News Intelligence Analysis
AARP's Treachery Exposed:
Exactly what they did to destroy the original concept of Medicare
Editor's Note: Since the original publication and
posting of this article on December 9, 2003, Deborah S. Socolar,
MPH, Co-Director, of the Health Reform Program at Boston University
School of Public Health has kindly pointed out an error: The
Yurica Report originally stated: "fully 67.7 percent
of the $228 billion Medicare dollars that will be spent to buy
more prescriptions will remain in the hands of drug makers as
profits. 'This is an increase in profits of $154.4 billion over
eight years.'" The correct figures, should have been the
following: "Drug makers' net increase in profit is estimated
at $139.2 billion over the eight year early life of the program.
This rise in drug makers' profit constitutes fully 61.1 percent
of the $228 billion in Medicare dollars used to buy additional
prescription drugs..." We apologize for the error and have
corrected the text below in Number 6, as of January 13, 2004.
By
Katherine Yurica
If you should ever see pictures of the Republican
leaders smiling at the bill signing event in the White House,
which was making a new Medicare Program the law of the land,
ask yourself who would smile at the let-them-die law that will
refuse drug assistance to millions of elderly Americans and threatens
future medical coverage for them unless the law is changed? The
legislators of course will deny the law lets anyone die. Yet
AARP’s Bill Novelli, who betrayed AARP’s members by
actively supporting the
very bill AARP exposed as a threat
to seniors just four months earlier, held a press conference
and admitted that AARP decided to focus on the “younger
generation members coming up to retirement age.” Excuse
me, isn’t that an admission he knew he was forsaking the
older senior citizens?
The killing of Medicare isn’t clean
and swift. It’s done with razor sharp cuts into the flesh
and blood of the American medical care system. The blood isn’t
showing on television. In the tepid corporate reporting, no one
will see that our seniors have been placed on an ice floe in
the North Atlantic without so much as an apologetic goodbye.
The smiling faces, wearing masks of pleasure over the signing,
should be juxtaposed to the reality of the suffering and pain
the new Medicare law will inflict upon elderly Americans.
The Yurica Report has researched exactly
what AARP, through its CEO Bill Novelli, did to insure the death
of Medicare as we know it. Consider AARP's actions and what they
imply. And ask yourself, "What happened to Bill Novelli
to make him do such an abrupt turn-around?"
In July AARP drafted its minimum requirements
for a Prescription Drug Benefit Program with a list of those
features that were unacceptable to AARP. Bill Novelli,
AARP CEO, wrote the letter
to congress in July of 2003. Novelli warned congress that
AARP would not support a bill that contained his list of objectionable
features. How wise he was in July. In November, just days before
the final vote, AARP announced its endorsement of the Republican
Medicare Reform Bill. Here are the objectionable features AARP
sent to congress in July, followed by the capitulation that has
doomed millions of senior citizens to increased costs--not lowered
costs--and to even no coverage at all for drug benefits.
Number 1:
In July AARP Opposed
Establishing a Medicare System that Forces the Program to Compete
With Private Insurers.
Novelli objected to a provision which establishes
competition between Medicare and private companies. This type
of competition, Novelli said:
“[W]ill lead
to an inherently unfair system: Medicare+Choice experience
strongly suggests that private plans will enroll younger and
healthier beneficiaries, leaving older and sicker individuals
to drive up traditional Medicare spending rates. In addition,
private plans could undercut bids in some years, eating short-term
losses in order to increase market share, and then raise rates
in later years to make up the difference.
“The result
would inevitably be higher costs for those who want to stay in
the traditional [Medicare] program. In fact…this could increase
fee-for-service premiums by up to 25 percent.
“AARP opposes
a premium support structure…that could destabilize the
Medicare program and require beneficiaries to pay even more out-of-pocket…The
bill does not create a level playing field and in fact will penalize
those who choose to remain in traditional Medicare. We believe
that the…system could actually limit beneficiary choice
by making the traditional program unaffordable for those who
tend to be sicker, and for those who do not choose to enroll
in a private plan.”
Novelli concluded, “Any final conference
agreement that retains this provision will
not be in the best interests of Medicare beneficiaries or
the program.”
