Child Watch® Column: "Medicare Overpayments to Private Insurers are Hazardous to Children's Health"

Release Date: June 22, 2007

Marian Wright Edelman

As Congress considers the renewal of the State Children's Health Insurance Program (SCHIP) over the next few weeks and months, we are pushing legislators to cover all nine million uninsured children. However, Congressional leaders are only attempting to come up with enough funds to cover some of the children who are already eligible for SCHIP but are not enrolled. We at CDF urge members of Congress to set their sights on the goal of providing a national health care safety net this year for all children in the richest nation on earth.

House and Senate Budget Committees have agreed on resolutions to allocate $50 billion in new funds for child health coverage over the next five years if the money can be found to pay for it. Now is the time your voice is needed to insist they find at least that amount. Our research indicates that even if Congress commits this additional $50 billion to SCHIP, millions of uninsured children will be left behind.

One potential funding source that could yield about $54 billion is the elimination of government overpayments to insurance companies through Medicare Advantage programs. Insurance companies have profiteered from overpayments that were originally intended to save money and provide better care for seniors. A portion of these expensive overpayments has gone to insurance company profits, marketing, and administrative costs rather than to additional benefits to seniors. These overpayments have resulted in higher premium costs for seniors participating in traditional Medicare, and they have diminished Medicare's ability to provide future benefits to all seniors. In addition, they will cost taxpayers more than $50 billion over the next five years. They also constitute a back door attempt to privatize Medicare.

If overpayments are eliminated, as the Congressional Medicare Payment Advisory Commission recommends, the savings should be used to address the national crisis of children's health care—a crisis that is getting worse because SCHIP is drastically underfunded to serve even those children who are currently eligible for coverage. This crisis affects real children. There are countless chronically ill children whose lives and futures are in great peril because they are uninsured.

Not surprisingly, the insurance industry is lobbying heavily to prevent the elimination of overpayments.  One argument they and others have used is that minority and low-income seniors rely disproportionately on Medicare Advantage plans. A study by the Center on Budget and Policy Priorities has refuted this claim with research showing that the minority percentage of Medicare Advantage enrollees is no higher than the minority percentage of all Medicare beneficiaries.

Actually, the burden of being uninsured falls heavily upon children of color—one in eight Black children and one in five Latino children is uninsured. Non-white youngsters make up more than five million of the nine million uninsured children. Minority children are at higher risk than White children of having unmet health, mental health, and dental care needs. They are less likely to get immunized. And Black infants are more than twice as likely as White infants to die before their first birthday.

Good governance requires our political leaders to make smart and moral choices. Do we want Medicare funds to be diverted toward profits for insurance companies? Wouldn't a better use of those dollars be to guarantee comprehensive health coverage for all children and pregnant women?

The United States provides health care to all senior citizens through Medicare. Children, who are the least expensive and most cost-effective group to cover, need and deserve a similar national health safety net. Should children have to wait until they are 65 to be insured? I don't think so. Virtually all industrialized democracies provide health care to all of their children. We certainly don't lag behind other nations in the brain power or the economic resources needed to do that. What we lack is the commitment and political will.

Insurance companies can contribute huge amounts of money to Congressional campaigns to preserve Medicare Advantage overpayments. Since children are too young to vote and cannot pay powerful lobbyists, your voice must speak for them. You must demand that your senators and representatives put children's health before corporate profits. Congress should commit to protecting America's children and not lining the pockets of insurance companies. For more information, please go to www.childrensdefense.org/healthychild.