with low costs and dump patients with high costs. In other words, to the extent they provide better services for lower costs, they do it by cherry picking the healthiest patients and leaving the sickest patients for traditional Medicare.

If we switch to a fully voucherized Medicare system, as Mitt Romney and Paul Ryan would like, this would almost certainly become worse. Private plans, it turns out, aren’t really any more efficient than traditional Medicare, and would probably end up competing on the basis of ever more brutal ways of making their plans attractive to the healthy and unbearable to the sick. This does not strike me as a very appealing model.

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

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