Group Says Medicare Drug Plan Will Add Billions To Costs In N.J. — Friday, March 24, 2006

By Lindy Washburn

A national advocacy group said Thursday that New Jersey taxpayers will end up paying $23 billion in excess costs for the new Medicare Part D benefit over the next decade, because the federal government is not allowed to negotiate drug price discounts.

Citizen Action, joining a national campaign, called upon the Bush administration to eliminate the May 15 deadline by which seniors must sign up for the new plan to avoid paying a penalty. The group -– joined by Reps. Frank Pallone, D-Monmouth, and Rush Holt, D-Hopewell, at a Trenton news conference – said the government should simplify the benefit by administering it as part of traditional Medicare.

The complexity of the plan adds millions of dollars in administration to the cost of the benefit; over 10 years, those costs alone will add $1.1 billion to New Jersey taxpayers' bill, the report said. The benefit is administered by dozens of insurers offering multiple coverage options with differing lists of preferred drugs.

The greatest waste comes from the law's ban on negotiating discounts with manufacturers, the report said.

If Medicare – like the Veterans Administration or health plans in other nations – could use its buying power to reduce prices, the savings were estimated at more than $80 billion a year nationwide.

The report was prepared by the Institute for America's Future, a Washington think tank.

Of New Jersey's 1.3 million Medicare beneficiaries, 235,000 had enrolled in the new Part D Plan by Thursday.

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