The 2003 Medicare Bill Bullet points  

• Health care spending in 2003 accounted for 15% of the nations economy, the highest level ever recorded.  Heath care spending grew at 9.3% in 2002, fueled by prescription drug prices.  Drug costs account for 23% of what Americans spend out of their own pocket, and 51% of the increase in Out-of-pocket expenses.  The drug-discount card will be available this summer.  It will provide all seniors with some saving and low-income senior with $600 in additional assistance with drug costs.
• Goal was to obtain saving of 10-15% on Medicare beneficiaries total drug benefit.   Much of this depends on how the success of the users drug-discount card [PBM’s, health insurers, chain drug stores etc].  The drug discount card program will end when the Medicare drug benefit takes effect in 2006.
• The bill covers physical examinations, establishes new disease-management program to identify patient at risk, coordinate care, and encourage self-monitoring
• Medicare premiums will have to increase to cover the cost of the seniors who remain in Medicare since they will be sicker than those in HMO’s.  Those higher premiums will then force more and more healthy seniors out of Medicare into private plans, further increasing Medicare premiums and resulting in a death spiral, as Medicare becomes more and more unaffordable and finally collapses. 
• The private insurers are free to set their own premiums and establish their own formularies.
• Senior citizens sign up for an insurance company and are locked in for a year.  The company can change the formulary anytime and not tell the beneficiaries except post it on the web site.
• The Veterans affairs and Department of Defense have paid 60% lower rates than others because of bulk rates for drugs.
• The pharmaceutical industry is the most profitable industry in the country over the last decade.  They were 5 times as profitable as the average Fortune 500 Company.
• The bill’s budget allocated for prescription drugs represents only 25% of the cost of the drugs that senior citizens need.
• The behind the scenes drafting and final result of the New Medicare bill was controlled through a variety of tactics from the drug industry.
• First tactic:  Pharmaceutical corporations, their PAC’s and employees contributed $44 million in political campaign contributions since 1999 [78% to republicans and 22% to democrats]. The heath industry gave $14 million total to the eleven elected officials largely credited with negotiating the bill with the Pharmaceutical Company giving $3 million into their campaigns. [President Bush received the most, qt $891,208.
• Measuring impact from donations is a direct correlation.  Those congressmen who voted for the bill received three times the amount as those who did not vote for the bill.  The drug industry spent $544 million on lobbying congress, federal agencies and the White house between 1997 and 2002.
• Second Tactic:  The Pharmaceutical industry has 675 lobbyist, - more than one for every one of the 535 members of congress.
• Third Tactic:  Pharmaceutical corporations and its trade association, PhRMA established  “front groups” to spend on electoral contests.  They spent $82 million in 2000 and 2002 elections.  These “front groups” with popular-sounding names delivered their message to voters, largely without disclosing who was behind the financing the various campaigns.  PhRMA knew voters might have been less likely to accept the message if the public knew this was really from the pharmaceutical companies who were spending on these issues.  Citizens for a Better Medicare” spent $65 million in the 2000 election to oppose Al Gores’ proposal for a Medicare prescription drug benefit.  There are three other groups as well: The Seniors Coalition, the 60 Plus association and the United Seniors Association which spent $17.6 million on advertising and direct mail to persuade the electorate to support their preferred candidate.  All four front groups were created by the same individual and while claiming to represent senior citizens, reported no contributions from them.  In reality, these organizations are financed directly by the pharmaceutical industry.  There is not way to track how much each of these groups spend.
• The forth tactic:  Direct access to President Bush’s administration. At least seven “Pioneers” or “Rangers” –well connected individuals who pledged to raise $100,000 or $200,000 respectively, for President Bush’s campaigns come from the pharmaceutical industry.  As of November 2003, President Bush’s campaign has 134 Rangers and 217 Pioneers.  At a bare minimum, these donors have accounted for $48.5 million or 37% of the $130.8 million collected by the end of December 2003.
