This is why putting the government in charge of healthcare has been a travesty. It turns out the insurers found another way to game the system. They are supposed to estimate the cost for proving prescription drug benefits to those they serve on Medicare. Wouldn’t you know it, they are often wrong:
However, year after year, most of those estimates have turned out to be wrong in the particular way that, thanks to Medicare’s arcane payment rules, results in more revenue for the health insurers, a Wall Street Journal investigation has found. As a consequence, the insurers kept $9.1 billion more in taxpayer funds than they would have had their estimates been accurate from 2006 to 2015, according to Medicare data obtained by the Journal.
The cornerstone of Part D is a system in which private insurers such as CVS Health Corp. ,UnitedHealth Group Inc. and Humana Inc. submit “bids” estimating how much it will cost them to provide the benefit. The bids include their own profits and administrative costs for each plan. Then Medicare uses the estimates to make monthly payments to the plans.
After the year ends, Medicare compares the plans’ bids to the actual spending. If the insurer overestimated its costs, it pockets a chunk of the extra money it received from Medicare—sometimes all of it—and this can often translate into more profit for the insurer, in addition to the profit built into the approved bid. If the extra money is greater than 5% of the insurer’s original bid, it has to pay some of it back to Medicare.
For instance, in 2015, insurers overestimated costs by about $2.2 billion, and kept about $1.06 billion of it after paying back $1.1 billion to the government, according to the data reviewed by the Journal.
What business would allow this to happen? None! But those that work for the government don’t care because it is not their money. Add this farce to the deal that the insurers got with Obamacare and we have just made these idiots stronger and stronger.Tweet