LA Times, WSJ reported revised estimated cost of drug plan without noting earlier, lower projections
SUMMARY: The Los Angeles Times and The Wall Street Journal reported on February 3 that the revised 10-year cost estimates of President Bush's Medicare prescription drug plan were less than earlier projected -- $678 billion, as opposed to $737 billion estimated in August 2005. In fact, while they were less than August 2005 projections, they were far more than the $400 billion estimate the administration provided Congress when trying to get the votes to approve the plan.
News articles in the February 3 editions of the Los Angeles Times and The Wall Street Journal reported that revised 10-year cost estimates of President Bush's Medicare prescription drug plan were less than earlier projected -- $678 billion, as opposed to $737 billion estimated in August 2005. The new estimates were announced by Medicare administrator Mark McClellan during his February 2 testimony before the Senate Committee on Aging. In fact, while the new cost estimates were less than the August 2005 projections, they were far greater than the figures the administration put forward when it was trying to persuade Congress and the public to approve the bill: In advance of the November 2003 vote to approve the plan, Medicare provided Congress with an estimate of $400 billion; subsequently, the agency's chief actuary disclosed in March 2004 that the Medicare administrator ordered him to withhold his actual budget projections of between $500 and $600 billion from Congress.
As staff writer Robert Pear of The New York Times reported on March 25, 2004, Medicare actuary Richard S. Foster testified before Congress that the agency's then-administrator, Thomas A. Scully, threatened to fire him if he divulged Medicare's own estimate of the program's cost to Congress.
On June 6, 2003, Scully had testified before the Senate Finance Committee about the proposed drug plan using the $400 billion estimate. In addition, Tommy Thompson, secretary of the Department of Health and Human Services (HHS), provided the same estimate to the House Committee on Energy and Commerce on February 12, 2003.
Moreover, while the estimates represent a drop from the administration's most recent cost estimates -- which HHS credited to competition among the plan's providers, as Washington Monthly's Kevin Drum, author of the Political Animal weblog, observed -- the revised HHS estimate McClellan released on February 2 in a report entitled "The Secretary's One Month Progress Report on the Medicare Prescription Drug Benefit" was issued just one month after the prescription drug plan went into effect. Drum also noted that the revised estimate reflecting the 10-percent "savings" is still significantly higher than both the estimate initially provided to Congress and the actual projections Foster developed before the plan's approval. He continued: "So take this news with a great big shaker of salt."
From the February 3 edition of the Los Angeles Times:
The White House has promoted the drug benefit as a historic accomplishment and the most significant improvement to Medicare since its establishment in 1965. Spokesman Trent Duffy said Thursday that President Bush remained committed to the program, even though Bush didn't mention it in his State of the Union message this week.
Separately, the Medicare agency released estimates indicating that the drug benefit would cost less than expected: $678 billion over the next 10 years instead of the $737 billion projected last year. The average monthly premium for seniors this year is expected to be about $25, or 22% less than the $32 estimated in August.
McClellan said the main reason for the lower estimates was "robust competition" among the private insurers offering coverage. Other data released by the government suggested another factor might be at work: The previously rapid rate of increase in drug costs has slowed dramatically in the last two years because of a shift to generic medicines and other reasons.
From the February 3 edition of The Wall Street Journal:
Medicare officials say the program's new drug benefit will cost less than expected this year, as beneficiaries gravitate to plans with lower premiums.
The average premium for beneficiaries this year is about $25 a month, down from about $32 as estimated in August. The government also will see savings, said Mark McClellan, administrator of the Centers for Medicare and Medicaid Services.
The reason for the reduction: Health insurers are offering lower premiums than expected, and beneficiaries, Dr. McClellan said, "are choosing the plans that offer them the best deal."
Last year, Medicare actuaries projected that the drug benefit would cost taxpayers $737 billion over 10 years. That figure, updated after beneficiaries began enrolling in drug plans, now is $678 billion. Under the new estimates, the 2006 cost of the benefit dropped to $30.5 billion from $38.1 billion.
From the March 25, 2004, edition of The New York Times:
The chief Medicare actuary, Richard S. Foster, told Congress on Wednesday that last June he provided the White House with data indicating that prescription drug legislation would cost 25 percent to 50 percent more than the Bush administration's public estimates. That information did not make its way to Congress for six more months.
