Tag Archives: Congressional Democrats

Obama’s Lifeline: For a Change, Government Spending That Actually Helps the People Who Need It Most

Republicans took to the Sunday morning news shows to express their “concern” about parts of the stimulus package presented by the Obama administration last week. House Minority Leader John Boehner declared that he would vote no “if it’s the plan I see today”–a pretty idle threat, since even if he takes his entire party with him, the Democrats still have nearly an 80-vote margin. In the Senate, however, two Republican votes are needed to create a filibuster-proof majority, which might at least slow the package down and could force some compromises.

There’s good reason for the Republican resistance. While it makes numerous concessions to favored conservative approaches–lots of public-private partnerships that will allow the private sector to cash in, tax cuts for businesses and the middle class, and no immediate end to the Bush tax cuts (which will expire on their own in 2010)-the $820 billion stimulus package also includes some dramatic increases in support for the nation’s social welfare programs.

With this package, Obama begins the process of reversing cutbacks initiated by Reagan and carried forward by the two Bushes, with some help from Clinton’s welfare “reform.” There may still be plenty of holes, but with this plan, the new government confirms that has some responsibility for providing a safety net for its poor and disabled, its children and elderly. To see the magnitude of the shift, it is only necessary to glance at the last budget drawn up by President Bush, for fiscal year 2009: In the midst of the growing recession, it had yet more cuts to the social welfare system, reducing already inadequate health and feeding programs for the most vulnerable Americans.

Here are some of Obama’s initiatives–not quite the New Deal, but quite a new deal compared to what we’ve grown used to over the past 30 years:

  • As unemployment grows, more and more people lose their health insurance and turn to Medicaid. State budgets already are in desperate straits, and can’t possibly shoulder this added burden. Obama would pump federal money into state Medicaid budgets as well into the program providing for health insurance for children.
  • In addition, Obama wants to shore up existing health insurance coverage for people losing jobs by extending COBRA and underwriting part of its cost through tax rebates. COBRA is a program that enables people losing their jobs to continue their health insurance if they pay for it. Obama wants the federal government to partially subsidize these payments, and also gives some low-income unemployed people access to Medicaid.
  • The president’s plan proposes to extend unemployment benefits through December 2009 and increase weekly unemployment insurance benefits by $25.
  • The stimulus package would incresasing food stamp benefits for the 30 million people now in the program, and provide support for food banks, school lunch programs, and the WIC program that provides for mothers and infants.
  • Obama’s plan would give 7.5 million blind, disabled, and aged Americans an immediate $450 by increasing-on a temporary basis–Supplemental Security Income (SSI) benefits.

Paterson to City: Drop Dead. The Governor Hands New York’s Senate Seat to an Upstate Blue Dog Conservative

New York Governor David Paterson’s appointment of Kirsten Gillibrand–a one-term Congresswoman from a conservative upstate district–to fill Hillary Clinton’s Senate seat is a slap in the face to both New York liberals and to New York City in general. Yesterday, as Gillibrand emerged as the frontrunner, the Village Voice’s Wayne Barrett called her “too Republican to replace Clinton,” and “out of step with New York voters, particularly Democrats, on a host of issues.”

Gillibrand has described her own voting record as “one of the most conservative in the state.” She opposes any path to citizenship for illegal immigrants, supports renewing the Bush tax cuts for individuals earning up to $1 million annually, and voted for the Bush-backed FISA bill that permits wiretapping of international calls. She was one of four Democratic freshmen in the country, and the only Democrat in the New York delegation, to vote for the Bush administration’s bill to extend funding for the Iraq war shortly after she entered congress in 2007. While she now contends that she’s always opposed the war and has voted for bills to end it, one upstate paper reported when she first ran for the seat: “She said she supports the war in Iraq.” In addition to her vote to extend funding, she also missed a key vote to override a Bush veto of a Democratic bill with Iraq timetables.

Gillibrand’s positions and voting record can be seen as especially offensive to New York City. As Barrett writes:

Gillibrand has a one hundred percent rating from the National Rifle Association ….Gillibrand even opposes any limitations on the sale of semiautomatic weapons or “cop-killer” bullets that can pierce armored vests….Gillibrand voted against both…financial service bailout bills last fall, which have delivered billions to New York, salvaging institutions like Citigroup. An editorial in Crain’s, the city’s premier business news magazine, said recently that Gillibrand “should be disqualified” from seeking the Senate seat “by her politically expedient vote” against the bailout.