In November AARP Endorsed
and Supported a Medicare System that Will Compete With Private
Insurers.
The final conference agreement in November
retained the provision AARP had previously rejected; Novelli
and AARP endorsed the bill. However, AARP’s first position
was sound. Comparing positions, I found the November 17, 2003
report of Gail
Shearer, the Director of Health Policy Analysis for Consumers
Union (CU), makes similar points. She writes that competition
between private health plans and the traditional fee-for-service
Medicare program is “a dangerous
step toward privatization of Medicare, which could ultimately
result in widely varying premiums across the country…Instead
of requiring private plans to demonstrate cost savings that result
from efficiency, the proposal provides additional subsidies to
private plans and even allows them to benefit financially from
cherry-picking the healthy, perpetuating the shameful history
of overpayments that have existed for many years.”
Number 2:
In July AARP Demanded
A Standard Drug Benefit For All Medicare Beneficiaries and Opposed
a “No Government Fallback System.”
Mr. Novelli then turned his attention to
“A Guaranteed Prescription Drug Benefit,” and stated
in July:
“AARP believes
that there must be a guaranteed
drug plan available for all Medicare beneficiaries—regardless
of where they live….Beneficiaries must have a guarantee
that the government will step forward if needed to ensure access
by providing a viable, guaranteed federal ‘fallback’
with a defined benefit and a defined premium in all areas.”
In November AARP Dropped
its Concept of A Standard Drug Benefit for All Medicare
Beneficiaries and Endorsed a “No Government Fallback System”
Oh Mr. Novelli, what happened to make you
change your mind? You seemed so strong and firm in your
statement above. AARP members lost out when Mr. Novelli accepted
a Medicare drug benefit that places beneficiaries who live in
certain areas at a distinct disadvantage. Consumers Report states
that one of the worst features of the new Medicare law is its
“weak ‘federal fallback’
provision.” This means that beneficiaries living in
an area that lacks true private competition of drug-only plans
will not be eligible for Medicare fallback coverage. There is
no “assurance that the premium for the drug-only plan will
be anywhere near the $35/month estimate.” In other words,
if a region has one drug-only plan, charging $70 a month, and
one preferred provider plan that severely restricts one’s
choice of doctor, there would be no federal fallback plan.”
What this means is: elderly citizens will be at the mercy of
the drug companies and will have to pay what the company charges,
period—if they fall into this “location” crevice.
Number 3:
In July AARP Opposed
Varying the Medicare Benefit Based on Income and Opposed A Strict
Asset Test for the Poor
Mr. Novelli opposed the House bill for “reducing
benefits for those with higher incomes.” He pointed out
that no insurance plan, including plans for Members of Congress,
“varies benefits by income.” He wrote:
“One of the
fundamental principles and core strengths of the Medicare program
is its social
insurance nature. Working Americans pay into the program
through the FICA payroll tax and are eligible for benefits upon
reaching age 65—regardless of health status or income.”
In November AARP Endorsed
Varying the Medicare Benefit Based on Income and Accepted A Strict
Asset Test for the Poor
AARP members lost out when Novelli reversed
himself again. According to Consumers Report, the Medicare
law has opened the door to reduced participation in Medicare
of those with high
incomes, thereby reducing their Part B subsidy. But, even
worse, the “strict asset test” in combination with
the subsidies to people with incomes below 150 percent of poverty,
“will preclude several million low-income beneficiaries
from getting the financial relief that they need.” They
will be unlikely to afford the coverage and “are ineligible
for additional subsidies.”
Number 4:
In July AARP Demanded
Coverage for Low-Income Beneficiaries in the ‘Doughnut Hole.’
In fact AARP Opposed the Doughnut Hole Entirely
Mr. Novelli wrote:
“The House
bill
does not provide any coverage for low-income beneficiaries
in the ‘doughnut hole.’ This means that low-income
beneficiaries could find themselves with no protection at a time
when they need it most…we believe that costs must be covered
without gaps in order to ensure that low-income Americans will
be able to afford the drugs they need to stay healthy.”
