AARP Gone Astray
The New York Times
November 21, 2003
OP-ED COLUMNIST
By PAUL KRUGMAN
This is a good bill that will help every Medicare beneficiary,"
wrote Tom Scully, the Medicare administrator, in a letter to The New York Times
defending the prescription drug bill. That's flatly untrue. (Are you surprised?)
As the Center on Budget and Policy Priorities points out, the
bill will force millions of beneficiaries to pay more for drugs,
thanks to a provision that cuts off supplemental aid from Medicaid.
Poorer recipients may find previously affordable drugs
moving out of reach.
That's only one of a number of anti-retiree measures tucked
away in the bill. It contains several Trojan horse provisions that are clearly intended
to undermine Medicare over time - it will allow private insurers
to cherry-pick healthy clients in selected cities, and it will heavily subsidize
private plans competing with traditional Medicare. Meanwhile,
the bill prohibits Medicare from using its bargaining power to cut drug prices;
drug company stocks have soared since the bill's details became public.
Yet the bill has a good chance of passing, thanks to an endorsement
from AARP, the retiree advocacy organization, which has already begun an
expensive advertising campaign on the bill's behalf. What's going on?
Let's step back a minute. This is a bill with huge implications
for the future of Medicare. It's also, at best, highly controversial. One might therefore
have expected an advocacy group for retired Americans to take its
time in responding - to make sure that major groups of retirees won't actually
be hurt, and to poll its members to be sure that they are well
informed about what the bill contains and don't object to it.
Instead, AARP has thrown its weight behind an effort to ram
the bill through before Thanksgiving. And no, it's not urgent to get the bill passed so
retirees can get immediate relief. The plan won't kick in until 2006
in any case, so no harm will be done if the nation takes some time to consider.
Many of AARP's members feel betrayed. The message boards
at the organization's Web site have filled up with outraged posts. A number of those
posts say something like this: "Now you're just an insurance company."
Indeed, that may get to the heart of the matter.
Over the years AARP has become much more than an advocacy
and service organization for older Americans. It receives more than $150 million
each year in commissions on insurance, mutual funds and prescription
drugs sold to its members.
And this Medicare bill is very friendly to insurance and drug companies.
Senator John Breaux, one of only two Democrats who participated in
negotiations over the bill, takes the controversy as a good sign: "No one
got everything they wanted." But as Jonathan Cohn points out in The New
Republic, drug and insurance companies got exactly what they wanted:
no efforts to limit prices, generous subsidies and lots of additional
business. For example, insurance companies that offer an alternative
to Medicare will not only be able to pick and choose their customers, but will
also get 30 percent more per client than the government spends
on the average Medicare recipient.
So do AARP executives support this bill because
they hope to share in the bounty? Maybe, but it probably runs
deeper than that. Once an advocacy
group becomes as much a business as a service organization,
its executives are likely to start identifying more with industry interests than with
the groups they are supposed to serve.
Thus it may seem odd on the surface that William Novelli, AARP's
chief executive, wrote a glowing preface to Newt Gingrich's book on health care
reform. After all, Mr. Gingrich has long advocated turning the administration
of Medicare over to private companies - an unpopular idea, and also
an expensive one (forget the clichés about inefficient
government: private companies have much higher overhead than Medicare).
But what looks like wasted money to taxpayers and retirees looks like
opportunity to private providers. Enough said.
Am I being too cynical? How could I be? In case you haven't noticed,
we live in a golden age of pork: the other big piece of legislation marching
through Congress, the energy bill, makes the Smoot-Hawley tariff look
like a classic of good government.
So it should come as no surprise that Medicare "reform" appears
likely to be another triumph for the coalition of the bought-off - a coalition that,
sadly, includes AARP.
Copyright 2003 The New York Times Company
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