• Personal Connections with impact:  David Halbert was a principal drafter of the Medicare proposal; he is the CEO of AdvancePCS, which is a Pharmaceutical benefits management company.  [PBM] These companies stand to make huge profits through the Medicare “discount drugs card” contracts.  [Halbert bailed out President Bush’s Harken Energy Corp which had prompted a SEC investigation of President  Bush] After this occurred, Halbert invited the Governor Bush to become one of the original investors in AdvanacePCS-which made Bush up to $1 million.   Why is this important?  AdvancePCS is one of the four largest PBMs in the country and is currently being bought out by the other largest company, Caremark Rx.  Pharmaceutical benefits management companies are middlemen.  They negotiate with pharmaceutical corporations on behalf of their clients, typically employers, to buy drugs in bulk.  The 2003 Medicare bill takes the negotiations away from the government and hands it into the insurance companies and PBMs.  BUT, these PBMs would not be required to pass on all the savings that they might be able to negotiate from drug manufacturers.  Instead, the law allows firms to pocket much of the discount themselves, passing a smaller amount on to the consumers.  This means, those discount cards really mean discounts to the corporations, not the people buying the drugs.
• Large employers with retiree health benefits have dropped from 66% to 35% sine 1988.  About 1/3 of the retirees have a drug coverage through their former employer.  The new law provides direct public subsidies to those employers, amounting to an estimated $89 billion over the decade.    The subsidy will cover up to 28% of what an employer currently pays for drug coverage for retired workers.  The subsides are not taxed, thus, the federal treasury will forgo $17 billion, which is a part of the total amount [$89 billion].  In fact, some companies with may retired workers are expected to post big earning gains for 2003-4, thanks to accounting guidelines for subsidies under the federal prescription-drug program. Another negative impact is large corporations with large numbers of retired workers also tend to profit from this bill, thanks to the accounting guidelines for subsidies under the federal prescription-drug program.  A provision slipped in the bill after the lobbying from Employers Coalition on Medicare [a coalition of more than 60 of the largest U.S. corporations and their Washington lobbying trade associations][This coalition gave $28.5 million in contributions to political parties during the 2000 and 2002 elections.  The law allows corporations to transition their retires from their current prescription drug coverage to Medicare while they receive taxpayer subsides, even if the Medicare plan does match up to what the retirees had been receiving.  There are 10 President Bush Pioneers and Rangers from the ranks of this coalition who are members of its corporations and gave at least 1.4 million for President Bush’s campaigns.  How serious is this:  The benefit discriminates against seniors who have private retiree coverage through those former employers. The CBO estimates 23% of the nearly 12 million [3 million people] retirees with employer-provided drug coverage will lose it when the new Medicare program goes into effect in 2006. That person pays the same taxes.  The poorest of the poor will have higher co-pays than they did before.
• Minnesota Attorney General’s office looked at the 17 largest pharmaceutical corporations and PhRMA and listed federal lobbying expenditures during the critical 2001-2002 period.  PhRMA spent $25 million over two years.  None of the 17 corporations spent less than $2.1 million over two years, with the average lobbying expenditure for the two years at $6.14 million.
• What does this all add up to: the drug industry sum total of money spent is $671 million [Campaign contributions are $44 million, Lobbying is $544 million, and Front groups re $83 million]
• The Health Reform Program of Boston University estimates Big Pharma will garner $139 billion in increased profits over the drug programs lifetime of 8 years. [For a $671 million investment] This is a 38% increase in annual profits
• There is now a $12.6 million federally funded campaign to sell this to the public.  National Media Inc [the company that handles Medicare TV advertising for the last two years] is the one marketing it, but this company is also the firm selected to work on President Bush’s Re-election effort!     

Notice the money trail in this bill that the legislature passed this year, a true problem for you and your children for the future--

All contacts of "W" got want they wanted- but remember, they paid for it

We need a fresh change, hope all is well. 

Doug Walta

Douglas Walta, MD
CEO
The Oregon Clinic