Upstate residents may resent the city’s perceived dominance of politics on both the state and local levels, but they are in fact biting the hand that feeds them: The city has historically paid about 20 percent more in federal taxes and twice as much in state taxes than it gets back in services from those governments.

It also seems like the wrong time to do anything that could be hard on New York City, which is already hurting badly. As I wrote late last year, while the effects of the economic meltdown are felt nationwide, New York stands at its epicenter, and is taking the heat on two fronts: It is suffering, along with the rest of the country, from the far-reaching fallout of the Wall Street debacle. But it is also directly dependent upon the financial industry itself: Jobs, retail, services, the real estate market, and an astonishing 20 percent of the state’s tax base all rest upon the now crumbling foundation of the financial sector. The trip from Wall Street to Main Street is a lot shorter in New York than it is anywhere else.

And while there may be plenty of valid reasons to vote against TANF, Barrett writes that Gillibrand’s “argument against the bill seemed to be both parochial and political, contending that ‘upstate New York needs a plan that will actually work to stabilize our economy and protect taxpayers.'”

This statement connects to the most sobering fact about Gillibrand: Upon entering the House two years ago, Gillibrand joined the Blue Dogs, the coalition of Democrats that stands to the right of the Democratic Leadership Council, and is known for their conservative positions on both social and fiscal issues. Gillibrand made it clear that she is pro-choice, and quickly changed her previous position against gay marriage. But the biggest upcoming battles in the Senate will involve fiscal policy, and the Blue Dogs have already telegraphed their intention to demand cuts to offset Obama’s big economic stimulus package, especially in such longtime conservative targets as social safety net programs and old-age entitlements. In fact, there are clear signs that Republicans are counting on the Blue Dogs to keep the president and Congressional Democrats in check.

It certainly seems like a strange move for Paterson, who had a solidly progressive voting record as a state senator from Harlem. But Paterson has changed since he stepped into the statehouse. Since becoming governor, he has dealt with the state’s fiscal shortfalls by presenting a budget that containing severe cuts to Medicaid and other components of the social safety net, while refusing to consider a “millionaire’s tax.”

A number of Albany-watchers have suggested why Paterson might make such moves: basically, as an expedient to his own political ambitions. As Politico described it yesterday:

Gillibrand brings several important political attributes critical to Patterson, who became governor when Eliot Spitzer resigned and has never topped a statewide ticket, when both run for their offices in 2010: She represents a relatively conservative part of upstate the governor hopes to woo, she’s a formidable fundraiser with connections to Hillary Clinton’s cash-generating apparatus and she’s a woman in a state that prides itself of inclusiveness.

WNYC public radio reporter Elaine Rivera mentioned the same factors this morning when she described Gillibrand as potentially a “tremendous” assett to Paterson when he runs for re-election. Less widely noted is the fact that she comes from a district that is 95 percent white, and that Paterson will be running as an African American in a state that has never had a black governor. In the end, it seems to be the upstate conservative chops that mattered: Another member of the shortlist, New York City Congresswoman Carolyn Maloney, is also a woman with ties to Hillary Clinton and a saavy politician, and is far more qualified than Gillibrand-but she’s an urban liberal.

As the muckraking Barrett points out, Gillibrand’s personal and family connections are far-reaching, connecting her not only to Hillary Clinton and other prominent state Democrats like Charles Schumer and both Andrew and Mario Cuomo, but also to state Republicans:

