Menino calls for Humana inquiry
He hits fee hikes for Medicare drug plans
Boston Mayor Thomas M. Menino yesterday called for an investigation into Humana Inc.'s price increases for its Medicare prescription drug plans, saying the company's 130 percent premium increase for its most popular plan in Massachusetts is a "bait and switch" tactic that preys on vulnerable people.
"Our seniors need a program that's affordable and consistent and not the bait and switch practices we're seeing here," Menino said. "They promised people one thing and gave them another."
Menino, who said he was responding to a story in The Boston Sunday Globe detailing Humana's 2007 price increases for its drug insurance, said he would raise the issue at an upcoming meeting of the United States Conference of Mayors in Washington, D.C., and seek support from leaders in other cities.
"This is not just a Boston issue," he said. "This is a national issue. We have to act in unity and stop this gouging."
Humana, a major health insurance company based in Louisville, Ky., offers three prescription drug plans for senior citizens enrolled in the Medicare drug benefit, called Part D, that began last year. For 2006, more than 2 million seniors nationwide enrolled in the lowest-priced offering, Humana Standard, which had an average monthly premium of $9.51. This year, monthly premiums increased an average of 60 percent, to $15.17. In Massachusetts, they increased 130 percent, from $7.32 to $16.90.
Humana attributed much of the increase to a government subsidy formula that is based on the average price of all Part D drug plans. The company said the government formula resulted in artificially low prices in 2006 and artificially high premiums for 2007.
While Medicare oversees the benefit through the Centers for Medicare and Medicaid Services, or CMS, the actual insurance is sold by private companies, and in most states there are dozens of plans with varying levels of coverage.
"The fact is that the premium prices that eventually appear on the government website are actually set by the government, and not by the individual health benefits companies," said Tom Noland , a Humana spokesman. This year, he said, the company's prices "ended up being higher than what we bid."
"Drug or other healthcare companies should not be allowed to lure seniors into low-priced plans one year and then hike the premiums through the roof the next," said US Representative Edward Markey , Democrat of Malden , in a statement. "Companies know that they have a lock on seniors who choose their plans because they will not have the energy to go through the confusing and frustrating process of changing plans every year."
Markey said Humana's tactics highlight the possible need to have the prescription drug program run by Medicare, and not by insurance companies. Democrats, who will have majority control of Congress, have vowed to find ways to improve the prescription drug benefit.
Incoming Speaker Nancy Pelosi , Democrat of San Francisco, has said that bills filed in the first 100 hours of the new session will include "fixing the Medicare prescription drug program." She proposes helping seniors by giving the government the power to negotiate lower prices with drug companies.
US Senator Edward M. Kennedy, Democrat of Massachusetts, yesterday wrote to Lesley V. Norwalk, acting CMS administrator, urging Norwalk to protect Medicare drug plan enrollees from "unjustified and predatory increases in insurance premiums for drug coverage."
"It is unconscionable that insurance companies should be allowed to raise their rates by 100, 200, or even over 400 percent after luring seniors into the program with artificially low rates," wrote Kennedy, who will become chairman of the Committee on Health, Education, Labor and Pensions.
Massachusetts Attorney General-elect Martha Coakley said she will review "issues around Medicare Part D and access to coverage" after she takes office Jan. 17. In a statement, Coakley said healthcare coverage for seniors will be "a high priority."
Jeffrey Krasner can be reached at krasner@globe.com. 