PEP, January 2004: World of Work: Bad medicine for seniors.

By GREGORY N. HEIRES

Conservatives have hated Medicare since before President Lyndon Johnson signed it into law four decades ago. Although the popular plan has provided health coverage for millions of elderly Americans who had none and has eased the cost burden on millions more, the right-wingers call it “creeping socialism” and “bloated government.”

In 1995 House Speaker Newt Gingrich demanded huge cutbacks and said he wanted Medicare to “wither on the vine.”

Gingrich and his right-wing allies began to realize their destructive dream on Dec. 8, when President Bush signed legislation that will create a sharply limited prescription drug benefit for seniors as it opens the door for the ruination of the entire Medicare program.

Gingrich, who now heads a consulting firm, worked with AARP chief executive William Novelli to help ram the bill through Congress.

As the nation’s largest retiree organization, with 35 million members, AARP provided crucial support for this poisoned pill. The group earns $150 million annually on commissions for insurance, mutual funds and prescription drugs sold to members. In fact, AARP has become as much a business as an advocacy group, and the new law gives a big boost to insurance and drug companies.

Higher drug profits
Of the $400 billion the prescription benefit will cost over the next 10 years, more than one-third (an estimated $139 billion) will go straight into higher proceeds for the drug industry, already the world’s most profitable business.

Retiree Arlene Tuff said she felt “betrayed” by AARP. A long-time DC 37 activist, Ms. Tuff is a member of AARP, which once honored her for her participation in the group’s lobbying efforts.

While Mr. Bush and the Republican majority in Congress are touting the drug benefit as a fulfillment of a campaign promise to provide coverage for seniors and curb drug costs, the Medicare law is a Trojan horse that may eventually gut the program.

“Besides providing an inadequate benefit, the new law sets into motion a process that could privatize Medicare, which will undermine the current program and damage the quality of health-care coverage for seniors,” said Stuart Leibowitz, president of the Retirees Association of DC 37.

Social Security is next
“Now that the extremists in control in Washington have undercut Medicare, you’d better believe they’re gearing up to privatize Social Security, the crowning achievement of the New Deal, which conservatives have sought to roll back for 70 years.”

Another DC 37 retiree, Vito Locascio, said he feared that employers would use the new law to cut off retirees from the far better prescription plans they currently enjoy. AFSCME, DC 37’s parent union, expects that cities and states nationwide will try to drop their drug coverage. (DC 37 retirees are covered by a union drug benefit funded under their contract, which the city can’t change unilaterally.)

“Incredibly, tens of millions of retirees will actually be worse off under the bill than they are now,” said AFL-CIO President John Sweeney. He called Mr. Bush’s signing ceremony a “leave no lobbyist behind” event. Millions of retirees under Medicaid, the federal-state health program for people with low-incomes, will lose that benefit and be stuck with co-payments, he noted.

Mr. Sweeney said the new benefit provides “scrimpy coverage.” The deductible rises from $250 when the program starts in 2006 to $445 in 2013. Catastrophic coverage kicks in only after a retiree pays out $3,600 in one year.

The health-care and drug industry spent an estimated $200 million to shape the legislation in their favor. Last year, about 80 percent of the industry’s $91 million in contributions went to Republicans, according to the watchdog group Public Citizen.

Prescription drug companies convinced Congress to booby-trap the legislation by prohibiting the importation of cheaper drugs from Canada and by banning Medicare from using its mass purchasing power to negotiate lower drug prices. Little wonder that drug firm stocks zoomed up when these provisions became public.

Tilt toward insurance firms
Beginning in 2010, the law will force the traditional Medicare program to compete with private insurance plans — but not on a level playing field. The private firms will get government subsidies and be able to drop less profitable patients. Disgracefully, the law tries to force seniors into the hands of the insurance companies by banning the “Medigap” coverage that millions have used to fill gaps in Medicare.

“The Bush administration and Congress have chosen profits over people,” said Edward F. Coyle, head of the AFL-CIO’sAlliance for Retired Americans.