In November AARP Endorsed
the ‘Doughnut Hole’ Gap Provisions and Accepted the
Increased Deprivation to Low-Income Americans
The so-called “doughnut hole”
where beneficiaries must pay the cost of their drugs was not
eliminated. Consumers Union explains, “Millions of people
with comprehensive retiree drug coverage will lose
this coverage, and will end up with a Medicare policy that
is much less comprehensive. (Retiree coverage is typically comprehensive,
without a ‘doughnut’ in coverage)…” For Medicare
beneficiaries with income above $13,000 for a single or $16,300
for couples, which CU says “includes many millions of seniors
and disabled who would be considered to have a fairly modest
income and standard of living…would be eligible for policies
within the following parameters:
$275 deductible
$ 35 / month
premium (estimated, not guaranteed)
75 percent benefit/25
percent cost-sharing on expenditures above deductible up to $2,200
Gap in coverage
(doughnut) for
expenditures between $2,200 and $5,000
95 percent coverage/5
percent cost-sharing for expenditures after $5,000, when out-of-pocket
costs total about $3,600.
CU reports that most of the Medicare beneficiaries
will have to pay
more—not less for prescription drugs in 2007 (real 2003
dollars.)
Number 5:
In July AARP Pleaded
for Cost Containment Measures and Objected to Spiraling Drug
Costs.
Novelli wrote:
“The high
price of prescription drugs continues to be a top concern
of our members. In order to assure the continued affordability
of the benefit for both beneficiaries and the Medicare program,
greater efforts are needed to put downward pressure on health
care costs, particularly the price of drugs.”
In November AARP Rejected
Cost Containment Measures and Accepted Spiraling Drug Costs.
The final conference agreement retained
explicit language
that precludes the government from pooling its collective
buying power to purchase drugs at a discount for America’s
senior citizens. As Consumers Union put it, the preclusion “…assures
that prescription drug expenditures will continue to spiral.”
Number 6:
In July AARP Opposed
Provider Givebacks
Mr. Novelli wrote:
“I also want
to reiterate AARP’s position on the use of funds from the
$400
billion allocation for provider reimbursement increases.
Providers should be paid fairly for treating Medicare patients,
but beneficiaries have waited long enough for relief from high
prescription drug costs. Every dollar allocated to ‘givebacks’
means one less dollar available to improve the drug benefit.
Increases in provider reimbursements also substantially increase
beneficiary out-of-pocket costs through higher premiums and coinsurance.”
In November AARP Accepted
Provider Givebacks
According to Alan
Sager and Deborah Socolar, the directors of the Health Reform
Program at the Boston University School of Public Health, "Drug
makers' net increase is estimated at $139.2 billion over
the eight year early life of the program. This rise in drug makers'
profit constitutes fully 61.1 percent of the $228 billion in
Medicare dollars used to buy additional prescription drugs..."
The Sager/Socolar report goes on to say, “This is the main
reason why the proposed legislation gives patients only a scanty
drug benefit with high continued cost-sharing. The gift to drug
makers is also why the plan requires a high taxpayer subsidy—money
borrowed from our children and grandchildren.”
The voice of Mr. Novelli sounds hollow as
we look at his words in July. The conclusion of his letter to
congress reads in part:
“At
a minimum, however, any final conference agreement should
not destabilize Medicare nor penalize those beneficiaries who
choose to stay in the current Medicare program; should not create
incentives for employers to drop retiree coverage; should ensure
prescription drug coverage in all areas of the country; and should
guarantee the same level of benefit to all beneficiaries regardless
of income.”
None of Mr. Novelli’s objections were
accepted by the GOP congressional leaders. None of Mr. Novelli's
July principles found their way into the bill he endorsed. I
hope that our legislators will go back to the drawing board.
This Medicare bill is a farce. It preserves the name, while it
subverts the thing!
Katherine Yurica was educated at East Los
Angeles College, U.S.C. and the USC school of law. She worked
as a consultant for Los Angeles County and as a news correspondent
for Christianity Today plus as a freelance investigative
reporter. She is the author of three books. She is also the publisher
of the Yurica Report.
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