Medicare Advantage plans earned a windfall $1.14 billion in added profits in 2005 because they spent less than projected on medical care for beneficiaries, according to a Government Accountability Office report released by Rep. Pete Stark (D-Calif.).
The GAO reported that projected medical spending for Medicare Advantage plans was 90.2% of total medical costs in 2005, but actual spending was 85.7%. This resulted in a profit margin increase of, on average, 5.1% of total revenue, or about $1.14 billion. Several unnamed outlier plans made up more than half of that added profit, according to the GAO.
This GAO report is evidence of the waste and abuse in the Medicare Advantage program, said Stark, chairman of the House Ways and Means health subcommittee, in a written statement. Stark is urging the Senate to approve cuts to the Medicare Advantage program through a bill that passed Tuesday in the House with a veto-proof majority.
Americas Health Insurance Plans, the trade group for health insurers, opposes the bill, saying that it will lead to higher costs, fewer choices and reduced benefits for the 10 million seniors enrolled in Medicare Advantage Plans.
Separately, the Treasury Department released new guidance on health savings accounts, including detailed rules on eligibility, contributions, debit card requirements, rollovers from other HSAs, and prohibited transactions, such as borrowing funds from the account or using those funds as security for a loan. -- by Rebecca Vesely
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