•Press Release Center for Medicaid Services Health Care and Social Programs Medicare Private Equity
Washington, DC — In a new report published today, the Center for Economic and Policy Research’s (CEPR’s) Eileen Appelbaum, Cornell University’s Rosemary Batt, and Emma Curchin analyze the current policies of the Center for Medicaid Services (CMS) that have allowed financial actors to become the dominant players in home health care – a process known as financialization. In the past decade, Wall Street and insurance conglomerates have increasingly extracted large profits in home health services at the expense of Medicare, patients, and taxpayers as a whole.
The transformation of the industry has meant that large insurance companies and private equity firms increasingly own home health care services, with the primary goal of maximizing shareholder profits, rather than providing quality care. These companies have massively increased their own revenue at the expense of taxpayers. While some of this profit is the result of illegal and fraudulent practices, much is the result of loopholes in the existing CMS payment system.
“CMS is to be applauded for getting serious about cracking down on fraud, but they still have work to do when it comes to reigning in private equity and insurance conglomerates,” said Batt.
Financial actors have seized Medicare Advantage as their point of entry, a form of insurance that, despite its name, is private. When the big insurance companies gobble up Medicare Advantage plans, they drain the Medicare trust fund and increase costs for taxpayers by driving up Medicare premiums. Private equity firms have been buying up independent home health agencies and creating chains with hundreds of locations. Ultimately, the dramatic consolidation of home health care increases costs for everyone.
“Medicare services are almost entirely funded by the payroll taxes of working people. They deserve a health care system in their older years that is patient-centered, not profit-driven,” said Appelbaum. “The goal of CMS is to change Medicare as we know it by 2030, and Congress must rise to the occasion to protect patients and taxpayers.”
Policy recommendations put forth by the authors include strengthening traditional Medicare, creating and enforcing regulations to keep financial firms that own home health agencies honest, discouraging vertical mergers that reduce competition in home health markets, and specific recommendations for CMS and state public health agencies.
“Profiting at the Expense of Seniors: The Financialization of Home Health Care” can be read here.