Press Release
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FOR IMMEDIATE RELEASE |
Contact: Jennifer Kohl 202.225.4289 or 202.225.4025 Trudy Perkins 410.685.9199 or 202.225.4641 |
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Cummings Releases Report Identifying $15 Billion of Wasteful Spending in Medicare Drug Benefit
Findings show large profits to private insurers at the expense of taxpayers and seniors.
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Baltimore, Md.— Today, Congressman Elijah E. Cummings (Md.-07), a senior member of the House Committee on Oversight and Government Reform, released a new report on the Medicare Part D drug program revealing that high administrative costs of the private Part D insurers, combined with their inability to negotiate significant drug savings, will cost taxpayers and seniors almost $15 billion this year.
“President Bush and some of my colleagues in Congress have been robbing the federal treasury to line the pockets of big business—at the expense of our families and seniors,” Congressman Cummings said. “This corporate welfare must be put to an end.”
The investigation by the House Oversight and Government Reform Committee is the first independent analysis to incorporate proprietary data about drug plan costs and drug prices. Key findings include:
· High administrative expenses. Part D private insurers report administrative expenses, sales costs, and profits of almost $5 billion in 2007—including $1 billion in profits alone. The administrative costs of the privatized Part D program are almost six times higher than the administrative costs of the traditional Medicare program.
· Failure to negotiate significant drug manufacturer rebates. The drug price rebates negotiated by the Part D insurers reduce Medicare drug spending by just 8.1%, compared to a 26% decrease in drug spending from rebates in the Medicaid program. Because of the difference in the size of the rebates, the transfer of low-income seniors from Medicaid drug coverage to Medicare drug coverage will result in a $2.8 billion windfall for drug manufacturers in 2007.
· Failure to pass through rebates to seniors. Although private insurers are required to give Medicare beneficiaries access to negotiated prices, including all discounts and rebates, the insurers do not pass rebates through to beneficiaries with gaps in coverage like the “donut hole.” This year alone, private insurers will receive $1 billion in rebates on purchases that seniors with coverage gaps will pay for out of their own pockets.
“This report is consistent with my early criticisms of the Medicare Part D program’s corporate handouts and failures,” Congressman Cummings said. “I am committed to ensuring that we shed light on these failures and uphold our obligation to be good stewards of taxpayer dollars.”
Attached: Copy of the Medicare Part D Report
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