Stop the Privatization of Traditional Medicare – Abolish ACO REACH
March 19, 2023


Whereas, for 57 years Medicare has been by a vital part of the social safety net of this country, providing government paid healthcare for millions of seniors and people with disabilities who might otherwise be reduced to poverty by medical bills; and

Whereas, unlike private insurers, Medicare allows patients to see any doctor they want and is able to keep its administrative costs to a minimum by paying providers directly; and

Whereas, according to the California Department of Health Care Services’ “Profile of the California Medicare Population” released in February of 2022, California’s Medicare population grew 11.3%, from 5.8 million in 2016 to 6.5 million beneficiaries in 2021; and

Whereas, California is experiencing a historic demographic shift; according to the Master Plan for Aging, nearly one-quarter of the state’s population will be older adults and seniors by 2030, many of whom will require affordable and accessible health care services provided by Medicare; and

Whereas, instead of filling the gaps in Medicare coverage, the federal government has increasingly used Medicare funds to subsidize private insurance companies, significantly increasing its administrative costs, burdening doctors with extra paperwork, and providing new opportunities for fraudulent billing by private insurers; and

Whereas, in 2020 private insurers like Humana and United Health charged Medicare over $12 billion, paying for diagnoses that were not actually treated; and

Whereas, the ongoing privatization has created a $350 billion market that Wall Street and private equity firms are rushing to exploit, undermining Medicare’s solvency, and putting crucial decisions about patient care in the hands of actuaries, rather than doctors; and

Whereas, during the final months of the Trump administration, a program was launched enrolling millions of Medicare recipients in private direct contracting entities (DCEs) without their consent or even knowledge; and

Whereas, the DCE program was launched without Congressional approval, oversight, or even discussion; and

Whereas, the Biden administration has so far responded to public protests of DCE by not ending it but by making essentially cosmetic changes and re-branding it ACO REACH; and

Whereas, The REACH program’s payment model creates dangerous incentives to restrict care. Traditional Medicare pays doctors and hospitals directly for care, the REACH program pays Accountable Care Organizations (ACOs) a monthly payment to cover a defined portion of each senior’s medical expenses. ACO participants are then allowed to keep as profit and overhead what they don’t pay for in health services, a powerful financial incentive to ration seniors’ care; and

Whereas, The REACH payment model not only threatens seniors’ care; it would drain Medicare of billions of dollars of needed revenue each year. Traditional Medicare spends 98% of its budget on patient care, but ACOs could spend as little as 60% of Medicare payments on care — keeping up to 40% of revenue for their own profit and overhead; and

Whereas, it is within the power of the Biden administration to end the program with the stroke of a pen;

Therefore, be it resolved, that the CFT calls on the Biden administration to end the ACO REACH program immediately; and

Be it further resolved, that the CFT transmit copies of this resolution to the President of the United States, the Secretary of the U.S. Department of Health and Human Services, the administrator of the Centers for Medicare and Medicaid Services, the Speaker of the House of Representatives, the Majority Leader of the Senate, and each senator and representative from California in the U.S. Congress; and

Be it finally resolved, that the CFT opposes ongoing efforts by the insurance industry and others to privatize Social Security and Medicare.

  • Submitted by the Council of Retired Members