gee....like everything else associated with Bush....MORE FAKE NUMBERS to ram stuff through...then the REAL truth comes out......LATER
Bush’s Aides Put Higher Price Tag on Medicare Law
January 30, 2004
By ROBERT PEAR
WASHINGTON, Jan. 29 - The Bush administration said on
Thursday that the new Medicare law offering prescription
drug benefits and private health plans to the elderly would
cost at least $530 billion over 10 years, or one-third more
than the price tag used when Congress passed the
legislation two months ago.
Conservative Republicans said the new estimate confirmed
their worst fears, while Democrats said it vindicated their
view that the law gave far too much money to drug
manufacturers and insurance companies. The bill passed
narrowly in the House after Republican leaders gave
assurances that the cost would not exceed $400 billion.
The Congressional Budget Office said in November and again
this week that the cost was about $400 billion for the
10-year period 2004 to 2013, the amount originally proposed
by Mr. Bush. But White House officials said Thursday that
the president's budget would put the cost at $530 billion
to $540 billion.
At the same time, the officials said that the overall
budget deficit for the current fiscal year would exceed
$500 billion. The deficit for fiscal 2003 was $375 billion,
a record amount.
Mr. Bush says his budget request, to be unveiled on Monday,
will cut the deficit in half within five years, by
promoting economic growth and keeping spending under
control.
The Medicare law, which Mr. Bush signed on Dec. 8, will
offer drug benefits to 41 million elderly and disabled
people. It will also give insurance companies and private
health plans a huge new role in the Medicare program.
A White House official said the new estimate reflected "the
Medicare actuaries' best estimate of the future cost." The
actuaries and White House budget officials often differ
with Congressional budget experts, he said.
"Health costs are very volatile," the official said. "It's
difficult to predict the behavior of 40 million people in a
market that does not now exist."
The Bush administration did not explain how it arrived at
its cost estimate, but health economists and budget
analysts suggested two factors. The administration predicts
that the new law will produce a sharp increase in the
number of Medicare beneficiaries enrolled in health
maintenance organizations and other private health plans.
In addition, the law significantly increases Medicare
payments to private health plans.
"For the foreseeable future, the private plans are more
expensive than the traditional fee-for-service Medicare
program," said Robert D. Reischauer, president of the Urban
Institute and vice chairman of a federal commission that
advises Congress on Medicare.
Republicans say the private plans will enhance competition
and efficiency in the Medicare market, saving money in the
long run.
Democrats have introduced legislation to augment what they
see as a meager Medicare drug benefit.
The new cost estimate could strengthen the hand of
Republicans who oppose any expansion of the benefit. But it
could also strengthen the hand of Democrats who want to
save money by controlling drug prices and reducing Medicare
payments to private insurers.
The White House tried to persuade Congress to include
stringent cost controls in the law. But Democrats balked,
saying the proposals could have led to cuts in Medicare
benefits.
Passage of the Medicare bill was a major political
achievement for Mr. Bush and the Republican leaders of
Congress. But lawmakers would probably not have approved
the legislation in its current form if they had thought the
cost would exceed a half-trillion dollars.
The bill was passed by a vote of 220 to 215 in the House,
with reluctant support from some conservative Republicans
who were deeply troubled by the cost.
The new estimate confirmed the fears of many conservatives.
"We told you so," said Robert E. Moffit, director of the
Center for Health Policy Studies at the Heritage
Foundation.
Mr. Moffit said the new estimate "will create an enormous
problem for the Congressional leadership, which repeatedly
told Republicans that this was a fiscally responsible
bill."
An aide to the Senate Republican leadership said that he
did not know why the new estimate was higher.
Thomas A. Scully, the federal official in charge of
Medicare from May 2001 to December 2003, said: "The
estimate may be surprising to some people, but it's not
shocking to me. It just reflects a difference of opinion
among actuaries who make different assumptions about the
growth of drug spending and enrollment in private plans."
William A. Pierce, a spokesman for the Department of Health
and Human Services, said: "The Medicare bill had lots of
moving parts. We could not make a final analysis of the
cost until it became law."
Representative Jeb Hensarling, Republican of Texas, who
voted for the bill, said he was surprised at the new
figure. But he said, "Cost estimates for entitlement
programs have been notoriously unreliable, often too low."
Representative Patrick J. Toomey, a Pennsylvania
Republican who voted against the bill, said: "The new cost
estimate is very disturbing, and I am concerned that the
bill will end up costing even more than $540 billion. What
could have changed so much in just a few months?"
Democrats said the new cost estimate vindicated their
contention that the law was too generous to drug
manufacturers and insurers.
"The news on the Republican Medicare bill gets better and
better for drug company profits and H.M.O.'s, and worse and
worse for seniors and the Medicare program," said Senator
Edward M. Kennedy, Democrat of Massachusetts.
Administration officials said they had not concealed
information about the cost of the new drug benefit. But in
their zeal to secure passage of the legislation last fall,
they played down concerns about the cost.
The drug benefit is scheduled to begin in 2006. The cost of
preparations in 2004 and 2005 is relatively small. But the
costs will surge as baby boomers turn 65 and become
eligible for Medicare in 2011 and subsequent years.
Douglas J. Holtz-Eakin, director of the Congressional
Budget Office, has estimated that the drug benefit could
cost $1 trillion to $2 trillion in its second decade.
Trent D. Duffy, a White House spokesman, said spending on
prescription drugs could reduce the need for more expensive
types of care. Mr. Bush often says, for example, that ulcer
drugs costing $500 a year can eliminate the need for
surgery and hospital stays costing $28,000 a patient.
The $530 billion estimate apparently does not include the
cost of another feature of the new law, which provides tax
breaks to people who establish savings accounts for medical
expenses. Mr. Bush says he hopes millions of people will
set up such accounts.
In recent weeks, conservative Republicans have expressed
alarm at the growth of federal spending, which increased
more than 20 percent from 2000 to 2003, while revenues were
declining. Some Democrats suggested that Mr. Bush was
predicting a big deficit for 2004 so it would be easier to
halve the deficit in five years.
Mr. Duffy, the White House spokesman, said that suggestion
was ridiculous.
nytimes.com
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