The Politics of Medicare

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• MEDICARE AD:

  It's the same Medicare you've always counted on, plus more benefits, like prescription drug coverage.

• SUSAN DENTZER:

  Now airing around the country, this television commercial about the sweeping Medicare changes Congress enacted last year.

• MEDICARE AD:

  You can save with Medicare drug discount cards this June and save more with prescription drug coverage in 2006.

• SUSAN DENTZER:

  The ad may not look all that controversial, but it is. Democratic Sen. Ted Kennedy of Massachusetts says it's blatantly political.

• SEN. EDWARD KENNEDY:

  It's basically to try and sell the Medicare program and for the Republicans to take credit for it. This is a political act, and it should be clearly done with political resources and political money and not the money from scarce resources our senior citizens pay into.

• SUSAN DENTZER:

  The federal Department of Health and Human Services produced the commercials as part of a $23 million awareness campaign. Kevin Keane is the department's top spokesman.

• KEVIN KEANE:

  The law tells us it's our responsibility to educate seniors about these new prescription drug benefits. And what more efficient way can you do that than with an advertising campaign and directly mailing information to Medicare beneficiaries?

• SUSAN DENTZER:

  It's been just over three months since President Bush signed the new Medicare law last December. But in that time, a series of controversies have erupted as both parties seek political advantage in an election year.

  This week Democrats sharply criticized this so-called video news release. HHS recently gave it to TV stations to use in their news broadcasts. The department says about 52 stations did use it in broadcasts seen by about 1 million people.

• VIDEO CLIP:

  Medicare officials emphasize that no one will be forced to sign up for any of the new benefits.

• SUSAN DENTZER:

  In the video, a voiceover from a freelance journalist describes the Medicare changes.

• VIDEO CLIP:

  From Washington, I'm Karen Ryan, reporting.

• SUSAN DENTZER:

  Last month Kennedy and other Senate Democrats wrote Congress's investigative arm, the General Accounting Office. They asked it to look into whether the information campaign violated a law governing use of public funds for publicity or propaganda. The GAO has since concluded that the commercials were legal. But it says it's still examining the video news releases, or VNRs. Keane says the VNRs don't warrant the scrutiny.

• KEVIN KEANE:

  It's a press release for the broadcast media, for the television stations. It's used in government and our predecessor in the Clinton administration has more than we have.

• SUSAN DENTZER:

  The biggest controversy to date involves a dispute over just what the Medicare changes could cost and whether the Bush administration deliberately kept its own higher estimates from Congress.

  When the Medicare law was passed last November, Congress's scorekeeping arm, the Congressional Budget Office, pegged the cost at $395 billion over ten years. Contrast that with the $534 billion estimate from HHS' Centers for Medicare and Medicaid Services, or CMS. The Bush administration released that estimate last month as part of its 2005 federal budget request.

  Economist Robert Reischauer is a Medicare expert and former CBO director. He says the CMS estimate was higher mainly because it assumed more Medicare enrollees would sign up for aspects of the new prescription drug programs.

• ROBERT REISCHAUER:

  In fact, it was probably an estimate that was done about the same time as the Congressional Budget Office estimated this bill, and there is no reason to believe the CMS number is more correct than the CBO number. Both are well within the range of the possible here.

• SUSAN DENTZER:

  But Reischauer also says the higher administration estimate could have derailed passage of the Medicare law had been known about at the time.

• ROBERT REISCHAUER:

  Many Republicans were concerned about the size of this piece of legislation, concerned that Republicans were about to enact the largest expansion in entitlements in at least 25 years, and the administration, I'm sure, would have been concerned that this would have led to more Republicans voting against the bill, and they really didn't have any to spare.

• SEN. EDWARD KENNEDY:

  The administration, the leaders, the Republican leaders represented figures that were just entirely different from what the accurate figures were, and that is deception that we cannot afford in our relationship between the executive and the Congress.

• SUSAN DENTZER:

  Democrats are now focusing their attention on charges made by CMS' chief actuary and cost estimator, Rick Foster. In recent press reports, Foster has said he was threatened with termination last summer by then-CMS administrator Tom Scully if he revealed higher estimates of portions of the Medicare legislation.

  On CNBC's Capital Report this week, Scully acknowledged he had told Foster not to provide House Democrats with one estimate they had sought. Scully said that was because the estimate dealt with a controversial section of the Medicare bill that had already been taken out by House Republicans.

• TOM SCULLY:

  They insisted that he score a provision in the bill that was no longer in there just to create this havoc to take the bill down, and I said no.

• SUSAN DENTZER:

  A congressional press release issued last June cited a heated conversation Scully later had with a House Democratic staffer. The aide claimed Scully told her Foster would "be fired so fast his head would spin" if the actuary released the estimate in question.

  The episode occurred nine months ago, but it was only yesterday that Democrats asked the GAO to investigate whether the threatened firing violated federal law. In today's Washington Post, Foster is quoted as saying he believes pressure to hide the higher CMS estimates came directly from the White House.

  This week HHS Secretary Tommy Thompson asked the department's inspector general to look into the allegations of Foster's threatened firing and suppressed cost estimates.

• KEVIN KEANE:

  The inspector general's going to take a look into what happened, what the accusations are, what's true, what's not true and make a finding, and then we'll go from there.

• SUSAN DENTZER:

  And even Republicans who voted for the legislation now say they agree with the need for an inquiry. Georgia Republican Rep. Jack Kingston:

• REP. JACK KINGSTON:

  As I understand it, Mr. Foster and Mr. Scully have had some personality rubs, and I think some of that has happened on this. But I will say that if somebody was sitting on good numbers or better numbers than us, that we want to know about it.

• SUSAN DENTZER:

  Last fall Kingston was part of the House team that helped persuade many reluctant conservative members to vote for the Medicare bill. Many had been alarmed at the bill's projected cost, but say they voted for it under pressure.

• MEMBER OF CONGRESS:

  The conference has agreed to…

• SUSAN DENTZER:

  And this week the House Ethics Committee opened a formal investigation into whether one Republican member, Rep. Nick Smith of Michigan, was offered a bribe to vote for the bill.

  Medicare actuary Foster is scheduled to appear before the Ways and Means Committee next week. He is to testify about Medicare's long-term financial projections. But he's sure to be questioned about his role in Washington's latest political storm.