Mr. Foster said he had shared his cost estimates with Doug Badger, the president's special assistant for health policy, and with James C. Capretta, associate director of the White House Office of Management and Budget. But he said that Thomas A. Scully, who was then administrator of the Medicare program, directed him to withhold the information from Congress, citing orders from the White House in one instance.
In testimony before the House Ways and Means Committee, Mr. Foster said he had struggled to preserve the independence and integrity of his office. It was his first public appearance since a furor erupted over his assertions that Mr. Scully threatened to fire him if he disclosed his cost estimates to Congress during debate on the Medicare bill. The law, signed by President Bush in December, adds drug benefits to Medicare and significantly increases federal payments to private health insurers.
Mr. Foster said he had been told to withhold information from lawmakers of both parties. Moreover, he said, Mr. Scully stated that he was "acting under direct White House orders" in telling the actuary not to respond to a request from the chairman of the Ways and Means Committee, Representative Bill Thomas, Republican of California. Mr. Thomas was a principal architect of the Medicare bill.
[...]
Federal law says the chief actuary shall follow "professional standards of actuarial independence" and can be removed from his job "only for cause." But Mr. Foster testified that a lawyer at the department had told him that Mr. Scully had the legal right to prohibit the actuary from sharing information with Congress.
[...]
President Bush was urging Congress to create a drug benefit under Medicare, but said the legislation could not cost more than $400 billion over 10 years, and Congress accepted that ceiling.
The shape of the legislation was continually changing, but Mr. Foster said, "The range of our estimates was $500 billion to $600 billion all the way through the process," from June to November.
In their public statements, administration officials cited lower figures. "We are spending $400 billion," Mr. Scully said in a letter to The New York Times published on Nov. 20.
What was it that Bush said in the SOTU, something like "We've slowed the growth of discretionary non-military spending on Tuesdays when it is cloudy and there are ducks flying over the Capitol after an execution in Texas for a minor with diminished mental capacities as determined by a republican appointee pretending to be a doctor." Or something like that.
On the one hand, Republicans are sticking it to seniors and cutting their health care. On the other hand, these estimates were way off so the administration was lying about the expense of the program. Either way, you win...(and despite the fact that the Democratic plan was even more expensive and more generous but was defeated, funny MMFA didn't mention that...not relevent?).
It wasn't relevant. The Democratic plan (that was voted on and defeated) was more expensive than the stated cost of the Republican plan. But the Democrats were truthful about the cost of their plan, the Republicans were not. In fact, if we would have adopted the Democratic plan, it would have cost much less than the actual cost of the Republican plan. And it would have provided more benefit to seniors and it would have been much less confusing.
PHREAK,
Well said.
From his comment, I wonder if "BRUCE1ACE" is a just a mugwump or if he's another Rovian bloggosoldier?
There is a lot of stuff you have to cut through to find the truth these days, you might have noticed. I'm looking for some truth in this health care debate. I don't see the consistency in the Dems argument that healthcare is being cut while at the same time the program is so far over budget. the TRUTH is, (according to factcheck which is a solid website IMO) deconstructing a DNC ad:
"Cutting Healthcare for Seniors?
Another distortion in the ad is a statement that "the President gives away billions to the drug companies…while cutting healthcare for our seniors." In fact, Bush signed the biggest expansion of Medicare since its enactment, adding a prescription drug benefit that took effect this month.
Far from "cutting healthcare," the new drug benefit is estimated to reduce out-of-pocket spending for prescription drugs by an average of 37 percent – or $465 – for the 29 million seniors expected to enroll. That estimate comes from a study by the nonpartisan Actuarial Research Corp. and the nonpartisan Kaiser Family Foundation, and is the most recent and authoritative estimate available.
To be sure, not all seniors will benefit. The Kaiser study estimates that one in four seniors will pay more for drugs, including retirees who may be dropped from more generous plans sponsored by the companies that once employed them. It is also true that Democrats had proposed a more generous and more expensive prescription drug benefit for Medicare, but could not get it through the Republican-controlled House. And as widely publicized, the transition to the very complicated new benefit program is causing widespread confusion in its first weeks. Nevertheless, the large majority of seniors are predicted to benefit substantially from the Bush drug benefit.
The cuts the ad refers to – according to a fact sheet provided by Americans United – are in the Deficit Reduction Act passed Dec. 19, 2005. That does indeed set targets for trimming nearly $11.2 billion from projected Medicare and Medicaid spending over the next five years. To put that into perspective, the reduction amounts to just under one-third of one percent of the nearly $3.5 trillion that the Congressional Budget Office projects that those two federal programs will cost over the five-year period (fiscal years 2006 through 2010). That's less than one penny of every $3."
