Automaker Retirees Racked Up a $2 Billion Pharmacy Bill in 2018

(Bloomberg) -- A retiree health-care trust set up by Detroit automakers and the United Auto Workers union described quite the medical bill on Capitol Hill this week: $4.2 billion.

The expenditures, outlined by Alan Reuther, legislative consultant for the UAW Retiree Medical Benefits Trust, covered 656,000 retired union members and their dependents. Almost half of that sum -- $2 billion -- went to prescription drugs, Reuther told the House Ways and Means Committee, which held a hearing Tuesday on rising costs.

About 80 percent of the trust’s members are covered by Medicare, and the trust provides supplemental coverage for prescription drugs, plus other health costs.

The biggest drug outlay for the trust in recent years has been insulin. About 50,000 trust members use the drug, and spending on it surged 51 percent from 2013 to 2017. Last year, the trust’s insulin costs were $235.5 million, Reuther said. That’s about $4,700 per patient.

General Motors, Ford, Chrysler and the UAW agreed to set up the trust in 2007 as part of contract-bargaining between the companies and union that takes place every four years. At the time of its 2010 launch, it was the biggest non-governmental purchaser of retiree health care in the U.S.

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