How Medicare Advantage could become a marquee issue in Nevada's 2024 Senate race
When President Joe Biden delivered his State of the Union address to Congress in February, he drew a clear distinction on entitlement spending – his administration had pledged to protect Social Security and Medicare, while congressional Republicans were trying to cut them.
Republicans in the audience immediately began to drown out the president by shouting, leading to a back-and-forth over entitlement spending now echoing in early campaign messaging from both political parties.
Ten days after the State of the Union, the National Republican Senatorial Committee came out with a new ad targeting Sen. Jacky Rosen (D-NV), a swing-state Democrat up for re-election in 2024, over Medicare.
“You earned your retirement benefits,” the ad says. “You followed the rules. You paid into the system. But Jacky Rosen wants to take them away. Rosen backed Joe Biden’s extreme agenda, putting your Medicare and Social Security at risk.
“Tell Jacky Rosen – hands off our benefits,” the ad concludes.
Though the 2024 midterms remain more than 600 days away, early Republican campaign attacks against Rosen are centering around a proposed new rule from the Centers for Medicare and Medicaid Services (CMS) for Medicare Advantage, the capitated Medicare Part C program created in the 1990s that pays private insurers to cover seniors’ health care benefits.
Nationwide, Medicare Advantage has exploded in enrollment growth over the past 15 years, with nearly half of seniors on Medicare Advantage plans. In Nevada, 47 percent of the 565,000 seniors enrolled in Medicare are on a Medicare Advantage plan.
The elevation of Medicare — and the larger issue of seniors’ health care — to a marquee 2024 issue is a strategy that both parties believe can work to their advantage.
American Action Network, a political nonprofit advocacy group aligned with Speaker Kevin McCarthy (R-CA), has since dropped $2 million on targeted ads accusing vulnerable Democrats of supporting a Biden policy that they claim, armed with an industry study, constitutes a serious cut to Medicare Advantage – an allegation Democrats and health care researchers such as the Kaiser Family Foundation say is a fear-mongering falsity.
It comes as a counterpunch as Biden and congressional Democrats have hammered Republicans for plans to sunset entitlements, force cuts as part of the debt limit negotiations or raise the Medicare eligibility age.
Republican leadership, recognizing their 2018 midterm losses came after the party attempted to overturn the Affordable Care Act, have mostly backed away from any positions threatening seniors’ Medicare benefits, and want to pin outrage on Democrats instead. McCarthy has stated that Medicare cuts are off the table for House Republicans’ proposed budget.
Rosen acknowledged that she has concerns about the proposed rule. But for those who won elections running on that health care wave in 2018, Medicare is an issue they are all too pleased to discuss.
Rosen beat then-Sen. Dean Heller (R-NV) in 2018 by five points – the largest Senate margin posted by a Democrat not named Harry Reid this century. She and others overwhelmingly attributed her win to one issue: health care.
“[In] my last two elections, a lot was on health care,” Rosen said in an interview, when asked if the re-igniting of Medicare as a campaign issue would be an asset for her. “When I went for the Senate, it was about health care.”
What is the Biden administration proposing?
The NRSC ad targeting Rosen is based on a proposed CMS rule that estimates a 1 percent increase to payment plans, changes to the risk adjustment model that codes whether or not a service will be covered, and clawing back overpayments to target waste and fraud.
Jack Hoadley, a professor at Georgetown University’s Health Policy Institute and former commissioner of the nonpartisan Medicare Payment Advisory Commission, defined the proposed rule as a correction rather than a cut.
While traditional Medicare operates on a fee-for-service basis, Medicare Advantage plans use a fixed payment based on averages of what costs they expect to incur, while also including dental and vision coverage (services not covered under traditional Medicare). While traditional Medicare beneficiaries bill directly to CMS, people on Medicare Advantage, also known as Part C, can choose from a number of plans provided by private insurers, which then bill the government.
Versions of that model have been around since the 1970s, but the Medicare Advantage program seen today was created in the 1990s and then took on its current form in the 2003 Medicare Modernization Act, a priority of then-President George W. Bush.
