The pernicious effects of reinsurance on taxpayers

Medicare Part D, which is Medicare’s prescription drug plan, seems like the model government health plan: growing enrollment, large consumer plan choice, and … stable premiums. But as Austin Frakt describes in The Large Hidden Costs of Medicare’s Prescription Drug Program, New York Times August 12, 2018, the Federal reinsurance program creates incentives that subtly pushes the excess cost of the program onto the taxpayers. The plans have a perverse incentive to encourage enrollees into higher spending, which moves the spending off the plans’ books and onto government reinsurance program, which does not count toward the premium. - Sanders DiPiero

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