March 12, 2004

Bush administration ordered Medicare plan cost estimates withheld


Tony Pugh, Knight Ridder: The government's top expert
on Medicare costs was warned that he would be fired if
he told key lawmakers about a series of Bush
administration cost estimates that could have
torpedoed congressional passage of the White
House-backed Medicare prescription-drug plan.

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Bush administration ordered Medicare plan cost estimates withheld

By Tony Pugh

Knight Ridder Newspapers

WASHINGTON - The government's top expert on Medicare
costs was warned that he would be fired if he told key
lawmakers about a series of Bush administration cost
estimates that could have torpedoed congressional
passage of the White House-backed Medicare
prescription-drug plan.

When the House of Representatives passed the
controversial benefit by five votes last November, the
White House was embracing an estimate by the
Congressional Budget Office that it would cost $395
billion in the first 10 years. But for months the
administration's own analysts in the Centers for
Medicare and Medicaid Services had concluded
repeatedly that the drug benefit could cost upward of
$100 billion more than that.

Withholding the higher cost projections was important
because the White House was facing a revolt from 13
conservative House Republicans who'd vowed to vote
against the Medicare drug bill if it cost more than
$400 billion.

Rep. Sue Myrick of North Carolina, one of the 13
Republicans, said she was "very upset" when she
learned of the higher estimate.

"I think a lot of people probably would have
reconsidered (voting for the bill) because we said
that $400 billion was our top of the line," Myrick

Five months before the November House vote, the
government's chief Medicare actuary had estimated that
a similar plan the Senate was considering would cost
$551 billion over 10 years. Two months after Congress
approved the new benefit, White House Budget Director
Joshua Bolten disclosed that he expected it to cost
$534 billion.

Richard S. Foster, the chief actuary for the Centers
for Medicare and Medicaid Services, which produced the
$551 billion estimate, told colleagues last June that
he would be fired if he revealed numbers relating to
the higher estimate to lawmakers.

"This whole episode which has now gone on for three
weeks has been pretty nightmarish," Foster wrote in an
e-mail to some of his colleagues June 26, just before
the first congressional vote on the drug bill. "I'm
perhaps no longer in grave danger of being fired, but
there remains a strong likelihood that I will have to
resign in protest of the withholding of important
technical information from key policy makers for
political reasons."

Knight Ridder obtained a copy of the e-mail.

Foster didn't quit, but congressional staffers and
lawmakers who worked on the bill said he no longer was
permitted to answer important questions about the
bill's cost.

Cybele Bjorklund, the Democratic staff director for
the House Ways and Means health subcommittee, which
worked on the drug benefit, said Thomas A. Scully -
then the director of the Medicare office - told her he
ordered Foster to withhold information and that Foster
would be fired for insubordination if he disobeyed.

Health and Human Services Department officials turned
down repeated requests to interview Foster. The
Medicare office falls under the control of HHS.

In an interview with Knight Ridder, Scully, a former
health-industry lobbyist deeply involved in the
administration's campaign to pass the drug benefit,
denied Bjorklund's assertion that he'd threatened to
fire Foster. He said he curbed Foster on only one
specific request, made by Democrats on the eve of the
first House vote in June, because he felt they'd use
the cost estimates to disrupt the debate.

"They were trying to be politically cute and get
(Foster) to score (estimate the cost of the bill) and
put something out publicly so they can walk out on the
House floor and cause a political crisis, which is
bogus," Scully said.

"I just said, `Look, (Foster) works for the executive
branch; he's not going to do it, period,'" he said.

Otherwise, Scully said, Foster was available to
lawmakers and their staffs.

" ... I don't think he ever felt - I don't think
anybody (in the actuary's office) ever felt - that I
restricted access. ... I think it's a very nice
tradition that (the actuary) is perceived to be very
nonpartisan and very accessible, and I continued that

Scully said Liz Fowler, the chief health lawyer for
the Democrats on the Senate Finance Committee, could
confirm the actuary's independence. Fowler didn't.

"He's a liar," she said of Scully.

At a Ways and Means Committee hearing last month, HHS
Secretary Tommy Thompson all but repudiated Scully's

"I may have been derelict in allowing my
administrator, Tom Scully, to have more control over
it than I should have. ... And maybe he micromanaged
the actuary and the actuary services too much. ... I
can assure you that from now (on), the remaining days
that I am secretary you will have as much access as
you want to anybody or anything in the department. All
you have to do is call me."

Democrats asked Thompson on Feb. 3 and March 3 for a
complete record of Foster's estimates. They've yet to
get it.

Said HHS spokesman Bill Pierce: "We respond to all
inquiries in time and we will do the same" with these.

Scully left the administration and in January took a
job with Alston & Bird, an Atlanta-based law firm that
represents numerous hospitals and health insurers. He
was exploring jobs in the private sector while he was
pushing for passage of the prescription drug bill,
thanks to a waiver from Thompson that allowed him to
conduct job interviews while he was still a federal

In February, the White House announced that President
Bush's appointees no longer would be permitted to
job-hunt while on the federal payroll.

Members of Congress and congressional staffers
complained that Scully's handling of Foster has
deepened congressional mistrust of the Bush
administration and that withholding information makes
it harder for Congress to draft good legislation.

Myrick didn't think the episode was an effort to "pull
the wool over our eyes."

But Democratic Rep. Pete Stark of California felt
otherwise. "This `need to know, our eyes only' stuff
is getting too restrictive for us to do a decent job,"
said Stark, the ranking Democrat on the House Ways and
Means health subcommittee.

For years before Scully's arrival in 2001, key
lawmakers had direct access to Medicare actuaries.

In 1997, when Republicans were having trouble getting
health-care cost information out of the Clinton
administration, Rep. Bill Thomas, R-Calif., who's now
the chairman of the House Ways and Means Committee,
added language to the Balanced Budget Act conference
report to emphasize the importance of free access to

"The process of monitoring, updating and reforming the
Medicare and Medicaid programs is greatly enhanced by
the free flow of actuarial information from the Office
of the Actuary to the committees of jurisdiction in
the Congress," the report says.

"When information is delayed or circumscribed by the
operation of an internal Administration clearance
process or the inadequacy of actuarial resources, the
Committees' ability to make informed decisions based
on the best available information is compromised."

Posted by richard at March 12, 2004 03:08 PM