Question
In 2016, Centers for Medicare & Medicaid Services (CMS) proposed new advantage plan rates to insurers, which represented a 1.35% increase for 2017. These average
In 2016, Centers for Medicare & Medicaid Services (CMS) proposed new advantage plan rates to insurers, which represented a 1.35% increase for 2017. These average increases were considered "modest but stable growth" for insurers, and came with the consolation from CMS that insurers would actually see increases of about 3.55% as they deliver and bill for more intense services. Medicare is considered a major growth engine for the insurance industry as more baby boomers reach age 65. There are currently about 18.2 million people in MA plans with annual enrollment growing at 5%. The rates that Medicare pays to insurers are capitated, but they include a lot of regulatory tweaks that can push payments up or down for particular companies depending on their mix of business. For example, one proposal is to increase payments to insurers who have a large number of low-income enrollees that also qualify for Medicaid. Companies who do not have any poor enrollees may see their payments from Medicare decline.
Which hallmark of regulatory capture is evident in the tone of CMS and its proposed rate increases? Assume that United Healthcare is in favor of the proposed incentives to sell advantage plans to poorer enrollees, and that ABC insurance is opposed. Which hallmark of regulatory capture is United Healthcare exhibiting?
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