The irony is that Paterson may be swinging from the nation’s most prominent Democratic family to one with strong Republican ties. Gillibrand’s father, Doug Rutnik, is an Albany insider and lobbyist whose ties to former GOP powerhouses Joe Bruno, George Pataki and Al D’Amato are legendary. In fact, Gillibrand won her seat when a state police domestic violence report about the GOP incumbent, John Sweeney, was mysteriously leaked, ostensibly with the acquiescence of the Pataki administration, which had its own reasons to oppose Sweeney. Bruno is under federal investigation now, [He was indicted this morning] and some of the subpoenas in the case involved a real estate deal that partnered Rutnik with Bruno and another lobbyist. Rutnik dated, and eventually lived with, a top Pataki and D’Amato aide for many years, until he broke up with her in 2006 to marry a cousin of his, Gwen Lee, who’d worked in high-paying state jobs secured by the same aide. Rutnik and D’Amato have been registered lobbyists for some of the same clients.
Gillibrand once worked for both D’Amato and Andrew Cuomo, another candidate for the senate seat. She was a special counsel when Cuomo ran HUD in the 1990s and her father was close to both Senator D’Amato and Governor Mario Cuomo in the same time period. Her former law firm, Boies, Schiller & Flexner, has been the largest single donor to her House campaigns, and David Boies, the senior partner at the firm, contributed $25,000 to Paterson’s campaign committee on December 23, 2008, while the governor was considering Gillibrand’s candidacy. Boies’ son Chris, also a partner in the firm, contributed another $25,000 on the same day.

All in all, it appears that what happened this morning has very little to do with anyone’s positions on the burning policy questions of the day. What happened is that one consummate political animal gave the nod to another.

Separation of Powers: All Eyes Are on Obama, But It’s Congress That Needs to Sieze the Day

Now that the euphoria of the election and inauguration are over, we will soon be reminded of the messy realities that come with having three branches of government. As much as the nation is pinning its desperate hope on Obama, the new president’s success or failure at advancing new policies and changing the way government works depends first and foremost on Congress.

The burning questions of the moment have to do with money–how much to spend, and when, and for what. The president will present his stimulus package to Congess, but it is just a recommendation: All spending measures must originate in the House through the Ways and Means Committee. While they receive none of the attention given to cabinet members, the leaders of this powerful committee are no less  important than the secretary of the Treasury, or the other members of the administration who must go to it pleading for funds.

Right now Ways and Means Committee is chaired by New York’s Charles Rangel, still a forbidable figure despite a growing collection of ethics scandals. In the front tier are Pete Stark of California, Sander Levin of Michigan, Jim McDermott of Washington, and John Lewis of Georgia. It’s a solidly liberal lineup (most are members of the Congressional Progressive Caucus) that is likely to support big public works projects as well as improvements to the social safety net for the poor and the unemployed, the disabled and the elderly.

On the other side is the group of conservative Democrats in the House that calls itself the Blue Dogs. Their numbers and influence have increased in the last two elections, and they have already made it clear that in exchange for gritting their teeth and accepting a big stimulus package funded through Keynesian deficit spending, they’ll be looking for concessions over the long  term in other areas, including old-age entitlements. With 51 members, the Blue Dogs have could monkey-wrench some of Obama’s plans if they choose to vote with Republicans.

We learned just how far an uncooperative Congress can go to undermine a president back in 1994, when Newt Gingrich’s Republican revolution emerged from the back benches and dedicated itself to opposing (and eventually impeaching) Bill Clinton. But it’s been such a long time since we’ve had a strong, popular Democratic president along with a solid Democratic majority in Congress, it’s hard to envision what it might be like.

Those of us old enough to remember them might harken back to the early LBJ years. On the day of Obama’s inauguration, Saul Friedman, the long time reporter for major dailies who now writes about the politics of aging, recalled that time, and the vital part played by a strong, committed Congress.

The murder of John F. Kennedy had given Johnson great power and new stature when I arrived in Washington in 1965 to cover the Congress for the Knight Newspapers and the Detroit Free Press….They were an odd couple; Johnson the southerner who grew up with segregation and Humphrey, the northern liberal who had driven Strom Thurmond out of the Democratic Party on the issue of race. But together, they gave the country activist, liberal government the like of which had not been seen since the New Deal.

But…they did it with the help of a Congress, especially the Senate, filled with people who I believe were deeply committed to politics as public service. Many of them had come from service in World War II into reform politics. And like several of the Vietnam and Iraq veterans now serving, they came to make a difference.

