MEDIA ADVISORY, Thursday, March 1, 2007
CONTACT: Yoni Cohen, (202) 225-3202

WASHINGTON – U.S. Representative Pete Stark (D-CA), Chairman of the Ways and Means Health Subcommittee, today responded to new data released by the Medicare Payment Advisory Commission (MedPAC) and to comments made by MedPAC’s Chairman, Glenn Hackbarth, at a Subcommittee hearing on the commission’s March report. Both the new report and Chairman Hackbarth’s comments warned against Medicare overpayments to private plans.
 
MedPAC’s current Chairman and the former Senior Vice President of Harvard Community Health Plan, Hackbarth said of the Medicare Advantage program, “The current reimbursement policy presents an imminent danger. As enrollment into these plans accelerates, it creates a problem with Medicare’s sustainability.”
 
MedPAC March’s report estimates that private plans are paid, on average, 112 percent of what it would cost to serve the same seniors and people with disabilities in the traditional fee-for-service Medicare. The overpayments for private fee-for-service plans are even higher, at 119 percent of the cost of the traditional Medicare program.  During the same discussion, Mr. Hackbarth continued, “I’m all for private plans that are efficient, but private plans that are going to drive up costs are bad for the program.” 
 
According to the Congressional Budget Office’s recently released Budget Options book, ending Medicare’s overpayments to private plans would save the federal government nearly $160 billion over 10 years.
 
“The free market’s so-called ‘invisible hand’ is picking taxpayers’ pockets,” said Stark. “Medicare’s overpayments to private plans cost taxpayers tens of billions of dollars. That’s why MedPAC continues to advise Congress to stop wasting money on inefficient private plans. For years, these overpayments have continued as part of an effort to privatize Medicare. As Chairman of the Ways and Means Health Subcommittee, I intend to pursue a more fiscally responsible course.”