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Biden’s Little-Publicized Medicare Privatization Scheme Is Starting To Raise Alarm Bells

The Biden administration hasn’t stopped trying to privatize Medicare. But a pushback is gaining steam.

Medicare For All protest January 27, 2017. Location unknown,Photo: UFCW 770, Flickr // Citizen Truth

There’s good news and bad news about the Joe Biden administration’s ongoing pursuit of the Direct Contracting Entity (DCE) program, also known as ACO REACH. The bad news is that the idea remains a threat to the health of seniors and an alarming Trojan horse that could lead to the privatization of Medicare. The good news is that resistance to it is beginning to gain some traction.

Late last month, the Seattle City Council unanimously passed a resolution “to stop privatizing the United States Medicare system.” The resolution, which warns that the introduction of the DCE pilot program “opened the door to the complete privatization of Medicare” and urges equity issues be resolved “within the traditional Medicare system,” was introduced by councilmember Teresa Mosqueda, who is far from being a radical. (While a progressive, Mosqueda has repeatedly butted heads with socialist councilmember Kshama Sawant, watering down the latter’s proposed “Amazon tax” — a sign of how potently unpopular the Medicare contracting program is.)

Three days earlier, the Arizona Medical Association (ArMA), the state’s four-thousand-member-strong American Medical Association (AMA) chapter, passed a similar resolution in its House of Delegates, calling for the program to be “terminated” and warning that seniors could find themselves thrown into a moneymaking system that “limits care to provide maximum profit.” The ArMA, which has previously voted down a resolution backing a single-payer health care system, also based its opposition on concern for doctors, pointing out they could end up enrolled in the program without choosing to be.

It’s a good sign for DCE’s opponents, for whom half the battle has involved simply alerting people to its existence. Though the controversial program began under Donald Trump, the Biden administration has quietly continued it, with a late groundswell of opposition earlier this year forcing the Centers for Medicare and Medicaid Services (CMS) to rebrand it as “ACO REACH” — but fundamentally changing nothing about the actual program or what led to such an outcry in the first place. All the while, seniors continue to get mail informing them their doctor is now part of the pilot program, but not to worry, because their Medicare benefits haven’t changed.

But that’s not true. ACO REACH’s closest comparison is the Medicare Advantage program that carved out a role for private insurers in the public health insurance program. But while Medicare Advantage enrollees are given the option to leave traditional Medicare, ACO REACH specifically targets seniors who have declined to do so.

Then, whether they like it or not, a profit-seeking third party like a health insurer or private equity–backed firm is allowed to step in and get paid by Medicare to manage the care they get, taking for themselves as profit whatever they don’t spend on the patient. Critics have warned that beyond taking the unthinkable step of partially privatizing all of Medicare — CMS has been explicit that it wants to shift everyone now on traditional Medicare into a relationship with an “accountable care organization,” or ACO, by 2030 — the idea is ripe for abuse.

One only needs to look at the track record of Medicare Advantage to see what this portends. It was barely two weeks ago that the inspector general of the Department of Health and Human Services issued a scathing report on Medicare Advantage plans, charging there were “widespread and persistent problems related to inappropriate denials of services and payment,” with the providers involved denying services that would have been approved under traditional Medicare in 13 percent of cases and denying 18 percent of reimbursements that met both Medicare and Medicare Advantage rules.

So ACO REACH’s continued existence is a serious looming threat to Medicare as we know it and to seniors themselves. And in a sadly typical trend, it’s a Democratic president who’s trying to get away with gutting Medicare, something a Republican could never hope to get away with.

But the resolutions passed by the Seattle City Council and ArMA suggest opposition to the program is building not just at the federal level but at the local one too. It’s a good start — but it’s going to take a lot more to defeat it once and for all.

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[Branko Marcetic is a Jacobin staff writer and the author of Yesterday's Man: The Case Against Joe Biden. He lives in Chicago, Illinois.]