The “names who personified what was best in American politics at that time were in the U.S. Senate,” Friedman writes. These included Humphrey’s fellow Minnesotans Walter Mondale and Eugene McCarthy; Michigan’s Philip A. Hart, who was called “the conscience of the Senate’; Wayne Morse, William Fulbright, and George McGovern, who all stood up against the Vietnam War; Frank Church, who would expose the abuses of the FBI and CIA; and Sam Ervin, who would help expose Watergate; as well as Bobby Kennedy and Ted Kennedy.

The Republicans, Friedman notes, “also included people of stature who believed in politics as public service.” There were also some “louts and know-nothings,” and some rabid segregationists. Nonetheless, he writes,

When the time came, and Johnson wheeled and dealed and appealed to their better nature, Republicans helped Democrats break southern filibusters and to pass a series of landmark civil rights bills, as well as the gems of the Great Society, Medicare and Medicaid and the Elementary and Secondary Education Act, all of which stand today.

Friedman wonders how the new president will fare with a Congress that seems, by comparison, weak-willed and churlish. (In this light, the tragedy of Ted Kennedy’s illness becomes all the more profound.) Will Congressional Democrats, who have accomplished little since winning their majorities in 2006, heed the call to pick themselves up, dust themselves off, and “begin the work of remaking America”? We’ll know soon enough.

Here Come the Entitlement Wars, Part 1: Quid-Pro-Quo

Any aging or disabled Americans who got nervous last week when Obama promised to make “reforming” old-age entitlements a “central part” of his fiscal program have still more cause for anxiety today. After a long interview with  Obama, the Washington Post reported:

President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare “bargain” with the American people, saying that the nation’s long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs.

That discussion will begin next month, Obama said, when he convenes a “fiscal responsibility summit” before delivering his first budget to Congress. He said his administration will begin confronting the issues of entitlement reform and long-term budget deficits soon after it jump-starts job growth and the stock market.

Obama didn’t get specific, and its much too soon to predict what he might propose. But he did juxtapose entitlement reform with his large fiscal stimulus package, which is where we start to get on dangerous ground.

The president-elect said he believes that direct government spending provides the most “bang for the buck” and that his advisers have worked to design tax cuts that would be most likely to spur consumer and business spending.

But he framed the economic recovery efforts more broadly, saying it is impossible to separate the country’s financial ills from the long-term need to rein in health-care costs, stabilize Social Security and prevent the Medicare program from bankrupting the government.

The National Committee to Protect Social Security and Medicare had already begun issuing warnings earlier in the week about a possible trade-off between stimulus and entitlements:

Anti-entitlement members of Congress want President-elect Obama to make a deal to gain their support for a desperately needed stimulus package. It’s a political quid-pro-quo that would trade away long-term benefits for generations of seniors, survivors, the disabled and their families for a short-term economic recovery package desperately needed to reverse the damage of eight years of flawed economic policies.

The trade-off goes something like this…Congress’ so-called “fiscal-hawks” will consider supporting the economic stimulus package if the Obama administration agrees to “entitlement reform” (translation: cuts to Social Security and Medicare).  Of course, Social Security and Medicare didn’t create this economic crisis but some view this as a unique political opportunity to sell their entitlement hysteria to the public. The problem is we can’t balance the budget on the backs of Social Security and Medicare.

It might be tempting to blame this on the usual suspects–the Republicans. But what the possible trade-off actually reveals is Obama’s first bargaining session with the right wing of his own party. The Washington Post article refers to refers to Obama’s “frequent meetings with legislators,” which include

the Blue Dog Coalition of fiscally conservative Democrats, who repeatedly told Obama they would be willing to support his stimulus package only if he pledged not to lose sight of the larger budget picture. Those who will be invited to attend the summit include the Blue Dogs.

Since Obama cannott pass his stimulus package–or indeed, any legislation–without support from at least some of the Blue Dogs, this could be the first in a long line of intra-party Faustian bargains.

Or Obama could remain true to the promises–and the promise–of his campaign, making small adjustments to the Social Security formula that will not hurt the poor and middle class, and saving money on Medicare through a broader reform of the health care system.

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George W. Bush: Can’t Live With Him, Can’t Die With Him

Included among the many parting shots from the lame-duck Bush administration are two actions that will add to the suffering of the terminally ill, of whom old people make up the majority.

