Drug Money: The Medicare Bill Shouldn't
be Called "Public Policy"

by David Donnelly
April 1, 2004
First Published in Tom Paine.com

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Let's not mince words: President George W. Bush's Medicare plan benefits private interests over public good. The pharmaceutical corporations, HMOs and insurance companies got what they paid for, and then some.

If the Bush plan was considered a boon to these industries at the as-advertised price of $400 billion last November, then what is it now when it turns out the administration suppressed more honest estimates of its $534 billion cost?

If it is not just a giveaway to private interests, how else, as The New York Times' Paul Krugman wrote, can the Bush White House justify the fact that the equivalent of two of the seven years of lost Medicare solvency announced last week can be attributed mainly to higher payments to private HMOs? These payments, of course, are financed by increased taxpayer subsidies.

Injecting Drug Money

"Sure we have more access," explained an unnamed drug executive to The New York Times after the 2002 elections. "Our hand is stronger because of the election results, but who knows how much stronger it really is."

We were all about to find out.

According to the Center for Responsive Politics, the drug industry contributed $5.7 million to Bush and the Republican National Committee in the 2000 and 2004 election cycles (so far). By injecting this cash into the effort that put Bush in the White House and more into to trying to keep him there, the pharmaceutical companies won a staunch ally in defeating two provisions in the Medicare bill which would have lowered the cost of prescription drugs: legalizing the reimportation of prescription drugs from Canada, and giving Medicare the ability to use its purchasing power to negotiate lower prices for consumers.

The defeat of the drug reimportation provision was particularly galling, and primary blame must be placed at the White House's doorstep. A majority in Congress supported reimportation. Only after the administration joined the final negotiations on the bill was reimportation removed.

How much does the Bush Medicare plan help the drug companies? The Health Reform Program at Boston University calculated that drug companies would receive approximately $139.2 billion in increased, new profits from the Medicare bill, and that estimate was based on the $400 billion cap, not the more realistic $534 billion figure released by the White House in January.

Donor Discount Cards

It gets even more unseemly.

Long-time Bush crony David Halbert, the CEO of pharmaceutical benefit management giant AdvancePCS, helped to draft the provisions granting companies like his contracts to provide drug discount cards. Bush was an initial investor in AdvancePCS, which, along with other similarities, led the Center for American Progress to call them the "Halliburton of Medicare."

But the card doesn't mandate savings for seniors. "Only in this administration would the words 'discount card' mean seniors get the card while corporations get the discounts," commented U.S. Sen. Ted Kennedy.

True to form, last week the Bush administration announced that Halbert's AdvancePCS would be among the companies awarded these potentially lucrative contracts. Other companies receiving drug discount card contracts were: UnitedHealth, headed by William McGuire, who as a 2004 'Pioneer' for Bush raised at least $100,000 for his re-election; Blue Cross Blue Shield, whose BC/BS Florida affiliate employs Michael Hightower, a 2004 'Ranger' for Bush who has raised at least $200,000; and WellCare, which boasts two 'Pioneers' in its top brass. Other Pioneers and Rangers come from AmeriGroup, Anthem and HealthNet.

In fact, employees and PACs of the companies receiving contracts, according Center for Responsive Politics data, gave almost $275,000 to Bush's re-election committee this election cycle.

Buying Insurance

In total, insurance and HMOs have contributed close to $9 million to Bush and the RNC in the 2000 and 2004 election cycles, according to figures provided by the Center for Responsive Politics.

The Congressional Budget Office estimates that private insurers and HMOs like these would gain an additional $14 billion in payments from Medicare to entice them to offer drug coverage. Moreover, a Senate analysis projected Medicare outlays to private health plans would increase by more than six-fold between now and the end of the decade, from $37 billion last year to an estimated $226 billion by 2010.

Another insurance company-backed provision in the new law—Health Savings Accounts (HSAs)—merits special attention. These tax shelters are likely to benefit very few corporations who offer them, and few wealthy individuals who take advantage of them, at the projected expense of $6.4 billion drained from the U.S. Treasury. Pursued for years by J. Patrick Rooney, the former chairman of Golden Rule Insurance Co., HSAs allow individuals to set aside, before taxes, money for health care expenses. Only wealthy individuals have enough money to take meaningful advantage of such accounts. Rooney has directed millions to Republican candidates and causes, including $121,000 to fund Bush's recount effort in Florida.

Golden Rule won a powerful partner in the final days of lobbying for the inclusion of HSAs. The company was purchased for $500 million cash by UnitedHealth (whose CEO is Bush Pioneer William McGuire) literally just days before the passage of the Medicare bill. UnitedHealth's stock soared on the news, analysts said, in part due to the pending Medicare provision on HSAs.

"We know this market exceptionally well, we pioneered it," crowed Brian McManus, Golden Rule's lobbyist.

'Pioneered' it is right. Or maybe, like the rest of the Medicare bill, they just bought it.

It is time to call the Bush's Medicare plan what it really is: One big special interest-giveaway masquerading as public policy. We ought to start calling it privatized policy.

David Donnelly is director of Public Campaign Action Fund's Campaign Money Watch, a project to hold elected officials accountable for the special favors they do for political contributors. This article first appeared in Tom Paine.com



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