Insurers Collected Billions From Medicare for Veterans Who Cost Them Almost Nothing

Taxpayers paid for their care at the VA—and for Medicare Advantage coverage that many didn’t use

By Mark Maremont, Christopher Weaver and Tom McGinty of The WSJ. Excerpts:

"Bruce Kitt is one of the Medicare Advantage industry’s most lucrative customers.

The federal government pays his private Medicare Advantage insurer thousands of dollars a year to cover the cost of doctor visits, hospitalizations and other medical care that the 74-year-old retired aircraft mechanic might need.

But Kitt, an Air Force veteran who served in Thailand during the Vietnam War, gets almost all of his healthcare outside the Medicare system, through the Minneapolis VA Medical Center. The taxpayer-funded Department of Veterans Affairs health system provides low-cost or free care to Kitt and about nine million other qualifying veterans.

Kitt’s Medicare Advantage insurer, an affiliate of CVS Health’s Aetna unit, pays for almost nothing other than a $100 monthly cash-like rebate to Kitt as an incentive to keep him on its rolls. The government paid the insurer at least $6,000 to cover him in 2022, the year he joined the plan.

“I don’t think I’ve used my Medicare in years,” said Kitt, who lives in Eden Prairie, Minn. When he needed some eye tests, the VA, not his Medicare Advantage plan, paid for him to go to an outside clinic. “I’m pretty happy with the VA,” he said. “I look at the Medicare plan as a backup.”

A Wall Street Journal analysis of Medicare and VA data found that Medicare Advantage insurers collected billions of dollars a year in premiums to provide medical coverage for about one million veterans like Kitt, even though they go to the VA for some or all of their healthcare needs.

The analysis found the insurers paid far fewer medical bills for those veterans than for typical members. About one in five members of Medicare Advantage plans that enroll lots of veterans didn’t use a single Medicare service in 2021, the Journal found. That compares with 3.4% of members of other Medicare Advantage plans.

The federal government paid insurers an estimated $44 billion from 2018 through 2021 to cover Medicare Advantage-plan members who were also users of VA services, based on average payments for all members of those plans. The VA spent $46 billion on the same group’s medical care, according to VA data reviewed by the Journal. The figures exclude pharmacy costs, which many Medicare Advantage plans focused on veterans don’t cover."