Abuses by private insurers affect public programs. On Oct. 7, 2007, the New York Times reported that 91 federal audits showed tens of thousands of Medicare recipients have systematically had their claims improperly denied by private insurers. Audits revealed improper terminations of people with HIV/AIDS; huge backlogs of unprocessed claims and complaints; and failure to answer phone calls from consumers, physicians and pharmacists. Companies audited include UnitedHealth, which services six million Medicare recipients; Humana, with more than 4.5 million; and WellPoint, which owns Blue Cross of California. Problems included UnitedHealth’s improperly denying claims without explanation to beneficiaries; Humana’s not explaining claim denials or not informing beneficiaries that they could appeal; and a backlog of 354,000 claims in a WellPoint subsidiary, UniCare.

 

Related problems in Medicare drug coverage by private insurers have come out in a report  by the House Oversight and Government Reform Committee. Among other problems, under the quasi-privatized “Medicare Part D,” some insurers receive rebates not passed along to consumers.

 

As the report explains,

 

“Unlike traditional Medicare, which is run directly by the government, the new Medicare Part D prescription drug program depends on private insurers to provide drug coverage to Medicare beneficiaries. This reliance on private insurers has sparked a debate about the consequences of privatizing the delivery of Medicare services. Proponents, including President Bush, have argued that competition among private insurers will lead to “better coverage at more affordable prices.” [however] Opponents have questioned whether private companies can match the efficiency and negotiating power of traditional Medicare.”

 

Regrettably, and oddly—considering that the taxpaying public is footing the bill—

 

“The actual costs incurred by the private drug insurers and the drug prices they negotiate are proprietary and closely guarded. This has left Congress and the public without access to the information needed to assess the performance of private insurers and to compare their performance with traditional Medicare.”

 

Research done by congressional experts reveals that “use of private insurers to deliver Medicare drug coverage is driving up costs and producing only limited savings on drug prices. The report estimates that taxpayers and Medicare Part D beneficiaries could have saved almost $15 billion in 2007 if administrative expenses in the program were reduced to the level achieved by traditional Medicare and drug prices were lowered to Medicaid levels.”

 

The key findings of the report are summarized (link above). Today, the House Oversight and Government Reform Committee holds a hearing on “The Medicare Drug Benefit: Are Private Insurers Getting Good Discounts for the Taxpayer?”

 

“The Medicare Part D program provides prescription drug coverage to almost 30 million enrollees, and will cost federal taxpayers almost $1 trillion in the next decade.  The hearing will examine whether the private insurers that receive government subsidies to provide the Part D benefit are able to effectively obtain prescription drug discounts from drug manufacturers.  Since the Part D program’s inception in January 2006, observers have questioned whether the private insurers who run the program are effectively negotiating with drug manufacturers for low prices.”

 

Witnesses include Kerry Weems, Acting Administrator, Center for Medicare and Medicaid Services, Department of Health and Human Services. Weems will be followed by panelists from the U of Minnesota Department of Pharmaceutical Care and Health Systems, Johns Hopkins’ Bloomberg School of Public Health and the Yale U School of Management, and by representatives of industry and consumer organizations.