The first of these actions makes it easier for health care workers to ignore or override the wishes of dying patients. The second threatens the availability of hospice care–the one setting in which such patients can be sure that their choices will be respected and their pain subdued.

On December 19, the administration issued what is being called the “right of conscience” rule for health care workers. As the Washington Post describes it:

The far-reaching regulation cuts off federal funding for any state or local government, hospital, health plan, clinic or other entity that does not accommodate doctors, nurses, pharmacists and other employees who refuse to participate in care they find ethically, morally or religiously objectionable. It was sought by conservative groups, abortion opponents and others to safeguard workers from being fired, disciplined or penalized in other ways.

But women’s health advocates, family planning proponents, abortion rights activists and some members of Congress condemned the regulation, saying it will be a major obstacle to providing many health services, including abortion, family planning, infertility treatment, and end-of-life care, as well as possibly a wide range of scientific research.

Such rules are implemented in 30 days, which means this one will go into effect on the eve of the inauguration. As the Post reports: “The ‘right of conscience’ rule could become one of the first contentious tests for the Obama administration, which could seek to reverse the rule either by initiating a lengthy new rulemaking process or by supporting legislation already pending in Congress.”

While opposition to the rule comes primarily from supporters of reproductive rights, the organization Compassion and Choices points out that it also has serious implications for “end-of-life care, especially the palliative care measures that rescue patients from unbearable agony. This ill-conceived rule will surely obstruct and delay good care in many instances, increasing the suffering of dying patients and their loved ones.” On the basis of “conscience,” the group warns, health care workers could refuse to disconnect life support, or could withhold medication for “palliative sedation,” where patients are rendered unconscious if it is the only way to control pain.

One place where the dying might escape such treatment is in hospice care. But another measure, tucked away in Bush’s budget for FY 2009, cuts federal Medicare reimbursement rates to hospices, which are largely (83 percent) financed by Medicare. The online magazine Obit summarized the impact of the cuts, which went into effect on October 1, and could add up to more than $2 billion over five years:

It is estimated that this will result in hospice staffing cuts–doctors, nurses, social workers, bereavement counselors, and eventually hospice services. And these reductions will affect the people least capable of fighting back.

Or, as Don Schumacher, president of the National Hospice and Palliative Care Organization (which is, among other things, the lobbying group for hospices), puts it: “That $2 billion the government wants to save? They’re doing it off the backs of dying people in the United States.”

Obit goes on to describe just what it is that’s being threatened by the Medicare cuts:

About 1.4 million people receive hospice services these days, meaning more than one third of those who will shortly end up dead: Hospice care is generally only for those within their last six months of life, and its mission is not to prolong existence, but to make those last months bearable and, ideally, pain-free.

In fact, the best and most effective treatments for very bad pain are to be found not at the doctor’s office but in hospice in-patient units: There no one is shy about administering morphine or even methadone to the dying. And no one is going to lecture patients on the perils of addiction….

Contrary to what most people believe, the majority of the terminally ill never see the inside of a hospice in-patient unit, unless they’re in severe pain or have a condition that needs to be stabilized. Most are treated at home by hospice-trained nurses, social workers, and volunteers.

In addition, patients who are denied hospice care are likely to end up in emergency rooms or costly hospital beds, which will increase rather than reduce health care expenditures.

Last year Duke University released a study on hospice cost-effectiveness, which was published in the journal Social Science and Medicine. “We found that hospices reduce Medicare spending by an average of $2,309 per person compared to normal care, which typically includes expensive hospitalizations near death,” said Don Taylor, an assistant professor of public policy who was also the primary author of the study.

Taylor added that although the average terminally ill person gets hospice care for only 15 days, it might be better to extend that period. His study “found that patients who use the benefit for the last seven to eight weeks of life maximize cost savings….” They also got “to fully experience the benefits of hospice, such as bereavement counseling, palliative care, and respite for care-givers.”

In fact, he concluded, “The hospice benefit appears to be that rare situation where something that improves quality of life also saves money.”

The hospice cuts went into effect despite efforts to pass a bipartisan  Medicare Hospice Protection Act, and despite a lawsuit by the National Hospice and Palliative Care Organization. In November, the Witchita Eagle was already reporting the impact of federal cuts on that city’s hospices:

One–Trinity Hospice–recently closed. One is for sale. Another has had layoffs, and others are finding ways to cut expenses. The biggest pressure, hospice service providers say, is from Oct. 1 cuts in their Medicare reimbursement rates. Nationwide, the cuts have averaged 4 percent.