But Medicare Advantage plans code (or identify medical services, which are then billed for) more aggressively than traditional Medicare, Hoadley said. He gave an example of coding a patient’s underlying hypertension, even if they are managing it and have not sought treatment for it, in a Medicare Advantage plan setting a rate when traditional Medicare does not.
Due to these coding discrepancies – and some reports of fraud – Hoadley says the government is essentially overpaying for Medicare Advantage, which is unfair to taxpayers and to beneficiaries of traditional Medicare. The proposed rules attempt to rectify that issue in an effort to balance the system and strengthen Medicare’s future financial stability.
“It's an adjustment — a cleaning up of the system,” Hoadley. “It's not like we're going in and saying, ‘Hey, we're just paying too much, we're gonna cut it back.’ The government's not doing that in this proposal. It's trying to make corrections.”
Republicans and their allies in the insurance agency point to a study from health care consulting firm Avalere Health, estimating that those enrolled in Medicare Advantage will see a $540 reduction in benefits due to the changes in the risk adjustment model, the term for how services get coded.
The study argues that the coding changes and the lower growth rate as compared to prior years will amount to smaller rebates from the CMS to Medicare Advantage plans, meaning they will have to make up those funds by either increasing premiums or decreasing benefits.
The study was commissioned by the Better Medicare Alliance, an advocacy and research group that supports Medicare Advantage and is funded by large health insurance companies including UnitedHealthcare, Aetna and Humana.
In a statement, Better Medicare Alliance President and CEO Mary Beth Donahue called Rosen and Sen. Catherine Cortez Masto (D-NV) "champions for Nevada seniors" and applauded their "unwavering leadership" in supporting Medicare Advantage.
"Senators Rosen and Cortez Masto have worked hard to ensure that Nevada seniors are not harmed by CMS’s recent proposed changes to Medicare Advantage," she said in an emailed statement. "We hope that CMS slows down and listens to the concerns of so many Nevadans who have asked the agency to not move forward with the proposed changes and to take the time needed to work with stakeholders on fully evaluating the potential consequences of these proposed changes for millions of seniors and individuals with disabilities.”
Republicans say that the 1 percent increase is tantamount to a cut, given that non-food-and-energy inflation is running at a 5.6 percent rate.
“Jacky Rosen should condemn Joe Biden for cutting nearly 250,000 Nevada seniors' Medicare benefits,” NRSC Spokeswoman Maggie Abboud said in a statement, referencing a story in the Las Vegas Review-Journal citing the Better Medicare Alliance study.
But groups such as the Kaiser Family Foundation, a nonpartisan foundation that researches health policy, and Protect Our Care, a left-leaning health advocacy group, say that the proposed rule changes should not significantly alter things for beneficiaries, and point out that the Biden administration increased Medicare Advantage payment rates by 8.5 percent last fiscal year.
Lesley Dach, the chair of Protect Our Care, said the insurance industry is invested in maintaining the status quo on Medicare Advantage because those plans offer some of the highest profit margins for insurers. The changes, he said, will ensure the solvency of the Medicare Trust Fund. (The Medicare Trust Fund’s solvency is only projected to last through 2028, according to the Center on Budget and Policy Priorities; Biden’s budget would extend its solvency for decades through increasing a tax on those earning over $400,000.)
Those profit margins protect them from the need to increase premiums if the rule is adopted and overpayments are clawed back – meaning they would have no ethical reason to do so, Dach said.
Kaiser’s analysis also notes that critics similarly claimed that changes to Medicare Advantage made in the Affordable Care Act would lead to insurers dropping benefits, but that fear never materialized.
Hoadley said beneficiaries could potentially see an increase in premiums if Medicare Advantage plans decide to charge for the services that traditional Medicare does not provide, such as vision and dental insurance.
“It may turn out that trying to correct these errors will lead some Medicare Advantage plans to go from being zero premium to maybe having to charge something every month or two to scale back some of those extra benefits,” Hoadley said. “But that would be done in a way to be fairer to all Medicare beneficiaries … as well as taxpayers.”
