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Report: Medicare-Administered Drug Benefit Would be More Affordable, Comprehensive, Stable than Current Private Insurance-Run Drug Benefit

Members of Congress Call Today for a "Medicare-Operated" Drug Plan

WASHINGTON, Oct. 23 /PRNewswire-USNewswire/ -- Older adults and persons with disabilities should have the option of choosing prescription drug coverage through the Original Medicare program to eliminate the consumer exploitation that plagues the current Medicare Part D drug benefit run by private insurance companies, concludes Consumers Union and the Medicare Rights Center in a report released today.

"Seniors and taxpayers deserve the choice of a Medicare-administered drug plan that covers the safest and most effective medicines at the best possible price," said Bill Vaughan, senior policy analyst for Consumers Union, publisher of Consumer Reports. "We know that the private insurance companies aren't getting the best deals for consumers on prescription drugs. Let's let Medicare -- which Americans know, trust and count on for their health care coverage -- offer prescription drug coverage, too."

"Day after day we see men and women with Medicare unable to get the medicine they need because of the confusing and exploitative marketplace that dominates the for-profit drug offerings from private insurance companies," said Robert M. Hayes, president of the Medicare Rights Center, a national consumer service organization. "It's time for Congress to offer a Medicare-administered drug benefit option that would benefit consumers' health and pocketbooks and bring down the program's cost for taxpayers."

"The Best Medicine: A Drug Coverage Option Under Original Medicare," is available online at or

In "The Best Medicine: A Drug Coverage Option Under Original Medicare," Consumers Union and the Medicare Rights Center cite numerous independent research studies that find the current Medicare drug benefit available only through private plans is unnecessarily costly, has coverage gaps, is unstable and leaves consumers vulnerable to marketing fraud because of the number of plans offering such divergent benefit packages.

The consumer groups report that a Medicare-administered drug benefit can lower drug prices and reduce the overall cost of the Medicare coverage program by harnessing the purchasing power of the 43 million Americans with Medicare to negotiate prices. It costs private insurers 9.8 percent of the drug benefit's total cost to administer the program, yet it costs Medicare only 1.7 percent of the total costs to administer hospital and outpatient coverage. Prices for the Veterans Administration's most commonly prescribed drugs are half as much, or less, than the prices offered through private drug insurance plans.

Consumers Union and the Medicare Rights Center recommend using a national evidence-based formulary for a Medicare-administered drug plan option that would help guide doctors to prescribe in a way that improves health care outcomes, reduces costs and facilitates a fair and efficient drug appeals system. The Veteran Administration's formulary is broader than the drugs covered under Medicare private drug plans and also covers non-formulary drugs prescribed according to evidence-based guidelines.

Legislation to give consumers a Medicare-run drug option was introduced today by Senator Richard Durbin (D-IL) and Representatives Marion Berry (D-AR) and Jan Schakowsky (D-IL). The Medicare Prescription Drug Savings and Choice Act would utilize price negotiation and the best evidence about the safety and effectiveness of drugs to give older adults and people with disabilities the choice of a stable, consistent and affordable drug coverage plan.

The consumer groups also report that the current, private drug plan appeals system is dysfunctional, with a lack of information from the private plans about the right to appeal, lengthy delays in the process and the need to use an experienced advocate to navigate the process. According to the Centers for Medicare & Medicaid Services, private drug plan denials are overturned by the independent review entity in over half of the cases concerning utilization management (prior authorization, step therapy and quantity limits).

The instability of a Medicare drug benefit available only through private insurers means fluctuating plan premiums, drug prices, formularies and utilization management restrictions for Americans with Medicare, most of whom are locked into their plans for the year, the report found. Each year, the poorest, most vulnerable people with Medicare who get "extra help," the federal subsidy to help pay drug plan costs, are forced out of their plans when premiums rise. For 2008, as many as 1.6 million people will be reassigned to a different drug plan due to increased premiums.

Consumers Union (CU), publisher of Consumer Reports, is an independent, nonprofit testing and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers.

Medicare Rights Center (MRC) is the largest independent source of health care information and assistance in the United States for people with Medicare. Founded in 1989, MRC helps older adults and people with disabilities get good, affordable health care.

SOURCE Consumers Union
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