CMS Actuary Confirms He Was Ordered To Withhold From Lawmakers Cost Estimates for Medicare Legislation

Richard Foster, chief actuary for CMS, on Friday confirmed that he was ordered by then-CMS Administrator Tom Scully to withhold from legislators "unfavorable cost estimates" for the Medicare legislation, which exceeded by more than $100 billion "what Congress seemed willing to accept," the Philadelphia Inquirer reports (Pugh, Philadelphia Inquirer, 3/13). The Inquirer last week reported that an e-mail from Foster to colleagues at CMS indicated he believed he might lose his job if he revealed his cost estimates of the Medicare legislation. According to Office of Management and Budget estimates released after Congress passed the legislation, the Medicare law will cost $534 billion over the next 10 years, $134 billion more than estimated by the Congressional Budget Office (California Healthline, 3/12). While some federal officials and lawmakers have charged that the Bush administration knew of the higher estimate for the legislation before its passage and enactment, until now "it has not been apparent the lengths to which Bush aides who negotiated the bill with Congress went to keep the figures private," the Washington Post reports (Goldstein, Washington Post, 3/13). Foster said the higher cost projection was known before the final House and Senate votes on the legislation in November, but he added that Scully told him, "'We can't let that get out'" (Rogers, Wall Street Journal, 3/15).

Foster said the "dozens and dozens of analyses and estimates" that he prepared -- which all "showed that the cost of the drug benefit, through 2013, would be in the range of $500 billion to $600 billion" -- were provided to Scully, and some were also given to the White House, OMB and top HHS officials, the New York Times reports (Pear, New York Times, 3/14). However, a written note to Foster from Scully ordered Foster "not to respond to certain requests [from lawmakers] and instead to provide the responses to" Scully, the Inquirer reports. The message allegedly "warn[ed] about the consequences of insubordination," Foster said. The note came after three "less formal threats," including Scully reportedly telling Foster, "'I think I need another chief actuary,' or 'If you want to work for the Ways and Means Committee, I can arrange it,'" the Inquirer reports. Foster said, "Estimates that were supportive of the legislation were generally released, and estimates that could be used to criticize the legislation were generally not released" (Philadelphia Inquirer, 3/13). In an interview with the Post, Foster said, "Certainly, Congress did not have all the information they might have wanted, or that we had" (Washington Post, 3/13). Foster said that while "the effect of the restrictions imposed on his office was to withhold information sought by Democrats," Scully also told him not to answer a request for data by Rep. Bill Thomas (R-Calif.), chair of the House Ways and Means Committee and chair of the conference committee negotiating the Medicare legislation (Pear, New York Times, 3/14). According to Foster, Scully said more than one time that he "was just following orders" by preventing Foster from releasing his estimates. Although Foster admitted he was not sure where the order came from, he said he thought it "might have originated in the White House," the Post reports (Washington Post, 3/13).

In an interview, Scully said, "I never told Rick I was going to fire him" (Wall Street Journal, 3/15). In an interview with the Inquirer last week, Scully said that he had "curbed Foster on only one specific request" made by Democrats at the time of the first House vote on the Medicare bill. He said, "They were trying to be politically cute" and get Foster to give an estimate on the bill "and put something out publicly so they [could] walk out on the House floor and cause a political crisis, which is bogus" (California Healthline, 3/12). Scully said, "We had told lots of people on the Hill that our score was likely higher, and they weren't interested. It wasn't relevant." Other unnamed government officials said that while they knew of the higher cost estimate, they felt no "reason to air the higher cost numbers," worried that the different estimate "would only sow confusion and give ammunition to the opponents of the bill," the Wall Street Journal reports (Wall Street Journal, 3/15). White House spokesperson Trent Duffy confirmed that the White House had received Foster's estimates for parts of the legislation, but the administration used CBO as "the primary authority" for the legislation's cost. Duffy added that he did not know if someone had threatened Foster (Pear, New York Times, 3/14). According to the Post, HHS officials on Friday "portrayed the matter as a conflict between Foster and Scully." Kevin Keane, the assistant secretary for public affairs at HHS, said, "Those two just clearly did not get along," adding, "To suggest it's anyone else is way out of line."