Now, Phreak may be correct that the Dems plan was better. I don't have that comparison. But Bush has not cut health care for seniors overall, from what I have seen here. Please choose one argument or the other.
Just random thoughts is the "generous" Bush "giveaway" as generous after inflation?
And just what happens to the other 25% of seniors whose medication prices go up? From what I have heard on the jaded MSM news that it's largely the poor, handicapped, and those with medical conditions who are seeing their costs go up. In short those who need it and probably can afforded it the least.
The ARC study you refer to is this the same organization whose President Mr. Trapnell. And I quote from their website also maintains a private consulting practice, Gordon R. Trapnell Consulting Actuaries (GRTCA), for private health insurance programs, rate setting by HMOs and other managed care organizations, the cost of prescription insurance programs and long term care insurance. Does this seem a bit like the fox giving a report on how many chickens the weasels have eaten? Anyone can say they are nonpartisan -- frankly I believe there is none such animal stalks this Earth -- but you decide. As for me I take the ARC's report with a grain of salt. I venture to say that a number of the upper staff definitely have something to gain from keeping the insurance companies afloat.
As for the Kaiser Family Foundation and their thought process indeed going by the President's listed plan you could still argue the plan is not so bad. Especially when you factor in the only 11B reduction over five years...but wait what is that it is the KaiserNetwork news alert -- yes they have one -- what is that Bush 2007 budget cut 36B out of the budget. Why that is more than three times the percentage metioned in that report. Go figure. Let's all say "No Child Left Behind." And an article from the USA Today says "Saving $65 billion in government benefit programs over five years, including $36 billion from Medicare. Much of the Medicare savings would come from cutting reimbursement rates to hospitals, nursing homes and home health agencies." A bit less than expected and therefore your report is dubious to say the best.
This administration is great at domestically and internationally over promising and under delivering. I have not figured out the the drug company angle yet, but I'll keep working on it. I already see some juicy bits on how this is going to benefit insurance companies. So, if you wish to try again please do.
I enjoyed the comments. There is always two sides to the story, which makes for good debates. I don't have anything to add on the health care issue but one comment on your education aside that you made. Here is a website with much information on Government education spending and "no child left behind: [link to www.ed.gov]
"By the end of the 2004-05 school year, national K-12 education spending will have increased an estimated 105 percent since 1991-92; 58 percent since 1996-97; and 40 percent since 1998-99. On a per-pupil basis and adjusted for inflation, public school funding increased: 24 percent from 1991-92 through 2001-02 (the last year for which such data are available); 19 percent from 1996-97 through 2001-02; and 10 percent from 1998-99 through 2001-02.
Importantly, the increase in funds has been linked to accountability for results, ensuring taxpayers get their money's worth."
If, as you say, this admin is "underperforming" in terms of promises, they certainly are NOT underperforming in terms of historical dollars. Spend, spend, spend, spend, spend....
In the 2004-05 school year, 83 cents out of every dollar spent on education is estimated to come from the state and local levels (45.6 percent from state funds and 37.1 percent from local governments). The federal government's share is 8.3 percent. So the federal government is really only marginally involved in education at the K - 12. This information is from the Dept of Education's website also.
But to be fair the question is the mandate the federal government set in place underfunded -- let's check a little research from the President's home state.
[link to ntj.tax.org]
According to the work conclusion that given the extra mandates of NCLB that present funding levels are inadequate for the stated goals to be achieved.
Now this being the case, as the stated goals are not achieved, we can only assume that the federal government will reduce or remove their funding creating a self-fulfilling cycle.
But I conceed may saying "reduction" maybe is unfair to the administration perhaps saying "underfunding mandate social programs" is more correct. Of course, if I was part of the GOP, I would rather hear we reduced education spending versus we underfunded it based on laws and standards we set in an election year.
I have heard a lot of complaining that the "no child left behind" is not adequately funded. The Federal governments charge that this is NOT a mandate since accepting government funding for education is OPTIONAL is not very convincing to me. As you pointed out, the Fed kicks in over 8% of the cost of education currently which is 1/3 more than 10 years ago. I highly doubt school districts could survive any easier without that 8% and under their own standards. I also would say that simply increasing funding for education has not gotten us better results, especially when compared to other developed countries. I'm looking at it more from a results standpoint than a funding standpoint. There has to be a better way.