Twelve Rounds with Medicare Advantage

Medicare Advantage is barely hanging on the ropes at the start of the 12th round. Challengers like Barack Obama, Harry Reid, and John Edwards have pummeled the fighter with sharp lefts and dizzying rights.

The latest blow—a Tyson uppercut, if you will—came not from a politician but CMS. The agency announced last week it was stopping WellCare from marketing its Medicare Advantage and Part D plans and accepting new members into those plans. WellCare will suspend marketing and enrollment activities by March 7. The insurer will continue to serve its current Medicare beneficiaries, as well as Medicaid and S-CHIP plans.

This follows months of other negative news (we'll call them jabs), including:

• Feds raiding the health insurer's offices
• A former employer pleading guilty to Medicare fraud
• The Tampa, FL-based company severing ties with Florida's managed Medicaid program
• WellCare announcing financial difficulties

WellCare and Medicare Advantage were hurt by these blows, but this latest punch is the biggest shot yet.

CMS criticized WellCare for its enrollment and disenrollment operations, appeals and grievances, timely and proper responses to beneficiary complaints and requests for assistance, and marketing and agent/broker oversight activities. The news gives more fodder for those who would like to cut the private insurer program. During his campaign, President Barack Obama bashed the private Medicare program as a hand-out to big business that costs 13% more per beneficiary than traditional Medicare. He pledged to cut $50 billion in subsidies to the program.

After taking office last month, Obama recalled a draft of the 2009 Medicare Advantage and Part D call letter, so his administration could review and make changes. On Tuesday night in a televised speech to both houses of Congress, the president mentioned cutting waste and inefficiency out of Medicare. He didn't use the phrase "Medicare Advantage," but that is what Obama was talking about. Obama's aversion to Medicare Advantage is bad news for insurers involved in the program.

It's easy to understand why Obama and Democrats don't like Medicare Advantage. It's costing the country more than if those beneficiaries were in traditional Medicare, and earlier this month, Medicare Advantage insurers said they are increasing premiums by an average of 13% this year. This is in contrast to the 6% premium increase for commercial private insurer plans this year.

Medicare Advantage advocates argue that part of the reason for the difference is that Medicare Advantage plans offer more services than traditional Medicare, such as dental and vision. That argument isn't reaching Democratic policymakers, who may soon finish off the wounded fighter with one final hook.

Beaten and battered, Medicare Advantage is barely on its feet and Democrats are getting ready to throw the final blow that will send Medicare Advantage to the canvas for the last time.