The privatization of Medicare drug plans has resulted in six-fold increases in administrative costs, dramatic reductions in drug price rebates and failure by insurers to pass rebates onto patients, according to a report released on Monday by the US House Oversight and Government Reform Committee.
“Privatizing the delivery of the drug benefit has enriched the drug companies and insurance industry at the expense of seniors and taxpayers,” said committee chairman Rep. Henry Waxman (D-Calif.). “The program’s inflated administrative costs and meager drug rebates will cost taxpayers and seniors $15 billion this year alone.”
The Medicare Part D prescription drug program, previously run directly by the federal government, now relies on private insurers to provide coverage to beneficiaries. Advocates of the new system have argued that competition would achieve better efficiencies and result in better coverage at more affordable prices.
However, the report says that the privatization model has not delivered these outcomes and also notes that drug manufacturer rebates received by Part D insurers are significantly smaller than rebates received by Medicaid.
The committee obtained information from the 12 leading insurers that offer Medicare prescription drug plans and Medicare Advantage drug plans.
Analysis of the cost and pricing data received indicates that the use of private insurers is driving up costs and producing only limited savings on drug prices.
The report’s key findings include:
The administrative expenses of Part D insurers are six times higher than those under traditional Medicare
Insurers have negotiated drug manufacturer rebates of only 8.1%, compared to drug spending rebates of 26% under traditional Medicare
Insurers derive profits by receiving rebates on drug purchases which they do not pass on to beneficiaries
Insurers have established ineffective drug pricing formulas that leave beneficiaries and taxpayers vulnerable to price increases
Insurers have a mixed record in promoting the use of generic drugs
Let's see - A) Dennis Kucinich is head of the sub-committee that authored this report; B) Dennis Kicinich is running for President; C) Dennis Kucinich's main platform is nationwide Medicare coverage for all people, thereby getting rid of all private insurance companies. Now he comes out with a "report" saying that drug and insurance companies are killing this program. Jeez - what does he think we are, a bunch of idiots? Written by Professor
on 10/16/2007
You know thats funny because ol Waxman and company said when it first came out that it (the program) would cost the taxpayers like 200 BILLION to run. I guess 15 Billion isn't as bad as they thought. Ohh and I think this report is rather Biased they went in looking for negatives about this, and thats what they reported why not report the 185 BILLION dollars it DIDN'T really Cost. Liars all of them. Written by Ole Jarhead
on 10/15/2007
