Politics engulfs Medicare shortfall

White House initiatives assailed by Democrats

Actuary tells of firing threat

March 25, 2004|By Cyril T. Zaneski | Cyril T. Zaneski,SUN STAFF

WASHINGTON - Democrats moved swiftly yesterday to try turning Medicare's grim financial forecast to their political advantage, blaming Bush administration initiatives to expand the role of private health insurers in the program and alleged White House efforts last year to hide the costs of its plans from Congress.

Medicare's chief actuary, Richard S. Foster, told a House panel that he told White House officials in June that his projected cost of Medicare reform legislation would far exceed lawmakers' assumptions.

The administration pressured him to keep that information from Congress when Capitol Hill debate began on the measure last fall, he said.

Foster said that Thomas Scully, the former Medicare administrator, threatened to fire him if he answered congressional requests for information about government payments to private health maintenance organizations. Foster projected that the government would pay HMOs $46.3 billion over the next decade, not the $14 billion that Congress was told by its own budget office before it passed the Medicare Modernization Act in November.

Foster's appearance before the Ways and Means Committee came one day after release of the annual report by Medicare trustees warning that the heath insurance program for 41 million seniors would go bankrupt in 2019 unless lawmakers acted to restrain rocketing medical costs and boost the program's finances.

The projected Medicare bankruptcy date is seven years sooner than the trustees forecast a year ago. The cost of the new Medicare law, which includes a prescription drug benefit, is responsible for knocking two of those years off the program's life span and will cost a total of $537 billion over 10 years, the trustees said.

While Democrats attempted to lay the blame for the acceleration of Medicare's funding decline at the doorstep of the Bush administration, Republicans countered that rising health care costs and an aging population were ultimately to blame. "We're the victim here of plain, simple mathematics," Treasury Secretary John W. Snow said.

Republican lawmakers, meanwhile, criticized Foster and the actuary for the Congressional Budget Office as giving them no credit for initiatives in the Medicare law that the lawmakers said would ultimately lower medical costs - required physicals for seniors entering Medicare and management programs for chronic diseases such as diabetes.

"I'm just astounded that you could cost out every dollar we spend, but you can't `cost in' every dollar we save," said Rep. Nancy L. Johnson, a Connecticut Republican. "It just spins my head."

The panel's Democrats focused on Foster's allegation that he had provided projections showing the administration's Medicare initiatives would cost between $500 billion and $600 billion to Doug Badger, the White House's senior health policy analyst, and to the White House Office of Management and Budget. Those officials had Foster's projections at a time when Democrats and Republicans on Capitol Hill were requesting the information.

Congress barely passed the Medicare bill in November using CBO projections that the measure would cost $395 billion over a decade. CBO Director Douglas Holtz-Eakin stood by that figure yesterday, saying it "remains the single best estimate." Republicans, meanwhile, backed the lower-cost figure, saying the CBO was, by law, the official "scorekeeper" for Congress.

The CBO and Medicare actuaries' estimates vary widely because of differing assumptions about the number of seniors who would take up the prescription benefit, which begins in 2006; the number of beneficiaries who would quality for a low-income subsidy; and the popularity of private HMOs and preferred-provider organizations.

Neither the CBO nor the actuaries at the Centers for Medicare and Medicaid Services "tilted" their projections in an attempt to influence action on Medicare legislation, Foster said. "The fact that we disagree somewhat ... is because the future is uncertain," he said.

Lawmakers from both parties were particularly interested last year in getting Foster's cost estimates for Medicare Advantage, a program in which private insurers contract with Medicare to provide services to beneficiaries.

The program is controversial. Republicans strongly back it, saying competition among private insurers would ultimately lower Medicare costs. Democrats say it drains cash from the standard Medicare program.

Foster maintains the program will indeed be popular, enrolling 32 percent of Medicare beneficiaries by 2013. However, he also said the program would be a net drain on Medicare because the program reimburses the private plans at a higher rate than it does fee-for-service medical providers.

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