Insurers fleeced taxpayers out of $9 billion in phony drug charges. Does anyone care?

It was a stop-the-presses revelation: “Halliburton Defrauding The Government of Billions of Taxpayer Dollars.” 

Or remember this one? “Solyndra Misled Government To Get $535 Million Solar Project Loan.” 

{mosads}And, of course, the ultimate white-collar swindle: “Enron Used Tax Code as ‘Profit Center.’”

Do you remember the days when we were shockable? When corporate malfeasance that bilked Americans out of vast sums of their hard-earned tax dollars constituted a national scandal that could shutter corporate titans and imprison top executives? 

I remember. I chaired the Enron oversight hearings during my time in Congress and recall both the media maelstrom that swirled around Washington for months and the heads that rolled as a result.

Yet cumulatively, these examples don’t equal the taxpayer fleecing perpetuated by the health insurance industry over the last 10 years, according to an explosive new media report: The $9 Billion Upcharge: How Insurers Kept Extra Cash From Medicare.

Miss that one? You aren’t alone. The public and congressional outrage has been imperceptible, as newscasts and social media feeds lock in on the border security debate and a government shutdown with no end in sight.

To catch you up: A Wall Street Journal exposé reported last week that major U.S. health insurance companies dramatically inflated their cost projections under Medicare’s Part D prescription drug benefit program for financial gain.

Under peculiar language of the statute, insurers are paid by Medicare for drugs in advance of their purchase, based on their own estimated outlays. However, they only have to repay a portion of the overpayments to the Treasury if their estimates come in high. Insurers exploited this loophole for a decade, and American taxpayers coughed up a staggering $9 billion to insurers for drug costs that they never actually incurred.

Giants like UnitedHealthcare, which covers many AARP members, won’t be voluntarily returning the windfall anytime soon. They are feigning ignorance and blaming drugmakers – their favorite foil – for unpredictable price increases that led to the inaccurate cost estimates. 

However, a statistical analysis by the Sloan Kettering Cancer Center, which frequently studies pharmaceutical pricing, swatted down that notion. The study’s author, Peter Bach, calculated the odds of a good-faith miscalculation by the insurers to be less than one in a million.

“Even expert dart throwers don’t hit the bullseye every time,” said Bach, usually an outspoken critic of the pharmaceutical industry. “But their misses are spread around in every direction. If they start missing in one particular direction over and over, they are doing it on purpose.”

The insurance industry’s credibility on pharmaceutical pricing matters, because the Trump administration has predicated the success of its campaign to lower drug prices largely on the fallacious notion that reducing insurers’ drug expenses will somehow trickle down to patients.

Given a veritable blank check on Medicare drug reimbursement, the insurance industry still forged it. It’s a stark reminder that insurance plans will not pass on savings to patients absent a legal requirement to do so.

I served in Congress when Part D was created, and I strongly supported its passage to help millions of seniors get desperately needed medicine. However, none of us – Republican or Democrat – understood how risk corridors in the arcane law could be abused to reward insurance companies for playing fast and loose with their spending forecasts.

Until and unless Congress enacts a statutory fix, the fleecing of Medicare and America’s seniors will continue.

Today, seniors may be required to pay up to $10,000 in out-of-pocket drug costs under Medicare. If President Trump wants to make good on his promises to get a better deal for taxpayers on drugs, he should work with Congress to fix the statute and apply the savings to lower the drug expenditures of actual Medicare beneficiaries. Heavens knows, insurers are doing more than enough to lower their own.

Mr. Greenwood is CEO of the Biotechnology Innovation Organization. He represented Pennsylvania’s Eighth Congressional District in Congress from 1993 to 2005.