House Ways and Means Committee Hearing To Focus on Medicare Law Cost Estimate Discrepancies
During Wednesday's House Ways and Means Committee hearing on the Medicare legislation, Democrats are planning to "zero in" on higher Medicare payments to private health plans, called for under the law and detailed in documents provided Friday to Congress by CMS chief actuary Richard Foster, CongressDaily reports (Heil, CongressDaily, 3/23). Democrats had previously requested the documents, but Foster has said he was prevented from releasing them by former CMS Administrator Tom Scully. 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. Foster has said that the higher cost projection was known before the final House and Senate votes on the legislation in November but that Scully told him, "We can't let that get out." In an e-mail to colleagues at CMS, Foster indicated he believed he might lose his job if he revealed his cost estimates for the Medicare legislation. Foster confirmed the allegations in interviews published in several newspapers last week. Scully has said that he did not threaten to fire Foster if the higher estimates were released. Scully also said that he "curbed Foster on only one specific request" made by Democrats at the time of the first House vote on the Medicare bill. Last week, HHS Secretary Tommy Thompson requested that the department's Office of Inspector General look into the issue, and on Thursday, 18 Senate Democrats asked the General Accounting Office to look into Foster's allegations (California Healthline, 3/22).
According to CongressDaily, Foster's estimates show that $32 billion of the difference between the OMB and CBO estimates is related to the increased payments to private plans participating in Medicare. Accounting for another $32 billion of the difference, CBO assumed that 87% of eligible seniors would participate in the prescription drug benefit, while OMB assumed that 94% of elderly would participate, according to the documents. A spokesperson for Rep. Charles Rangel (D-N.Y.), ranking member of the Ways and Means Committee, said that Wednesday's hearing also would focus on how the law will affect Medicare's long-term solvency, adding, "We see these so-called cost-saving measures that actually cost more money and reduce solvency" (CongressDaily, 3/23).
While Democrats have focused blame on the Bush administration for the discrepancy in CBO's and OMB's cost estimates, "the underlying implication is that CBO must have lied or been grossly mistaken about its own estimate," Roll Call reports. According to Roll Call, Rep. Pete Stark (D-Calif.) said that he "put much more stock in [Foster's] ability to accurately forecast Medicare costs," adding that CBO "cooked the numbers" at Republicans' request. Stark also said that CBO does not have the expertise that CMS actuaries have, adding, "This is a very specialized area in which [Foster] and his guys are the only guys in town who can do this." Stark did not provide any proof of those claims, according to Roll Call. Jim Manley, spokesperson for Sen. Edward Kennedy (D-Mass.), said, "I don't think anybody is meaning to suggest that (Foster's) numbers are more accurate than CBO's. It's just another estimate that should have been heard on Capitol Hill." He added that CBO's "low-balling" of participation rates in the prescription drug benefit "helped Republicans, because it kept the cost of the bill below the 2003 budget resolution's $400 billion cap," Roll Call reports.
According to Roll Call, Republicans generally have "leapt to the defense of CBO." Bill Hoagland, budget and appropriations adviser to Senate Majority Leader Bill Frist (R-Tenn.), said, "I think it's an indirect slap at CBO," adding that the White House and Congress almost always have different cost estimates for legislation. Thompson even "took CBO's side against his own employees at CMS," saying during a press conference last week that CBO employees "have a lot more experience than our actuaries," Roll Call reports. Thompson said that his actuaries' assumption that because 91% of eligible Medicare beneficiaries participate in Part B, which covers outpatient and other services, 94% of beneficiaries would participate in the prescription drug benefit "doesn't logically follow." He added, "I've always had a difficult time believing that." An unnamed House Republican aide said, "CBO, even though they aren't running the program, seem to know more about the program than the CMS actuary," adding, "Did (CMS) miss the memo saying that not everybody will participate?" Former CBO Director Robert Reischauer, now president of the Urban Institute, said that both CBO's and OMB's estimates "are well within the range of the possible." He added, "The fact is no one has a lot of experience doing this. These are educated guesses" (Pierce, Roll Call, 3/23).
Last weekend, House Democrats met with their constituents across the country "for a spring offensive" against the new Medicare law, The Hill reports (Nichols, The Hill, 3/23). A spokesperson for House Minority Whip Steny Hoyer (D-Md.) said that the events led by 75 Democrats aimed to give members the opportunity "to point out flaws in the [law] and discuss the high-profile investigations into its passage," CongressDaily reports. During the meetings, representatives screened a video produced by Families USA that features former CBS anchor Walter Cronkite (CongressDaily, 3/23). Hoyer and Rep. Ben Cardin (D-Md.) told seniors in Maryland "to take action against the new drug benefit program," The Hill reports. Hoyer said, "In the long run, [the law] puts Medicare at risk. ... Ultimately it will drive up the cost for seniors." He added that Republicans passed the bill "by various devices, some of which have been not so nice" (The Hill, 3/23). Hoyer's spokesperson said that about 25 more members will hold similar meetings in the next few weeks (CongressDaily, 3/23).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.