On May 1, the U.S. Department of Justice (DOJ) filed a federal lawsuit alleging that three major health insurance companies that profit from Medicare Advantage—a program which allows individuals who qualify for both inpatient and outpatient Medicare benefits to receive both bundled through a private broker—conspired with other privately-owned Medicare Advantage insurance brokers to rip off the system.
According to the lawsuit, from 2016 through at least 2021, the health insurance companies Aetna, Humana, and Elevance (formerly known as Anthem) engaged in an illegal kickback scheme with insurance brokers eHealth, GoHealth, and SelectQuote. The Justice Department alleges that the insurance companies paid hundreds of millions of dollars to insurance brokers (who help people navigate the Medicare Advantage system) in exchange for enrollments into the insurers’ plans.
At the same time, according to the lawsuit, Aetna and Humana used the kickback scheme to “pressure brokers to enroll fewer Medicare beneficiaries with disabilities, whom the insurers perceived as more expensive to cover.” The lawsuit states that in response to “financial inducements,” brokers “strategically directed disabled beneficiaries away from Aetna and Humana plans.”
When I first heard about all of this, I was shocked. But the more I think about it now, the less surprised I am. After all, the only reason that private health insurance companies take part in Medicare Advantage—also known as Medicare Part C—is to squeeze every penny of profit out of the Medicare system that they possibly can.
To be eligible to receive health care insurance coverage under Medicare, one must be over sixty-five years old, disabled, or have end-stage renal disease. Anyone signed up for Medicare can opt out of traditional public Medicare coverage—which includes Medicare Part A for inpatient coverage and Part B for outpatient coverage—and instead receive health care coverage under a private plan offered by one of the insurers participating in Medicare Advantage. About half of all Medicare enrollees have chosen to do that. Thus, in 2024, Medicare paid approximately $462 billion to Medicare Advantage insurance companies, which was more than half of the total Medicare financial outlay for the year.
The lawsuit says that Medicare beneficiaries who are considering switching to Medicare Advantage rely on the impartiality of brokers to help them find the plan that they think is best for them. Therefore, brokers wield “considerable influence over our nation’s most vulnerable citizens” as they attempt to make a decision “that can have significant health and financial consequences.”
This all serves as an important reminder of why it’s necessary to generate public support for programs like traditional public Medicare in the first place—because the private marketplace doesn’t give the slightest damn about serving people it doesn’t see as profitable. There need to be places where anyone can go, services that anyone can access, where the bottom line is to meet a need rather than to make a lot of money.
And when we let programs like Medicare Advantage turn these places into profit centers, this kind of thing is bound to happen. The only way to assure that this will never happen is to remember the motivation of those who are so hot to privatize public programs—and to never give them the chance to do so.