Medicare Actuary Gives Wanted Data to Congress

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Medicare Actuary Gives Wanted Data to Congress

By Robert Pear, the New York Times

March 20, 2004

Richard S. Foster, the chief actuary of Medicare, provided Congress with documents on Friday showing that federal payments to private health insurance plans under a new Medicare law could far exceed what Congress assumed when it passed the measure last fall.

For months, lawmakers had been seeking the data, but Mr. Foster said in an interview that he had withheld it under instructions from Bush administration officials.

He turned over documents outlining the information at a meeting on Friday with Congressional aides of both parties who work on health legislation.

The documents estimate that the new law will increase Medicare payments to private health plans by a total of $46 billion over the next 10 years, not the $14 billion assumed by lawmakers when they voted on the legislation. Mr. Foster had cited the discrepancy in an interview earlier this week, but the documents he turned over on Friday, Mr. Foster said, show that the Bush administration was aware of the gap well before Congress approved the new law.

Moreover, the documents show that the administration expects a huge increase in the number of Medicare beneficiaries enrolled in various types of managed care. About 12 percent of the 41 million current Medicare beneficiaries are in such private health plans today. By 2009, Mr. Foster says, the proportion will reach 32 percent, equally divided between health maintenance organizations and preferred provider organizations.

By contrast, the actuary estimates that enrollment in the traditional government-run Medicare program will decline from 2006 to 2009, along with payments to many health care providers.

For example, the documents show that payments to doctors under Medicare's fee schedule will decline each year from 2006 to 2012, while spending for inpatient hospital services and skilled nursing homes under the traditional government-run program will decline in 2006 and 2007.

Doctors and hospitals have lobbied vigorously against such cuts in recent years. The actuary's report suggests they will need to mobilize their lobbyists again if they want to preserve the gains they won last year.

Many Republicans wanted to encourage the growth of private health plans because they believe such insurers coordinate care better than the traditional Medicare program.

But if the estimates of higher costs had been known last year, they would have given ammunition to Democrats and other critics who said the bill was lavishing money on insurance companies at the expense of the traditional Medicare programs.

Mr. Foster said he withheld the cost estimates and other information from Congress last year on instructions from Thomas A. Scully, who was then administrator of the Medicare program.

Mr. Foster, who has been a government actuary for more than 30 years, said Mr. Scully had threatened to fire him if he gave the data to Congress.

Mr. Scully, who left the government in December, confirms that he told Mr. Foster to withhold certain information, but denies threatening to fire him.

A federal law stipulates that officials must not try to prevent federal employees from having "oral or written communication or contact" with any member of Congress on matters relating to the employees' duties.

On Thursday, a group of 18 Democratic senators led by Frank R. Lautenberg of New Jersey asked the comptroller general to investigate whether Mr. Foster had been muzzled in violation of this law.

Trent D. Duffy, a White House spokesman, said no White House official had instructed Mr. Foster or Mr. Scully to withhold information from Congress. But Mr. Duffy acknowledged that the actuary's cost estimates had been sent to White House officials, including Doug Badger, a special assistant to President Bush who negotiated with Congress on the Medicare bill.

Some Republicans, especially conservatives concerned about the cost of the new law, have criticized the administration for withholding information.

An earlier Medicare law, adopted in 1997 at the behest of Republicans, explicitly protects the actuary's independence.

A spokeswoman for Representative Bill Thomas, Republican of California, who helped write that provision, said Mr. Thomas believed "that members of Congress should have access to differing assumptions and estimates and that any administration should provide requested information."

Representative Jeb Hensarling, Republican of Texas, who voted reluctantly for the Medicare bill, said the costs of benefit programs often soared beyond expectations.

"I never believed anybody's cost estimates for the Medicare bill," Mr. Hensarling said. "I didn't believe the Congressional Budget Office or the administration."

Consumer advocates told the administration on Friday that one way to hold down costs would be to allow Americans to import drugs from Canada and other countries.

They said the government could guarantee the safety of such imports by inspecting foreign production plants, licensing wholesale importers and tracking shipments from factory to pharmacy, with the help of new technology.

The administration has strenuously opposed drug imports, saying they pose an unacceptable risk to consumers. But under a requirement in the new Medicare law, a panel of 13 administration officials is studying ways to ensure the safety of imported drugs.

David M. Certner, director of federal affairs at AARP, told the panel: "Individuals are already doing this on their own. It would be far better to establish a safe regime for imports."

Mr. Certner said the Food and Drug Administration should, on its Web site, provide a list of "approved pharmacies" that could supply safe medicines from abroad.

Dr. Georges C. Benjamin, executive director of the American Public Health Association, said federal officials should be able to guarantee the safety of imported drugs because doctors, pharmacists, wholesalers and manufacturers were all "trusted agents," subject to federal or state regulation.