States Must Be Given Authority To Address Deceptive Medicare Advantage Marketing, New York Times Editorial States

The Bush administration "is to be commended for taking aggressive steps over the past year" and proposing new regulations to "curb the deceptive, hard-sell tactics" used by insurers to market private Medicare Advantage plans, a New York Times editorial states. However, the "new regulations could still fall short of what is needed, unless the states are also given greater powers to enforce them," according to the Times.

The editorial states that the administration has been "unwilling to eliminate the root cause of the problem: the high subsidies that prop up" MA plans and "make them so attractive to high-pressure marketers." The Times notes that MA plans on average are paid 13% more than traditional Medicare, and the "subsidies are even more egregious -- averaging 17% above cost -- for the so-called private fee-for-service" MA plans. According to the Times, the higher fees "create a big incentive for insurers to maximize sales through aggressive, sometimes unscrupulous, marketing."

The Times writes, "The problem is that the states -- which have many more investigators on the ground to police the industry -- have very little authority" to regulate private MA plan marketing because federal law prevents states from holding health plans responsible for the actions of their individual agents. The editorial states, "Congress will need to assess whether the new rules will be sufficient to curb abuses and should grant the states the power to enforce rules and respond to consumer complaints," adding, "Congress also must eliminate the subsidies granted to private Medicare Advantage plans" (New York Times, 5/21).