Wall Street moves to privatize Medicare

SEATTLE—Rep. Pramila Jayapal, D-Wash., is leading the struggle to block medical insurance profiteers from privatizing Medicare, a scheme covertly launched by former President Donald Trump and continued in a new guise by the Biden administration.

Jayapal sent a letter Jan. 5 to Health and Human Services Secretary Xavier Becerra and Medicaid Administrator Chiquita Brooks-LeSure urging the Biden administration to terminate the Trump-initiated scheme to shift Medicare beneficiaries to so-called “Medicare Direct Contracting Entities” (DCE), such as Aetna and Humana, without informing the recipients.

“As you know,” Jayapal wrote, “the previous administration started Direct Contract Entities (DCEs) which are privately owned and controlled networks in which for-profit companies are paid monthly to cover beneficiaries’ health care. Any funds left over after it covers care are kept as profits, creating a perverse motive to decrease the quality and volume of seniors’ care.”

She added, “These models ultimately aim to privatize traditional Medicare by funneling beneficiaries, without their knowledge, into a DCE.”

DCEs, she continued, “pose a threat to patient care and outcomes due to the encroachment of profit-driven organizations on their care.”

More than 50 other members of the House, all Democrats, co-signed her letter.

Physicians for a National Health Program (PNHP) denounced the Trump DCEs, circulating a petition signed by more than 13,000 physicians and other health advocates blasting the scheme to privatize Medicare.

The pressure was so strong that the Center for Medicare Services (CMS) announced a few days after Jayapal’s letter a freeze on acceptance of new applications to the DCE program. CMS also announced that the DCE program will be replaced Dec. 31, 2022, by a new program, ACO REACH (Accountable Care Organization-Realizing Equity, Access, and Community Health).

Critics charged the new plan was no better than Trump’s DCE.

Jayapal pointed out that the 53 private equity firms and insurance companies that currently provide health care coverage “already take large profits from other healthcare ventures and will likely do the same from Medicare DCEs at the expense of patient care.”

She cited Medicare Advantage plans that have invented “upcoding,” the practice of adding extra diagnosis codes to patient charts in order to squeeze more money from the Medicare Trust fund to increase their profits.

“This scheme already costs the U.S. government $10.6 billion per year, and with the addition of traditional Medicare beneficiaries into this scheme those costs will almost surely rise.”

DCEs are projected to spend as little as 60% of the taxpayer dollars they receive on care, allowing them to keep up to 40% as profit….” By contrast, the administrative costs of non-profit traditional Medicare are 1.5%, leaving 98.5% of every Medicare dollar for patient care.

Jayapal requested a meeting with Becerra and Brooks-LaSure to “stop the expansion of these Direct Contracting Models and oversee the sunsetting of these programs.”

While all Republican members of the House and even a majority of Democrats refused to sign her letter, the fightback against Medicare privatization is moving ahead.

Here in Jayapal’s home district, Seattle, Puget Sound Advocates for Retirement Action (PSARA) has launched a grassroots campaign to stop Medicare privatization. PSARA Co-Presidents Jeff Johnson and Karen Richter sent out a letter, saying:

“For decades, Wall Street has tried and failed to privatize our Social Security. Now they are trying to privatize traditional Medicare on top of the already existing Medicare Advantage plans. The financial rewards for achieving this goal are enormous.”

They add, “The Trump administration has opened the door to complete privatization of Medicare. The Biden administration has furthered the Trump lead by continuing the Direct Contracting Pilot program until the end of 2022 and then beginning a new program labeled ACO REACH, which is privatization of traditional Medicare with a new name – Hands Off our Medicare!”


Tim Wheeler
Tim Wheeler

Tim Wheeler has written over 10,000 news reports, exposés, op-eds, and commentaries in his half-century as a journalist for the Worker, Daily World, and People’s World. Tim also served as editor of the People’s Weekly World newspaper.  His book News for the 99% is a selection of his writings over the last 50 years representing a history of the nation and the world from a working-class point of view. After residing in Baltimore for many years, Tim now lives in Sequim, Wash.