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The $9 Billion Upcharge: How Insurers Kept Extra Cash From Medicare

By The Wall Street Journal (Joseph Walker and Christopher Weaver) on January 5-6, 2019

Each June, health insurers send the government detailed cost forecasts for providing prescription-drug benefits to more than 40 million people on Medicare.

No one expects the estimates to be spot on. After all, it is a tall order to predict the exact spending for the following year of the thousands of members in each plan.

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 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.

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