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Dear Dana,
Back in 2003, when the so-called Medicare Modernization Act
was being debated in Congress, we warned that this latest
round of Medicare privatization contained severe flaws that
would hurt consumers and taxpayers while lining the pockets of
special interests. With nearly two years of hindsight, we can
safely say we were right: The MMA has been a major
disappointment for consumers and taxpayers, but a windfall for
private insurance and drug companies.
We've laid out the extent of the MMA's failures in a new
report: Medicare Privatization: Windfall for the Special
Interests. The report chronicles the
failures of the MMA in three key areas: Medicare Advantage
overpayments, subsidies to regional PPOs, and drug prices.
View the report
here
Among the key findings:
- Under the MMA, Medicare has been significantly
overpaying private plans under Medicare Advantage.
In 2005, Medicare overpaid private plans by at least
7% per beneficiary, costing taxpayers:
$2.7 billion. In 2006, overpayment reached
11% per beneficiary, costing taxpayers
$4.6 billion.
- Under the MMA, Congress set aside $10 billion
for an unnecessary subsidy (or "stabilization fund") to
regional PPOs. This year, however, 88% of
beneficiaries have access to a regional PPO, before
the so-called "stabilization fund" was even tapped--no
subsidy was necessary.
- Medicare Part D drug prices are substantially
higher than the prices obtained by the Department of
Veterans Affairs (VA), which negotiates prices on
behalf of consumers. For all of the top 20 drugs prescribed
to seniors, the lowest price charged by any Part D plan was
higher than the lowest price secured by the VA. Yet Congress
refused to let Medicare negotiate directly with the drug
companies, as the VA does.
View the report
here
Bottom line: this report shows that, unfortunately for
consumers and taxpayers, the MMA has not even come close to
meeting the high expectations set for it by Congress.
Consumers are getting hurt and taxpayers fleeced, while
insurance companies and drug manufacturers are raking in money
faster than they can count it. Congress needs to move away
from this deeply flawed privatization model, and instead focus
on strengthening Medicare.
We urge you to disseminate this report far and wide and to
use it aggressively in your advocacy efforts.
Luis Hestres
eAdvocacy Coordinator, Families
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