As fewer hospice beds and home hospice services become available, the repercussions of these cuts will be felt across the aging community, as well as among younger people with cancer, AIDS, and other illnesses. As one hospice advocate pointed out, some of those who might have died in a sympathetic and pain-free setting will end up spending their last moments in the emergency rooms of hospitals. Average waiting times in some ERs are up to 10 hours, and measures to control pain are often inadequate–even if they don’t enounter a health care worker whose “conscience” trumps their agony.

As they prioritize their agenda for the new administration, Obama’s health care czar Tom Daschle and members of Congress would do well to pay a visit to one of these ERs and spend some time with the suffering and the dying.

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Privatized Medicare: Bush’s Parting Gift to Insurance Companies and Obama’s First Health Care Challenge

Having spent eight years bypassing the laws of the land via signing statements, executive orders, or just simple denial, the Bush Administration is adding to its grim legacy with a rush of last-minute orders and rule changes. Compiled here by ThinkProgress, these include everything from everything from cutting Medicaid and disabled veterans’ benefits to descreasing corporate taxes to allowing concealed, loaded firearms in National Parks.

Some parting shots are so low-profile that they might easily escape notice. The latest of these came today in the obscure form of a “call letter” to private insurance companies that want to contract with Medicare to provide health and drug coverage in 2010. Such calls are issued annually–but the call letter was released two weeks earlier than it was last year, and two months earlier than the previous year, ahead of the changing of the White House guard. Medicare advocacy groups view the early release as “an attempt by the Centers for Medicare & Medicaid Services (CMS) to assure continued leniency in the oversight of private plans for at least another year and as a last-ditch effort to promote private Medicare Advantage plans.”

Medicare Advantage (MA) plans–which offer managed care run through private insurers, paid for by the federal government–are the point of the stake that conservatives have long been trying to drive into the heart of traditional Medicare (which, for all its shortcomings, is the closest thing to a single-payer program that this country has ever seen). Columnist Saul Friedman recently wrote about the history of  of this effort, recalling a 1995 press briefing in which Dick Armey, Newt Gingrich’s collaborator on the “Contract With America,” announced their intent to “wean our old people away from Medicare.”  The first step was to introduce private Medicare HMOs–what later evolved into Medicare Advantage plans, with a big boost from the Republicans’ 2003 Medicare bill.

MA plans have come under increasing fire for their hard-sell tactics to elderly Medicare recipients, shoddy coverage, and rip-offs of the public purse. “Competition” from the private plans was supposed to reduce growth in Medicare spending–but in fact, they cost the government more. A September report from the Commonwealth Fund calculated that “payments to MA plans in 2008 will be 12.4 percent greater than the corresponding costs in traditional Medicare–an average increase of $986 per MA plan enrollee, for a total of more than $8.5 billion. Over the five-year period 2004-2008, extra payments to MA plans are estimated to have totaled nearly $33 billion.”

According to the advocacy groups, the call letter reflects few of the demands critics say are needed to ensure that the government gets what it pays for–and that old and disabled people get the decent coverage they need.

“The draft Call Letter issued today is another example of how CMS has failed to properly oversee private Medicare plans that receive billions of dollars above traditional Medicare without providing the extra benefits they tout,” Judith Stein, Executive Director of the Center for Medicare Advocacy says. “For example, the CMS Call Letter does not require private Medicare plans to coordinate care and sets no standards for those that purport to do so.”…

“We are dismayed that the current administration of CMS has failed to issue a Call Letter that protects beneficiaries and taxpayers by describing in detail what is expected by private Medicare plans,” says Kevin Prindiville, staff attorney with the National Senior Citizens Law Center. “We ask the incoming administrator of CMS to rescind the current Call Letter and issue a new document that demonstrates that CMS will exercise appropriate oversight over private insurance plans.”

