Privatized MediCare Drug Program Provides Worse Coverage than Public Programs

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FTCR Calls on Feds to Allow MediCare to Take Over Drug Program

Santa Monica, CA — A nonpartisan consumer group renewed its call for MediCare to take control of the privatized prescription drug program in response to a report released today that found that elderly, poor and disabled patients are receiving worse coverage than they did when insured under public programs. The Foundation for Taxpayer and Consumer Rights cited excessive insurance and drug company overhead and profits for the program’s inefficiencies and dramatic failures. These new faults in the private insurance program are further reason for Congress to lift its ban on direct bargaining by Medicare for lower drug prices and better coverage.

So-called “dual-eligibles” — low-income and disabled patients — are struggling with new out-of-pocket costs and, even worse, finding that drugs formerly provided by the California Medi-Cal are not covered by some of the new plans. Medi-Cal drug coverage was more comprehensive and provided access to more prescription drugs than average coverage under the new program run by private HMOs and drug companies. The report is available at:

Under the new program, some of the nation’s neediest patients have been denied coverage outright due to computer glitches. In California it is estimated that 20 percent of the state’s 1.1 million low-income and disabled enrollees, who had no choice about giving up a predictable drug benefit and were automatically enrolled in private plans, have been turned away at the pharmacy.

“The privatized MediCare drug program means big trouble for seniors who are forced to take less so that insurers and drug companies can have more,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). “The catastrophe stands as a reminder of the plagues that afflict the nation’s whole private health care system: pointless complexity, high overhead, unregulated corporate profits and the exclusion of millions of people. Congress must untie the hands of the federal government and allow the MediCare program to use its market clout to negotiate cheaper drugs.”

Congress wrote the 2003 Medicare prescription drug law under stiff lobbying pressure by the drug industry. Lawmakers broke with the tradition of other public health care plans by banning the 41-million member Medicare program from using its bargaining power to negotiate lower prescription drug prices. Instead, the law requires seniors to access the new prescription drug program by joining private HMOs and drug benefit managers. HMOs commonly take up to 25% of the premiums they collect for overhead, executive salaries, advertising and profit.

Rx Express

To dramatize the savings potential of allowing Medicare to use its bargaining power to negotiate discounts, and the need for a U.S. solution to high drug costs, FTCR organized two train trips last fall — dubbed the Rx Express — taking patients to Canada to purchase their prescriptions. Canada’s health plan directly negotiates prices with drug makers worldwide. For more information visit:

Many seniors traveled three days to access the same discounts that could be available in the U.S. if Medicare was authorized to negotiate directly with drug companies as do the U.S. Department of Veteran Affairs and big business. Rx Express riders saved an average of 60% off the prices they pay for the same drugs in the U.S. for annualized savings of $2000 each.

“Medicare should negotiate discounts, not HMOs whose only interest is lining their pockets. At issue is our health,” said 79 year old Carole Jaquez of Apple Valley, California who rode both Rx Express trains and has made several trips to Mexico to help pay for her monthly prescription drug needs. Carole has been forced to cut her prescription pills in half in order to make them last longer — a common practice that threatens a senior’s health by skimping on the necessary medication dosage.

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The Foundation for Taxpayer and Consumer Rights (FTCR) is California’s leading nonpartisan consumer advocacy organization. For more information, visit us on the web at:

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