A win-lose proposition.

Byline: The Register-Guard

The idea has been around for decades, and it goes something like this: For-profit, private sector insurance companies can beat the pants off of the gargantuan federal Medicare program for administrative efficiency and bang for the buck. Therefore, privatizing big portions of Medicare would save taxpayers' money and do a better job serving patients.

The premise resonates with fans of free market capitalism, and it has been an easy sell for insurance industry lobbyists on Capitol Hill. Problem is, health care privatization rarely delivers on its promises.

The most recent privatization scheme came bundled with the much more widely publicized prescription drug coverage created in the 2003 Medicare Modernization Act. It's called Medicare Advantage, and guess who's receiving the biggest advantage?

(Hint: It isn't taxpayers.)

Under a reimbursement scheme so complicated it would take an Enron accountant to explain it, the federal government is paying private Medicare Advantage plans an average of 12 percent more per patient than traditional Medicare - for providing the same care. The subsidies pay for such things as administration, marketing, insurance agent sales commissions - and company profits.

These overpayments will average $1,893 per person this year in Oregon, according to a report prepared by the Committee on Energy and Commerce of the U.S. House of Representatives. That is the third-highest overpayment rate in the nation, behind New Mexico and Hawaii.

One way to measure the effect of these overpayments is to consider that the $344 million paid to Oregon Medicare Advantage plans in 2007 actually drives up the cost of traditional Medicare Part B premiums for the majority of Medicare beneficiaries in Oregon. That's because Medicare Advantage is paid for in part with money from the traditional Medicare Part B outpatient pro- gram.

The Committee on Energy and Commerce report says Oregon seniors will end up paying an extra $48 per couple per year for their Part B premiums so as to finance the overpayments to Medicare Advantage private plans. In Oregon, 254,000 seniors participate in traditional Medicare, and 182,000 are enrolled in Medicare Advantage plans.

Nationwide, overpayments to private insurance companies will total $9.5 billion in 2009 alone and $54 billion from 2009 to 2012, according to the Congressional Budget Office. This money is coming directly out of taxpayers' pockets and from the jacked-up premiums paid by traditional Medicare beneficiaries.

That's how the deal the insurance lobbyists struck with Congress in 2003 is penciling out in 2007. Privatizing Medicare will cost $54 billion more over the next five years than traditional Medicare would have charged for the same services - a classic win-lose proposition.

There's an alternative. Congress could choose to reduce or eliminate the overpayments and shift the savings to other health care priorities. A worthy recipient would be the State Children's Health Insurance Program, a federal program that works in partnership with states to provide health care coverage to uninsured children. Oregon has 117,000 children who have no health insur- ance.

Let Oregon's U.S. senators, Ron Wyden and Gordon Smith, know how you feel about the issue. Wyden's Eugene office phone is 431-0229; Smith's is 465-6750.