Chances are that many taxpayers have never heard of Medicare Advantage.
Yet that program — in which private-sector firms insure about 10 million people age 65 and older — is at the heart of this week's Senate debate over health insurance.
About 23 percent of Medicare beneficiaries now have Medicare Advantage coverage, which provides more benefits than traditional Medicare.
Senate Finance Committee Chairman Max Baucus is proposing to cut more than $100 billion over 10 years from Medicare Advantage plans.
The senators on the Finance Committee who are debating Baucus's bill this week are trying to walk a fine line: how to cut spending on Medicare Advantage, while not alienating the seniors in their own states who are happy with the plans.
Those on Medicare Advantage will get a chance to let Congress know what they think of all this in next year’s elections. In the last off-year election in 2006, nearly two-thirds of people over 65 voted. By contrast, only one-third of people aged 25 to 34 voted in 2006.
Why cut Medicare Advantage? The logic is simple: A principal goal of overhauling health insurance is to insure the uninsured.
Senators need to raise the revenue to pay for that.
Specifically, they must find the money to pay for subsidies to help the uninsured purchase coverage. They must also pay for a major expansion of the Medicaid program for low-income people.
Medicare Advantage plans provide benefits, such as vision and dental care, which go beyond those covered under the traditional fee-for-service Medicare program. Private insurers contract with the federal government to provide the plans, and they offer the extras as perks to entice patients to choose their programs instead of regular Medicare.
But the non-partisan Medicare Payment Advisory Commission told Congress that such services cost too much, with Medicare Advantage payments per enrollee 14 percent higher than traditional Medicare.
Don't miss these Health stories
More women opting for preventive mastectomy - but should they be?
Rates of women who are opting for preventive mastectomies, such as Angeline Jolie, have increased by an estimated 50 percent in recent years, experts say. But many doctors are puzzled because the operation doesn't carry a 100 percent guarantee, it's major surgery -- and women have other options, from a once-a-day pill to careful monitoring.
- Larry Page's damaged vocal cords: Treatment comes with trade-offs
- Report questioning salt guidelines riles heart experts
- CDC: 2012 was deadliest year for West Nile in US
- What stresses moms most? Themselves, survey says
- More women opting for preventive mastectomy - but should they be?
The commission said that this year the government will pay about $12 billion more for enrollees of Medicare Advantage plans than it would if they were in fee-for-service Medicare.
“These excessive payments encourage inefficient plans to enter the program, further raising the costs to Medicare,” the commission reported last June.
But the commission also said some Medicare Advantage plans were high quality.
Budget chief sees benefit cuts
And Congressional Budget Office director Douglas Elmendorf told Finance Committee members that cuts to Medicare Advantage “would reduce the extra benefits that would be made available to beneficiaries though Medicare Advantage plans.”
Who's who in the health care debateIn other words, if Congress cuts more than $100 billion from Medicare Advantage, some people's benefits will be cut.
Most Democrats are critical of Medicare Advantage, agreeing with Sen. Jay Rockefeller, D- W.V., who said at Wednesday’s hearing, “It’s a wasteful, inefficient program and always has been.”
“It is part of what is endangering the solvency of the Medicare program,” said Sen. Kent Conrad, D-N.D. “One of the reasons Medicare is forecast to go broke in eight years is because of the explosive additional cost of Medicare Advantage.”
But other Democrats defend Medicare Advantage plans — especially the plans in their own states.
Finance Committee Democrat Sen. Bill Nelson of Florida said it would be “intolerable” to ask seniors on Medicare Advantage to “have something taken away from them that they have come to expect.”
He offered an amendment to “grandfather in” some Medicare Advantage plans and shield those beneficiaries from benefit cuts.
And, then, he promised, “On a going-forward basis, we’re going to squeeze the inefficiencies out of that extra 14 percent that has gone into Medicare Advantage."
Finance Committee member Sen. Charles Schumer, D-N.Y., said that in his state, too, there are laudable Medicare Advantage plans.
"There are some of us on this (Democratic) side who see Medicare Advantage working in good ways," said Schumer. "I have non-profits who do Medicare Advantage in parts of my state that do a very good service for seniors and I am working with Sen. Nelson to try to keep those people viable."
But, he added, "In some areas, the amount of money given to the companies, given the amount of services that is returned, is excessive. … What we’re trying to do is thread the needle and garner back some of those excessive profits without hurting the individual on Medicare Advantage who actually gets a good plan."
Oregon Democrat sees 'a lifeline'
“Not all Medicare Advantage plans are created equal,” said Sen. Ron Wyden, D-Ore., explaining that Oregon has the highest Medicare Advantage enrollment, on a percentage basis, of any state.
Oregon has well-run Medicare Advantage plans, Wyden said. “In our part of the country it is a lifeline,” he told his colleagues.
Wyden said some companies had peddled Medicare Advantage plans using deceptive marketing, with salesmen masquerading as doctors in medical garb. The CEOs of those firms “really ought to go to jail,” he said.
But Wyden said the Senate must “make a distinction between the good quality Medical Advantage and those kinds of practices.”
Western state Republicans on the Finance Committee such as Sens. John Ensign of Nevada and Mike Crapo of Idaho say their states’ Medical Advantage beneficiaries would not be adequately protected from the proposed cuts. Crapo said that in Idaho 60,000 people, or 27 percent of the Medicare beneficiaries in the state, would face cuts.
Baucus and other Democrats argue that, on balance, all Medicare beneficiaries will be better off if the Democrats' bill passes because they'll get improved preventive care, have more of the cost of their prescription drugs covered by the taxpayers, and see other improvements.
But the Republicans on the Finance Committee kept reminding the audience of the formula that President Barack Obama used to use: “If you like the plan you have, you can keep what you have.”
Obama’s altered version of that formula came in his speech to Congress two weeks ago: “If you are among the hundreds of millions of Americans who already have health insurance through your job, Medicare, Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. Let me repeat this: nothing in our plan requires you to change what you have.”
With next year’s elections little more than a year away, Republicans are telling older voters that that while they may not have to change their plan, cuts in Medicare Advantage funding would force their insurer to change their plan unilaterally, to their disadvantage.
© 2013 msnbc.com Reprints