WHEREAS:
Congress created Medicare in 1965 because more than half of all Americans over 65 had no health insurance and private insurers said they could not provide affordable coverage to seniors and the disabled and still make a good profit; and 

WHEREAS:
Medicare has kept its administrative costs below 3 percent a year for over 40 years because it is a federal program that spreads risk over 44 million beneficiaries and requires no marketing outlays or profit margins, while private insurers have administrative costs that average 14 percent or more; and

WHEREAS:
The original Medicare program offers a standardized package of hospital and medical benefits that is guaranteed by the U.S. government and pays providers on a fee-for-service basis; and

WHEREAS:
In the 1980s, Medicare also started covering beneficiaries in private health maintenance organizations (HMOs) because Congress thought managed care might save money for Medicare; and

WHEREAS:
Congress expanded the program in 1997 to include additional types of managed care such as  preferred provider organizations (PPOs) as well as private fee-for-service (PFFS) plans; and

WHEREAS:
All these private plans are designed to replace the entire package of Medicare benefits (Parts A and B), not merely supplement Medicare in the way that Medigap policies and most employer-paid plans do; and

WHEREAS:
The cost efficiencies of managed care plans were generally negated by the costly medical needs of older people, causing many plans to cite insufficient profits and drop out of the Medicare market; and

WHEREAS:
Between 1997 and 2003, private plans never signed up more than 15 percent of Medicare beneficiaries because the majority preferred the traditional Medicare program that allows them to go to virtually any doctor or hospital; and

WHEREAS:
To encourage private plans to remain in the Medicare market and move Medicare toward privatization, the Bush administration and its congressional allies enacted the Medicare Modernization Act (MMA) in 2003; and

WHEREAS:
The MMA included a new drug benefit provided only by private insurance companies, rather than traditional Medicare, as well as a demonstration project scheduled to begin in six cities in 2010 that would substitute a voucher for purchasing insurance in the health care marketplace; and

WHEREAS:
The MMA renamed the private plans program Medicare Advantage (MA), formerly Medicare+Choice, and significantly raised reimbursement rates so that private plans now get subsidies that average 13 percent more per person than traditional Medicare, with some plans receiving as much as 50 percent more; and

WHEREAS:
These big subsidies to private plans are paid with taxpayer dollars, as well as with higher Part B premiums for all Medicare beneficiaries, and have resulted in record profits for insurers like Humana and UnitedHealthcare; and

WHEREAS:
High pressure sales tactics and unethical marketing practices  have increased participation in private plans from less than 15 percent to more than 20 percent of Medicare beneficiaries, with most of the growth in PFFS plans; and

WHEREAS:
PFFS plans have many drawbacks compared with traditional Medicare, such as higher cost-sharing for medical, hospital and nursing home care; a reliance on the insurer’s appeals process rather than Medicare’s; a greater tendency to deny claims and fewer doctors and hospitals who accept plan coverage; and

WHEREAS:
This growth comes at the expense of the traditional Medicare program because the high cost of MA subsidies is hastening the Medicare trust funds’ projected shortfall and preventing benefit improvements for the majority of Medicare participants; and

WHEREAS:
Insurers have recently started marketing their MA plans to large employers, promising to share their federal subsidies if employers take their retirees out of Medicare and the employer’s supplemental plan and replace them with an MA plan; and

WHEREAS:
Public employers are particularly vulnerable to the MA sales pitch because of the new Governmental Accounting Standards Board rule that requires them to project and publish their costs for retiree health coverage into the future--a powerful incentive to cut benefits and replace coverage with cheaper health plans; and

WHEREAS:
The states of West Virginia and Pennsylvania, the Ohio School Employee Retirement System, the City of Houston and the Michigan Teachers Retirement System are just some of the public plan sponsors that have already replaced Medicare and their own supplemental coverage with MA; and

WHEREAS:
The vendors of such plans continue to attempt to lure AFSCME affiliates to join MA plans.

THEREFORE BE IT RESOLVED:
That AFSCME oppose the privatization of Medicare, including the expansion of unreliable and costly private Medicare Advantage plans and the voucher demonstration project scheduled to go into effect in 2010; and

BE IT FURTHER RESOLVED:
That AFSCME support congressional legislation to rollback Medicare’s subsidies to private plans, create a level playing field with traditional Medicare, and cancel the voucher demonstration; and

BE IT FINALLY RESOLVED:
That AFSCME actively oppose efforts by public jurisdictions to replace Medicare and employer-sponsored retiree health coverage with unreliable and unsustainable Medicare Advantage plans, thereby protecting the future of both Medicare and employer-sponsored retiree health care.
 
 
SUBMITTED BY: Randy Perreira, Executive Director and Delegate
Richard Onishi, President and Delegate
HGEA/AFSCME Local 152
Hawaii