What happens with Medicare Advantage plans–along with the privatized Medicare Part D prescription drug benefit–should be of interest to Americans of all ages, and not just oldsters, since it will almost certainly mark the Democrats’ first showdown on health care. As the Wall Street Journal reported:

Democrats are likely to go after some long-sought targets, especially private Medicare plans and the drug benefit–two areas where years of Republican control have left strong marks. Private insurers run those programs and offer seniors more choices–and some say, confusion.

Rep. Pete Stark (D., Calif.), chairman of the powerful House Ways and Means Health Subcommittee, says President George Bush and Republican lawmakers spent the past eight years “trying to privatize Medicare and turn it into a new voucher system.”

“I think that was wrong, and now we have to correct that,” he says in an interview.

How the new administration and Congress deal with Medicare will be a test of their moxie in dealing with health care reform in general. Creating any sort of health care system that gets Americans better care for better prices will require that the Democrats take a stand against the interests of the insurance and pharmaceutical companies. And if they can’t do it for us geezers, it doesn’t look good for everyone else.

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Change in Medicare Drug Pricing Rules Amounts to a Drop in the Doughnut Hole

It’s no secret that the Medicare Part D prescription drug program, the signature health care initiative of the Bush years, was designed and structured to benefit the insurance and pharmaceutical industries, rather than the old and disabled people it is supposed to serve. As a result, it helps patients far less than it could and costs the government far more than it should, while jacking up private profits.

The only way to fix these inherent flaws is to overhaul Medicare Part D completely, reigning in the drug companies and kicking the insurance companies out of the mix altogether, since they are nothing but superfluous and costly middlemen. I’d like to think this has a chance of happening under the new Democratic administration, but I know better. The best we can hope for is some tinkering with the details of the program to minimize some of its most outrageous giveaways to the private sector.

In what I can only guess is a pre-emptive move, one such change was announced on Tuesday by the Center for Medicare and Medicaid Services (CMS). The most concise description of the change comes from the Wall Street Journal, which reports that CMS “finalized a rule meant to curb an industry practice that has inflated drug costs for some patients with Medicare drug coverage”:

The practice involves pharmacy benefit managers, the middlemen that administer drug plans on behalf of insurers. PBMs negotiate drug prices with pharmacies and reimburse them for drugs that patients purchase. Insurers, in turn, pay the PBMs for administering the claims.

The higher drug costs for patients result from a so-called lock-in approach used by some PBMs. Under this practice, insurers pay the PBMs a set amount for drugs, regardless of what the PBMs actually paid the pharmacies.

Often, what the PBMs pay the pharmacies is less than what the insurers pay the PBMs. But the size of that difference is typically secret, and the PBMs keep it.

In other circumstances, these kinds of secret dealings might qualify as fraud. But they’ve been perfectly legal under Medicare Part D. What’s more, the higher price is what’s used to calculate Medicare patients’ overall drug costs. This means we will hit the annual limit (currently $2,700) and fall into the notorious “doughnut hole” coverage gap that much sooner.

The rule change, which goes into effect in 2010, doesn’t eliminate the PBMs’ rip-off, but it does prevent it from being passed on to Medicare patients. According to the WSJ:

Under the new rule, plans can still use the lock-in approach. But the amount paid to the pharmacy–not the higher price paid by the insurer–will have to be what is used to determine patients’ pace to the doughnut hole.

For old folks like me who fall into the doughnut hole partway through each year, every little bit helps. And as Paul Precht of the Medicare Rights Center told Bloomberg News, the rule change “ends a scam, and it adds some much-needed transparency to drug prices under the benefit.” But the savings are unlikely to be really significant.

They are nothing, for example, compared to what might be saved if the government were permitted to negotiate prices directly with the drug companies, instead of leaving that task to the insurance companies and PBMs. In a provision engineered by private industry lobbyists, the law that created Part D expressly forbids such negotation. The government negotiates directly with the pharmaceutical manufacturers for Medicaid, and it received rebates averaging 26 percent in 2007–as compared with 8.1% for Medicare. This single change, then, might lower Medicare drug costs as much as 18%.

The Democrats made one attempt, in early 2007, to pass a bill allowing the government to negotiate Part D drug prices, but they couldn’t pull together the votes needed to move it through the Senate, much less override a Bush veto. They are likely to try again in 2009–and in this bit of tinkering, at least, they just might succeed.