Undermining America

Administrator of the Centers for Medicare and Medicaid Services Thomas Scully was negotiating for private employment with five different health care firms while he was drafting the Medicare reform legislation. He was granted a special waiver of ethics rules by the administration. He left for private industry in December 2003. [Public Citizen]

The legislation requires the Secretary of Health and Human Services, Tommy Thompson, to explicitly authorize pharmaceutical imports from Canada. He refuses to do so. [Center for American Progress ]

The administration recently appointed Mark McClellan as a replacement for Thomas Scully. As Commissioner of the Food and Drug Administration, McClellan led the charge against the importation of drugs from Canada. [Washington Post 2/20/04]

The legislation provides a subsidy for private insurers to compete against Medicare. As private insurers enter the Medicare market, they will target their services at the healthiest, best off seniors. Removing their contributions from Medicare will further weaken its financial situation, and prompt more departures for private insurers, eventually leaving only the sickest of seniors in Medicare. [Families USA ]

When Congress approved the legislation, they were told that it would provide an appallingly high $14 billion subsidy to private insurers. [Campaign For America's Future] Based on information the administration suppressed, it now looks like the program will costs more than three times that amount. [New York Times, 3/20/04]

David Halbert founded the corporation that would become AdvancePCS in the early eighties, with a contribution from struggling businessman George W. Bush. He also assisted Bush with several illegitimate business deals while Bush was Director at Harken energy. George Bush would eventually realize more than 1 million dollars in capital gains on his Advance PCS investment. Halbert would be a significant Bush contributor in each of George W. Bush’s candidacies.

Halbert was tapped by the White House to create a "Medicare discount card" program that provides questionable benefits to seniors. Fortunately, his corporation, AdvancePCS, is one of the leading providers of prescription drug discount cards, and would be well positioned to reap an enormous profit from the program. [Center for American Progress; Boston Globe]

The prescription drug benefit is to be provided by private insurance companies. [Center for American Progress] Many private insurers don’t even bother to offer coverage for rural residents. [Families USA] These rural residents will have no choice but to sign up with a single Medicare HMO. [Center for American Progress]

Based on a CBO report, the administration claimed that its Medicare reform plan would cost $400 billion over ten years, a low figure that was key to winning support for the plan from anti-deficit Republicans. [Seattle Times 3/12/04] Just weeks after the legislation passed, an Office of Management and Budget report put the actual cost at $534 billion. [OMB Watch 2/9/04 ] The administration feigned shock and surprise, but Medicare actuary Richard Foster claims that he was threatened "on White House instructions," probably from Doug Badger, the White House senior health policy analyst. [Washington Post 3/18/04; New York Times 3/18/04]

He prepared a cost estimate for the administration months before the vote, and forwarded it to the White House, [New York Times 3/20/04] but was threatened with firing by Bush’s Medicare chief, Thomas Scully, if he "let [his estimate] get out." [Center for American Progress; KaiserNetwork.org 1; KaiserNatwork.org 2]

The Dept. of Health and Human Services and the White House are passing the blame onto former administrator Thomas Scully, supporting an investigation into his activities. [Washington Times 3/17/04]

It now looks like the cost of the program will be more than double what it was originally forecast at. [New York Times 3/19/04]

Congress has launched an investigation of the treatment of Foster. [Time Magazine 3/9/04]

Congressman Nick Smith (R-MI) is retiring from the House in November, and his son was locked in a tight primary race to succeed him. Republican floor leaders offered substantial campaign contributions for his son’s campaign in return for Congressman Smith’s vote. They also threatened to support his son’s opponents if Congressman Smith voted against the legislation. [KaiserNetwork.org]

It is strong congressional convention that congressmen have fifteen minutes to vote after a vote is called. [ Campaign for America's Future; Office of Rep. Steny Hoyer]

The Department of Health and Human Services initially produced 36 million misleading flyers [Flyer 1; Flyer 2] to send to current Medicare recipients, at a cost to taxpayers of $10 million. It soon after began spending millions of taxpayer dollars on a misleading television, radio and print advertising campaign, designed to "counteract Democratic criticism." The advertisements were placed by George Bush’s campaign media firm. On March 10, the GAO ruled that the advertisements were not illegal, though they "have notable omissions and other weaknesses." [Center for American Progress]

The GAO immediately reopened its investigation, though, when new Medicare ads were released that portray fake reporters asking questions about the program. [Kaiser Network; Village Voice]

The legislation actually says: "In order to promote competition under this part and in carrying out this part, the Secretary (1) may not interfere with the negotiations between drug manufacturers and pharmacies and [prescription drug plan] sponsors; and (2) may not require a particular formulary or institute a price structure for the reimbursement of covered Part D drugs." [Center for American Progress; Public Citizen]

Just try and make sense of this: Everybody pays a $420 annual premium and the first $250 in drug costs. The benefit pays 75% of the next $2000 dollars in drug costs, up to $2250 in expenses. It then provides nothing for the next $2850 in expenses, before covering 95% of all expenses above $5100. [Kaiser Family Foundation]

The reform requires "dual eligibles," or seniors that meet the income and wealth standards for Medicaid, to pay more for their prescription drugs than under the old system. It doubles the costs of prescription drug costs of dual eligibles that have income above the poverty line, but still qualify for Medicaid. [Center on Budget and Policy Priorities 1; Center on Budget and Policy Priorities 2] Seniors with income of more than $8980 or more than $6000 in wealth – a car, a modest savings account, even a burial plot – are ineligible for the reduced rates. [Boston Globe 11/18/03] Medicaid has long helped poor seniors meet their Medicare related expenses. [Statement of Barbara Lyons, Ph.D; Kaiser Family Foundation]