The Journal: Medicare, Inc. Part 2 – Taxpayers Paid for Care Denied by Insurers

Released June 7, 2025 | Produced by The Wall Street Journal & Gimlet

1. Personal Story: Agnes Facio’s Struggle

The episode opens with a poignant personal narrative from Tatiana Facio, who recounts the challenges her 99-year-old mother, Agnes, faced under a Medicare Advantage plan. Agnes, an independent and resilient woman, prided herself on her autonomy. Despite living in an apartment without an elevator and managing the stairs with a single cane, she advocated fiercely for her needs:

Tatiana Facio [00:27]: “Living in an apartment which was about 12 to 14 steps from the street level, without an elevator, there was only one rail up the steps. So she arranged with the landowner to install a rail on the other side of the steps.”

In 2022, Agnes suffered a fall that resulted in a broken femur, necessitating surgery and subsequent rehabilitation in a nursing home. Tatiana had enrolled Agnes in a Medicare Advantage plan, expecting seamless coverage for her mother’s emergency care:

Tatiana Facio [02:05]: “That there would be no problem. It would be seamless.”

However, complications arose when the insurance provider, Blue Shield of California, began denying coverage for Agnes's extended nursing home care, labeling it as “not medically necessary”:

Tatiana Facio [07:47]: “Not medically necessary, which was ludicrous.”

Despite multiple appeals, Blue Shield ultimately only covered a limited period of care, forcing Tatiana and her family to pay $14,000 out of pocket to ensure Agnes’s continued treatment. This distressing experience underscores the systemic issues within Medicare Advantage plans.

2. Systemic Issues in Medicare Advantage

The narrative transitions to a broader analysis by Ana Matthews, a reporter for The Journal, who uncovers alarming patterns within Medicare Advantage (MA) plans. MA, a privately managed alternative to traditional Medicare, is designed to offer lower out-of-pocket costs and additional perks like free glasses and hearing aids. Currently, over half of Medicare beneficiaries are enrolled in an MA plan.

However, Matthews’ research reveals that individuals in MA plans are twice as likely to switch to traditional Medicare in their last year of life—a period marked by intensive and costly medical care:

Ana Matthews [04:35]: “Why would people in that last year of life leave Medicare Advantage?... It just begs the question of whether it had something to do with their need or their want to access certain kinds of care that they perhaps weren't getting.”

3. Insurer Practices and Coverage Denials

The Journal delves into the mechanisms insurers use to control costs within MA plans, such as:

• Prior Authorization: Requiring approval before certain treatments or specialist visits.
• Network Restrictions: Limiting access to specific doctors and hospitals.
• Gatekeeping Practices: Mandating referrals from primary care physicians for specialist care.

These practices often lead to denials of necessary care, as evidenced by Agnes Facio’s case. When her need for extended nursing home care arose, Blue Shield’s refusal to cover her treatment highlighted a critical flaw in the MA system:

Tatiana Facio [07:53]: “Tatiana appealed the insurance company's decision and was able to extend nursing home coverage for Agnes. After that, there was another denial and another appeal... ”

Matthews cites data indicating that millions of MA enrollees face similar obstacles, resulting in significant out-of-pocket expenses and shifts to traditional Medicare during their final months:

Ana Matthews [10:37]: “Moved to the taxpayer because the insurer is no longer covering the person as their expenses get bigger and bigger.”

4. Government Response and Investigations

In response to these revelations, the U.S. government has begun scrutinizing MA programs more closely. Dr. Mehmet Oz, the Trump-appointed head of the Medicare agency, has been proactive in addressing these issues. During his confirmation hearings, Senator Warren pressed him on findings of fraudulent practices within MA plans:

Senator Warren [14:14]: “Now that is, as you know, anatomically impossible. So Dr. Oz insurers pocketed an extra $178 million in taxpayer money last year thanks to just this one fake diagnosis. Does that sound like Medicare fraud to you?”

The Department of Justice (DOJ) has also launched investigations into major insurers like UnitedHealth, Aetna Elevance, and Humana, accusing them of unethical practices aimed at maximizing profits at the expense of patient care. These include:

• Civil Fraud Probes: Allegations that insurers encouraged doctors to record unnecessary diagnoses to trigger additional payments.
• Criminal Investigations: Ongoing probes into potentially illegal activities, though details remain scarce.

UnitedHealth, the largest MA insurer, has faced severe backlash, including executive resignations and a plummeting stock price following missed earnings targets and intensified regulatory scrutiny:

Ana Matthews [17:07]: “Andrew Witte, who was the CEO, would be stepping down and Stephen Hemsley, who is a former CEO and chairman, would return to run the company again.”

5. Economic Impact on Taxpayers and Healthcare

The systemic issues within MA plans have significant financial implications. The Journal reports that the cost of MA programs reached over $460 billion in the previous year, funded by federal taxpayers. Insurers’ inability to cover the rising costs of care for the sickest beneficiaries shifts the financial burden back to the government:

Ana Matthews [10:37]: “Moved to the taxpayer because the insurer is no longer covering the person as their expenses get bigger and bigger.”

Furthermore, the practice of insurers denying necessary care not only strains families but also results in longer hospital and nursing home stays, which are more costly in the long run. Traditional Medicare covers these expenses at an average of $218 per day—twice the cost of other Medicare recipients:

Ana Matthews [09:57]: “These patients often had long hospital and nursing home stays after they left. ... their care cost an average of $218 per day.”

6. Reporter Insights and Future Outlook

In concluding reflections, reporters Ana Matthews and Chris Weaver express concerns about the sustainability and ethical integrity of the Medicare Advantage system. They emphasize the need for reform to ensure that MA plans deliver on their promises without compromising patient care:

Chris Weaver [19:23]: “And I think that the recourse is not to like abandon the program... but to kind of reconfigure it such that it gets the result that it was originally intended to deliver.”

While acknowledging that some revenue-generating practices by insurers might enhance patient benefits, the overarching sentiment is that these come at the cost of accessibility and quality of care. The Journal commits to ongoing investigative reporting to monitor the evolving relationship between private insurers and Medicare, anticipating further government interventions and potential policy reforms.

Conclusion

“Medicare, Inc. Part 2: Taxpayers Paid for Care Denied by Insurers” offers a compelling exploration of the challenges faced by Medicare Advantage enrollees, particularly the most vulnerable populations nearing the end of life. Through personal stories, data-driven analysis, and incisive reporting, The Journal highlights the urgent need for systemic reforms to ensure that Medicare continues to fulfill its mission of providing comprehensive and accessible healthcare to all eligible Americans.

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