Senate Minority Leader Tom Daschle (D-S.D.) and House Minority Leader Nancy Pelosi (D-Calif.) on Friday both demanded a new vote on the Medicare legislation, saying that "members of Congress were called to vote under false pretenses" (Washington Post, 3/13). Daschle added, "[A]n investigation of some kind is clearly warranted. Whether this is criminal or not is a matter that we will certainly want to clarify. If not criminal, it is certainly unethical" (Pierce, Roll Call, 3/15). A group of congressional Democrats on Friday asked the HHS inspector general to launch an ethics investigation into "the possible intimidation of Mr. Foster," the Times reports. In a letter, Reps. Pete Stark (D-Calif.), Sherrod Brown (D-Ohio), Rosa DeLauro (D-Conn.), Rahm Emanuel (D-Ill.) and Bernard Sanders (I-Vt.) wrote, "Throughout the debate on the Medicare bill, the legislation's cost was a central issue for lawmakers on both sides of the aisle. The withholding of cost information may have impeded lawmakers' ability to engage in fair debate on the bill" (Pear, New York Times, 3/14). Prior to the legislation's passage and enactment last year, 13 conservative House Republicans said that they would vote against the bill if its estimated cost was more than $400 billion over 10 years (California Healthline, 3/12). Max Baucus (D-Mont.), a member of the Medicare conference committee, said that while he still strongly supports the legislation, he also has "grave concerns" about the alleged withholding of cost estimates (Pear, New York Times, 3/14). On Friday, Sen. Edward Kennedy (D-Mass.) and Daschle sent a letter to President Bush, asking him "when he knew that his administration's cost estimate was higher than that of the CBO, and why he did not disclose the higher estimate to lawmakers before they voted" on the bill, the Times reports (Kemper, Los Angeles Times, 3/14). Stark said, "The administration seems to have a habit of suppressing information to serve its political purposes" (Pear, New York Times, 3/14). Democratic presidential candidate Sen. John Kerry (Mass.) said in a statement that Foster's allegations could "deepen" what Kerry called "a credibility problem for the president." Kerry said, "With this new evidence that the Bush administration threatened to fire a public official if he told the truth to the public, President Bush's growing creditability gap has just gotten that much wider."

According to the Los Angeles Times, Republicans are "dismiss[ing]" Democrats' accusations as "politically motivated." John Feehery, spokesperson for House Speaker Dennis Hastert (R-Ill.) said, "I don't know of any cover-up" (Los Angeles Times, 3/14). A spokesperson for Senate Majority Leader Bill Frist (R-Tenn.) said that while Foster's estimates were based on different assumptions than those done by CBO, "If an individual's job was threatened and if they were trying to shield information from Congress, that could be an issue of concern" (Philadelphia Inquirer, 3/13). Senate Finance Committee Chair Chuck Grassley (R-Iowa) said, "Government analysts with relevant information should never be muzzled" (Washington Post, 3/13). However, Grassley added that Democrats are "embrac[ing] an administration estimate to suit the partisan cause of undermining the Medicare bill," noting that many Democrats had supported an alternative Medicare bill that "by anybody's estimate would have cost hundreds of billions of dollars more than what we enacted" (Pear, New York Times, 3/14).

The New York Times on Monday profiled Foster, calling him a "no-nonsense mathematician with a reputation for being careful in his assessments" (Clemetson, New York Times, 3/15).

NPR's "All Things Considered" Friday reported on Democrats' call for a new vote on the Medicare law. The segment includes comments from Daschle, Sen. Byron Dorgan (D-N.D.), Frist and Scully (Rovner, "All Things Considered," NPR, 3/12). The complete segment is available online in RealPlayer.