Heads up: A Major Threat to Medicare!

Medicare has been a highly successful, popular and treasured government program that provides health care for seniors, for those with disabilities and for those with end-stage renal disease. The Traditional Medicare (TM) approach spends 98% of its funds on health care and only 2% on administration. A key part of TM is that beneficiaries don’t have to jump through all the hoops that the private health insurance industry often requires of its enrollees who are trying to obtain care.

Private health care insurance has already made inroads into the Medicare program through the Medicare Advantage (MA) approach. MA is primarily implemented through health maintenance organizations and preferred provider organizations. The opportunity for profits is clear as the MA industry is only required to spend 85% of the Medicare funds it receives on health care.

Unfortunately, additional plans are underway to turn Medicare into a cash cow for Wall Street and the private health insurance industry to the detriment of the almost 64 million Medicare enrollees and the rest of the US population.


How is this happening? Well, the 2010 Affordable Care Act established the Center for Medicare and Medicaid Innovation (CMMI). This Center’s claimed goal was identifying “ways to improve healthcare quality and reduce costs in the Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) programs.”

Incredibly, this Innovation Center was granted the authority to test alternative payment and service delivery models on a national scale without Congressional approval. Being able to avoid Congressional politics may make some sense as long as the public’s health isn’t harmed and the public’s money is protected.

CMMI’s Direct Contacting model

Initially the CMMI focused on relatively small pilot projects. However, under former President Trump’s appointees, the CMMI extended the scope of the pilot project idea and focused on greatly expanding the reach of a direct contracting entities (DCEs) model. According to Physicians for a National Health Program (PNHP), these DCEs are essentially third-party middlemen that receive a capitated monthly payment for covering some defined portion of enrollees’ medical expenses. Shockingly, estimates are that the DCEs may keep up to 40% of the monthly payment as overhead and profit. We have had a long and painful experience with health insurance companies; i.e., middlemen, and the profit-based incentive for denying or delaying care. Unfortunately, this terrible experience is still ongoing.

It appears that this horribly problematic and complicated DCE approach makes gaming the system attractive and easy to do. This gaming increases the cost to Medicare while also increasing the profits for investors and the participating private insurance companies. Making matters far worse, the goal seems to be to bring all of Medicare enrollees, with or without their knowledge or approval, into this system by 2030. In effect, if this goal is achieved, this treasured public program will be privatized at the expense of the public’s health and its pocketbook.

The Biden Administration and DCEs

Disappointingly, the Biden administration didn’t end the implementation of the Trump administration’s DCE model. Instead, it made some minor changes and also changed the program’s name to REACH (Realizing Equity, Access and Community Health). Fortunately, in January 2022, 54 members of Congress signed onto a letter to Xavier Becerra, Secretary of Health and Human Services, essentially calling for an end to the DCE program. Representatives Joe Neguse and Jason Crow of Colorado were among the signers and they deserve our thanks and support.

What you can do

We need to pressure the rest of the Colorado delegation to join the effort to stop the REACH program. Unless there is huge public opposition and increased pressure on Congress and the White House to this planned privatization of Medicare, it will happen. Please call your member of Congress at (202) 224-3121 and, as suggested by PNHP, request they: 1) bring this proposed REACH to the light of day by holding hearings on it; 2) call on Health and Human Services Secretary Becerra to end the REACH program; and 3) establish Congressional oversight of the Center for Medicare and Medicaid Innovation.

•  First published in Boulder Daily Camera

Ron Forthofer is a retired professor of biostatistics from the University of Texas School of Public Health in Houston and was a Green Party candidate for Congress and also for governor of Colorado. Read other articles by Ron.