The report said administrative expenses, sales costs and profits of
private insurers offering Medicare drug plans are almost six times
higher than the administrative costs of traditional Medicare coverage,
costing almost $5 billion or about $180 per beneficiary in 2007.
The insurers' profits will account for $1 billion, the report said.
The companies failed to negotiate significant rebates from drug
makers, the report also said.
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"Privatizing the delivery of the drug benefit has enriched the drug
companies and insurance industry at the expense of seniors and
taxpayers," Waxman said in a statement on Monday.
He released the report with 12 Democrats on his committee.
From Reuters, 10/15/07:
http://www.reuters.com/article/domesticNews/idUSN1227570120071015
Report critical of Medicare drug plan costs
By Lisa Richwine
WASHINGTON (Reuters) -
Taxpayers and Medicare patients could have saved almost $15 billion in
2007 if private health insurers had cut expenses for prescription drug
coverage and negotiated bigger discounts, a report from Democratic
staff of a House of Representatives panel said on Monday.
The Medicare prescription drug benefits offered by private insurers
operate with "high administrative costs, sales expenses and profits,"
the report said.
Staff for Democrats on the House Oversight and Government Reform
Committee, chaired by California Rep. Henry Waxman, based their
conclusions on proprietary cost and pricing data obtained from 12
insurers that provide drug coverage to more than 18 million Medicare
patients.
"The cost and pricing data obtained by the committee reveal that use
of private insurers to deliver Medicare drug coverage is driving up
costs and producing only limited savings on drug prices," the report
said.
Aetna Inc, UnitedHealth Group, Humana and other companies offer drug
plans through Medicare, the federal health coverage for the elderly
and disabled.
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