Will Elon Musk’s efficiency group have the guts to take on health insurers?

Opinion editor’s note: Strib Voices publishes a mix of commentary online and in print each day. To contribute, click here.

•••

The cost of the sleep study my doctor ordered this month put me over my health insurance policy’s annual deductible. But that pronouncement, relayed by a cheerful staffer checking my records, triggered a different health problem: a temporary blood pressure spike induced by exasperation.

“A lot of good that’s going to do me,” I remember thinking while rolling my eyes. After months of paying for non-preventive care out of pocket, I’d hit the dollar amount at which insurance starts paying for the bulk of my care. The problem is that there are only two weeks left of 2024. On Jan. 1, consumers like me start over again meeting the yearly deductible.

The process reminds me of why I don’t enjoy casinos, where it always feels like the “house” has the advantage over bettors. But unlike those gleaming gaming palaces, health consumers don’t have a choice in whether they want to play. If you need health coverage, and everyone does, this is our system. And it’s unlikely to change in far-reaching fashion anytime soon. Even health-reform-minded Democratic presidential administrations have delivered incremental progress at best.

That feeling of powerlessness can stay bottled up only so long. Unfortunately, this shared frustration boiled over in alarming fashion earlier this month after the murder of UnitedHealthcare CEO Brian Thompson, with callous social media comments regrettably eclipsing sympathy for the victim’s family. Congress, the incoming Trump administration and the new “government efficiency” advisory group led by Elon Musk ought to take note of this coldhearted reaction and see it as a mandate to take meaningful action.

While sweeping health care reforms ― like moving to the “single-payer” systems that other countries use ― aren’t realistic right now, there are still sensible improvements that would deliver taxpayer savings and ensure that health care dollars go toward patient care rather than insurers’ bottom lines. Taking steps like this versus doing nothing would help assuage the anger erupting after Thompson’s death. For the example I’ll highlight here shortly, there’s even a detailed plan from the Medicare Payment Advisory Commission (MedPAC), an independent advisory group to Congress. Medicare, of course, is the federal program covering care mainly for Americans 65 and older.

To be absolutely clear, ire over a health system that many feel ill-served by does not justify Thompson’s execution, or the revolting embrace by some of Luigi Mangione, the 26-year-old charged with Thompson’s murder, as a hero. In a nation of laws, worthwhile change comes through the democratic process, not at gunpoint. That’s what makes America great, even if the pace of reform is slower than ideal.

So let me explain how Musk and his efficiency teammate Vivek Ramaswamy enter this chat. Let’s consider an obvious though politically daunting target for them.

It involves Medicare, which has 67.8 million enrollees and cost $839 billion in 2023. The program represents 14 percent of total federal spending, reports the Peter G. Peterson Foundation. Its sheer size likely makes it an attractive target for Musk and other cost-cutters.

The lazy way to target spending would be to reduce benefits or raise the eligibility age. But drilling down into how the program works could also deliver serious savings without diminishing seniors’ care, which should be the priority. This wouldn’t be easy, but a March 2024 MedPAC report offers a road map, specifically Chapter 12.

It highlights cost concerns about Medicare Advantage (MA), which gives enrollees “the option of receiving benefits from private plans” ― such as UnitedHealthcare or Humana ― rather than the traditional Medicare program. For those choosing MA, the federal government pays insurers a fixed monthly sum for each enrollee’s care versus the traditional practice of paying per service.

As MedPAC notes, “plans should have greater incentives ... to deliver more efficient care.” In reality, “Medicare spends an estimated 22 percent more for MA enrollees than it would spend” for traditional Medicare enrollees. That difference “translates into a projected $83 billion in 2024.”

Adding to the concerns: The percentage of Medicare enrollees in an MA program has risen rapidly, from 19% in 2007 to 54% in 2024.

Among the reasons for the higher costs: extra benefits that MA plans offer, such as vision care or gym memberships. But MedPAC also cites “coding intensity,” a practice that essentially amounts to reporting more health conditions or risk for enrollees, which in turn can boost the fixed sum paid for their care. In addition, MedPAC raises concerns about quality bonus payments paid to MA insurers. And, it notes, “there is no reliable information” about the extent to which MA beneficiaries use the extra benefits offered by MA plans. Market concentration is another concern, with UnitedHealthcare having the largest number of MA enrollees.

I asked industry trade group America’s Health Insurance Plans to respond to MedPAC. It provided this statement: “More than 34 million American seniors and people with disabilities choose Medicare Advantage for their health coverage because it provides better care at a lower cost than fee-for-service Medicare. Meanwhile, what urgently needs reform is fee-for-service Medicare, which continues to lag behind Medicare Advantage on what matters most to seniors: affordability, quality and outcomes.”

MedPAC doesn’t call for abolishing MA, citing the additional choices it provides Medicare enrollees and the potential for innovation and reduced cost-sharing. But it makes a strong case for serious reforms. It’ll be very interesting to see if Musk and the Trump administration have the courage to take on AHIP, a powerful special interest. I hope they do.

Said Richard Kronick, a University of California San Diego researcher and professor: “If Republicans are serious about cutting spending, Medicare Advantage is the most fertile ground to be paying attention to because of the overpayments that are currently being made.”