Medicare HMO Costs

How strange it is that all the financial experts who are concerned with “saving Medicare” ignore the monthly premium paid by Medicare’s trust fund to for-profit HMOs for seniors who have turned over their Medicare cards. While Medicare administration costs take 4 cents from each dollar paid by the trust fund, the for-profit HMOs take 30 cents. The money paid from Medicare directly to providers is paid only when service is provided. The for-profit HMOs, however, collect their premium each month.

The difference in the amount of each dollar given to health care comes from the difference in the budgets of Medicare and the HMOs. While Medicare uses 4% for administration, HMOs need money for administration, advertising, CEO salaries and stockholders’ dividends.

The solution, while simple, will be hard to implement because the HMOs will get scads of money from their owners, insurance companies, to buy votes in the negative. Congress must revise the plan to privatize with “managed care” by paying premiums only when Medicare cards are put in the hands of nonprofit managed-care organizations that can show that at least 95% of Medicare dollars they receive go to patient care.

MORRIS JONES, Vice President

Congress of California Seniors

Sacramento