While these risk adjustments have been needed for years, Hoadley said, it has been politically challenging to do so due to the opposition of the insurance industry – and thus, Biden’s plan of pairing the risk adjustment coding changes with a modest increase in payments is a potential way to thread the needle, keeping the government from being overcharged while keeping costs stable for patients.
Rosen, a strong supporter of Medicare Advantage, said in a statement that the proposed rule did raise her suspicions. “Our office has made it clear to the administration that there are concerns about how the proposed Medicare Advantage rule changes could impact Nevada seniors,” she said.
But she added that Republicans’ pressure campaign over the proposed rule is a tacit acknowledgement of their anti-Medicare stance, not a serious concern.
“I'm going to continue to stand up to the administration — this one or any administration — to ensure that any proposed rule changes to Medicare Advantage don't negatively impact Nevada seniors or their benefits,” Rosen said. “And honestly, this is really just a distraction from the fact that Republican leaders [have] sought to target these programs, even sunset some of these programs, like Social Security and Medicare.”
Republicans have the insurance industry and doctors, including the American Medical Association, in their corner as skeptics of the rule. The Latin Chamber of Commerce of Nevada also jumped into the debate, saying the proposed rule change would be harmful.
But Republicans have been unable to gain a valuable Democratic ally in their campaign — Nevada’s other Senator, Catherine Cortez Masto (D-NV).
Cortez Masto is widely known as one of the most pro-Medicare Advantage Democrats, bucking the progressive wing of the party, which often criticizes the plans as cash grabs for insurers. She led a bipartisan letter, which drew more Republican signees than Democrats, to the CMS administrator affirming support for the program.
But even Cortez Masto says the rule is not a threat to seniors’ health care.
“In Nevada, nearly 50% of seniors and individuals with disabilities rely on Medicare Advantage, and I’ve made it clear that if there are changes to the program, they cannot jeopardize Nevadans’ health care access,” the senator said in a statement. “I’m confident the White House understands this, given their proposal, and look forward to working together to make sure Medicare Advantage can continue to meet patients’ health care needs.”
Implications for 2024
The NRSC says it plans to hammer Rosen on Medicare, keeping the issue in the public eye. The National Republican Congressional Committee, which boosts Republicans in House races, has already begun attacking Rep. Dina Titus (D-NV) over her support of the president and the rule.
“Titus would rather run interference for Biden than defend Nevada seniors,” NRCC spokesperson Ben Petersen said in a statement after Biden’s March 15 appearance in Las Vegas.
Dan Lee, a political science professor at UNLV, said given how Medicare and Medicaid funding will continue to be in the news as the debate over the debt limit plays out this year, Republicans are wise to try to capitalize on the narrative – particularly because health care has traditionally been a Democratic strength.
He attributed Heller’s 2018 loss to an inability to navigate the health care dynamics of the time. Heller was attacked on the right for supporting a “skinny repeal” of Obamacare rather than a wholesale takedown, while he lost support for trying to overturn the part of the law that expanded Medicaid access to more than 200,000 Nevadans, a month after publicly promising at a press conference alongside then-Gov. Brian Sandoval (R) that he would not support repealing Obamacare and taking insurance coverage away from “tens of millions of Americans and hundreds of thousands of Nevadans.”.
With health care back on the chopping block — particularly if Republicans force cuts to Medicaid in debt limit negotiations — the GOP needs to promote its own narrative dinging Democrats as the party endangering health care.
Rosen and Democrats, meanwhile, could even lean into the Medicare Advantage discussion as part of the broader Democratic brand of taking on large corporations, Lee said.
“That's always been a message that the Democratic Party has tried to push to [its] electoral advantage – going after Big Pharma, Big Oil,” Lee said. “Here, [it’s] going after these insurance companies.”
Rosen – who says health care is the topic she hears most about from constituents – said she has a record she is proud to tout.
She spoke about capping the price of insulin at $35 per month for Medicare beneficiaries and making shingles vaccines free for seniors – a personal issue for her, because both of her parents suffered from shingles.
“Everything we've done is to ensure that seniors stay healthy,” Rosen said. “And that's the best investment we can make.”
Updated on 3/22/23 at 10:39 a.m. to include a statement from Better Medicare Alliance.