Healthcare Reform in Texas Long Overdue

This op-ed was originally published in the Rio Grande Guardian.

It’s long past time for Congress to rein in waste, fraud, and abuse plaguing the federal government’s $1 trillion Medicare system. Reform and accountability are overdue, but some of the worst offenders have evaded accountability.

When buoyed by lucrative agreements with taxpayer-financed insurance programs such as Medicare and Medicaid, pharmacy benefit managers (PBMs) contribute to the healthcare cost crisis and impact affordability and access for all. And while the recently enacted  federal Consolidated Appropriations Act contains commendable PBM reforms, these changes don’t address every abusive public-sector facing PBM practice or other looming issues facing taxpayer-funded Medicare Advantage (MA) plans.

More than 34 million Americans, including 2.4 million Texans, rely on Medicare Advantage plans for their healthcare and prescription medicines. Despite key advantages compared to the traditional Medicare program, MA plans are facing challenges across the nation.

As MA plans pare back benefits and quit unprofitable markets, beneficiary growth is faltering. KFF analyst Meredith Freed notes, MA’s “pace of growth slowed from prior years…It’s still going to be the choice of a lot of people, but over time there will likely be an equilibrium or plateau of enrollment.”

Texas’ aging population and large rural geography make these circumstances even more troublesome for plan sponsors. The Lone Star State has already seen significant consolidation among major providers spurred by out-of-control government intervention, as large hospital systems continue to acquire smaller clinics, and in many rural communities, hospital and clinic closures continue to increase. While there’s certainly nothing wrong with mergers and acquisitions in a free market, artificial consolidation spurred by government-made barriers to entry—such as certificate of need laws—creates distortions that disadvantage taxpayers and consumers.

In a state as expansive and diverse as Texas, limited provider networks under Medicare Advantage can mean long drives for specialized care, sometimes even hours to the nearest major city. For seniors without reliable transportation, these barriers lead to delayed or forgone treatment.

This is not to say that Medicare Advantage is a net negative for beneficiaries. Unlike most government forays into healthcare (or really, anything else), Medicare Advantage works with, instead of against, companies to provide quality services to patients at the lowest cost. Instead of dictating plans and reimbursements to providers, the government pays competing insurers to offer patients the best plans at the lowest cost.

This system of competition works. According to a 2016 study by the Commonwealth Fund, Medicare Advantage plans cost taxpayers nearly $400 million less annually than government-managed Medicare plans. Writing in Health Affairs, scholars Robert E. Moffit, Rita E. Numerof, and Christen M. Buseman note, “Medicare beneficiaries are increasingly attracted to MA plans that are relatively familiar as an insurance offering, simpler and customer friendly, transparent in their quality performance, more comprehensive in coverage, and yet often still more affordable than traditional fee-for-service Medicare.”

It’s especially alarming, then, when MA does not work the way it is supposed to. An increasing number of Texans must go out of network to access care, translating to higher out-of-pocket costs and additional financial burdens. In addition, weak oversight and misaligned incentives have driven up costs. A popular Medicare Advantage issue called “upcoding”—when plan sponsors inflate patients’ diagnoses to obtain higher risk-adjusted payments—has resulted in “risk scores” 18 percent higher than traditional Medicare, according to a 2021 analysis.

The proposed bipartisan No UPCODE Act would address this issue and bring Medicare Advantage more in line with the standards required by traditional Medicare, saving taxpayers $124 billion over a decade.

From PBMs to upcoding, there’s a clear need for significant reform across the Medicare system. It should command our elected officials’ attention and action. It’s long past time for greater accountability to taxpayers, patients, and providers.