Jeff Cruz is a senior policy analyst for Medicare and Social Security at Campaign for America’s Future.
Most TomPaine.com readers are already painfully aware of the culture of corruption that dominates this Republican Congress. Just to name a few of the most egregious examples, they let their big-donor oil friends write the energy bill, increased the cost of student loans while getting contributions from lenders, and attempted to enact a risky privatization scheme for Social Security through funding from investment firms eyeing unprecedented profits.
But nowhere is the corruption more glaring than in the Medicare Part D disaster passed in the dark of night in November of 2003 after a 3-hour vote—the longest recorded vote in the history of the United States. The bill created a Medicare drug benefit that relied on private companies. Republicans claimed privatization would give beneficiaries more choices and that competition among private plans would keep program costs down.
Between 2000 and 2004, health insurance, health services and pharmaceutical companies contributed $96,370,907 to candidates for public office—71 percent going to Republicans. Thirteen administration and congressional officials who were in key positions during the writing and passage of this bill now work for pharmaceutical companies. This includes Rep. Bill Tauzin, R-La., who is credited with guiding the law’s passage and now works for the drug industry's top lobbying group, PhRMA, as one of the highest-paid lobbyists in Washington. Bush’s former Medicare chief Tom Scully is now the top healthcare lobbyist for law firm Alston & Bird. Both reportedly negotiated their lobbying contracts while working on the so-called Medicare reform law from inside the U.S. government.
The result is a plan that is needlessly confusing and expensive. A recent poll found more then half of American seniors think Part D is “hard to understand.” Hardly a day passes when the newspapers aren’t reporting some new frustration in the long list of headaches this ill-conceived program is causing Medicare’s beneficiaries—older and disabled Americans. However, direct beneficiaries aren’t the only victims of this exercise in free-market failure. Last week, the Center for Economic and Policy Research and the Institute for America’s Future released a joint report detailing the exact costs of Republican corruption in the Part D disaster. The report calculates that the actual cost to the American public is about $80 billion per year, or $800 billion over the next 10 years—as most federal budgets are calculated.*
For those of you who aren’t Bill Gates and have a hard time putting $80 billion a year into perspective, that’s enough money for a tenfold increase in the annual appropriation for Head Start programs.
This $80 billion price-tag is based on two specific provisions where Republicans sold out seniors for their industry contributors. First, they created a confusing web of competing and inefficient private plans run by private insurers—who receive huge subsidies from the federal government—that beneficiaries must choose from, rather than a simple stand-alone benefit run by Medicare. The low overhead costs of a single administrating agency could save $4.8 billion annually.
Second, they made it illegal for the federal government to negotiate the price of drugs with manufacturers, despite the fact every other industrialized nation negotiates these prices. When the government does negotiate lower prices for bulk drug purchases, as does the Veterans Administration, it saves more than 40 percent compared to the market cost. Applied to Medicare, this would save about $560 billion over the first eight years of the program. The cost of the disastrous Medicare plan is even greater when the subsidies given to insurance companies are factored in.
In the fight against Bush’s previous number one domestic policy fraud, Social Security privatization, conservative racketeering and inefficiency were rejected. One reason for this success was that Democrats and outside groups were able to unite with a common message and strategy.
These same forces are reuniting to fix the Part D disaster. Americans United—a group that rose from the ashes of Americans United to Protect Social Security—is leading a coalition to reform Part D. In addition to participating in the AU coalition, the liberal advocacy group Campaign for America’s Future is teaming up with Moveon.org, the Public Campaign Action Fund and USAction to educate voters in key districts about the real costs of the Medicare boondoggle. Last week, several prominent groups—including the AFL-CIO, AFSCME, Consumers Union, Families USA, the National Committee to Preserve Social Security and Medicare, U.S. PIRGS and USAction—met with Senate Minority Whip Dick Durbin to begin plotting on how to best force action. On the House side, a unified Democratic Party is organizing more then 100 Medicare “town halls” in the upcoming weeks.
A campaign to reform Medicare starts with many advantages when compared with the fight against privatizing Social Security. For one thing, there is already a massive and passionate group of seniors opposing the Part D debacle. The Social Security fight targeted a terrible idea that people needed to be educated about. With Medicare, people have already experienced the complete failure of the Republican “reform” and are clamoring for a simpler and cheaper alternative.
Furthermore, the complexities of the plan will only produce further unhappiness. On May 15th seniors who haven’t yet enrolled will get stuck with lifetime penalties. Throughout summer and fall a steady stream of seniors will fall into the coverage gap known as the “doughnut hole” and be forced to pay out of pocket the entire cost for their overpriced drugs. When plans start changing the drugs they cover or increase drug prices, beneficiaries will be held hostage by their inability to change plans. Already seniors are complaining of not being able to get drugs that should be covered because of burdensome paperwork and restrictive requirements.
But this emerging campaign also lacks many assets of the Social Security fight. For example, the AARP was a strong opponent of privatization. While it has made some indications it would fight to push for obvious Medicare reforms like negotiated prices, it has yet to make a concerted commitment to improve a bill it originally supported. Similarly, young people were most affected by privatization schemes, which would have forced them to pay for the older generation’s retirement security while putting their own at risk. As a result, the privatization scheme found widespread resistance on college campuses and traditional centers of youth activism. Despite the widespread Republican cronyism that should anger young and old alike, there has not been nearly as much attention among younger activists on the prescription drug debate.
Efforts to reform Medicare will have large implications in the upcoming November elections. The drug benefit is one of the most glaring illustrations of how the cost of GOP corruption has been passed on to ordinary citizens. With seniors accounting for a disproportionate amount of the vote in midterm elections, they will be crucial for any national wave of progressive campaigning. A strong call for Part D reform will remind voters how Republicans sold out our seniors to cater to their special interest donors, and show outraged seniors that proposed progressive alternatives would make the drug program both simpler and cheaper.
The most critical ingredient to reforming the prescription drug benefit will be having knowledgeable and committed activists on the ground. To be kept up to date on new developments in this fight, please sign up for Campaign for America’s Future’s Medicare/Social Security listserve . You can also write to your representative in support of the House Democratic alternative featuring negotiated prices and a prescription drug benefit operated like traditional Medicare. And you can join local grassroots activist groups like USAction or MoveOn.org. Together we can defeat the “you’re-on-your-own” survivalists threatening America.
*10-year cost added after initial publication.