Traditional Medicare a better deal.

Private Medicare Part D plans have higher administrative expenses and negotiated lower drug rebates, compared with traditional Medicare, according to a report released in October by the House Committee on Oversight and Government Reform. The total 2007 administrative costs of the 12 leading private Part D plans (9.8% of total benefit costs) were almost six times those of Medicare (1.7%), and will reach $4.6 billion this year, $1 billion of which is profit. In addition, the private insurers negotiated drug rebates from manufacturers of only 8%, compared with 26% obtained by Medicaid; the drug prices paid by enrollees of Part D insurers are no better than prices at discounters like Costco and Wal-Mart. However, private insurers will pocket $1 billion in rebates on drugs that are paid for entirely by beneficiaries during coverage gap periods. "The program's inflated administrative costs and meager drug rebates will cost taxpayers and seniors $15 billion this year alone," Committee chairman Henry A. Waxman (D-Ca.) said in a statement. The report can be found at www.oversight.house.gov.