How Medicare Advantage could become a marquee issue in Nevada's 2024 Senate race

Though the 2024 midterms remain more than 600 days away, early Republican campaign attacks against Sen. Jacky Rosen (D-NV)  — a swing-state Democrat up for re-election in 2024 —  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. Ten days after the State of the Union, the National Republican Senatorial Committee came out with a new ad targeting Rosen 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.

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 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 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.

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.

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.

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.”