On this the 10th anniversary of the Republican health-care plan (which consists of Medicare Part C or "Medicare Advantage" private medical insurance, and of Medicare Part D private drug insurance), what are the impacts, on the U.S. taxpayer, and on the people who have signed up for the plans, and for the corporations who receive the massive public subsidies under these plans? First, we shall explore here the history and content of this Republican plan, so that its outcomes will be readily understandable as having been predicted at the start by federal and academic budget-planners. Nothing in this plan's outcome is at all a surprise.
In November 2003, a Medicare prescription drug and supplemental insurance bill was presented in Congress, which Democrats vociferously opposed, whereby the Republicans offered seniors some help in affording prescription medications, but only if, following President Bush's anticipated re-election, the private health insurers would be permitted, for the very first time, to compete against Medicare after 2006, by offering health insurance, called "Medicare Advantage" supplemental insurance, replacing Medicare Part B supplemental insurance, and with these insurers being heavily subsidized by taxpayers so as for them to be able to compete against the government-provided Medicare Part B. Another Republican demand was that Medicare not be permitted to do what the Veterans Administration already was doing and which saved billions to the government and reduced by billions drug company profits: use the massive bargaining power of their millions of patients to negotiate lower prices for the drugs they purchase. The self-styled "seniors' lobby," AARP, which received huge kickbacks/commissions from insurers and the like (typically over $300 million per year) of which over half would now come from private health insurers whose insurance plans they would sell, issued a press release expressing their "strong endorsement" of the bill, without considering or mentioning, at all, that such a law might gradually destroy Medicare.
Indeed, the bill resulted from communications between former Republican congressional leader Newt Gingrich and his friend Bill Novelli, the AARP chief, who had written a foreword to one of Gingrich's books. (Furthermore, as Barbara T. Dreyfuss noted, in the 7 June 2004 American Prospect, under the headline "The Shocking Story of How AARP Backed the Medicare Bill," "Novelli had first honed his marketing skills on behalf of Richard Nixon. He worked in 1972 with the November Group, the in-house advertising unit that helped devise attack ads against George McGovern.") By financially harming Medicare, such a law would produce a financial gain for AARP and for other sellers of health insurance. Sick seniors would be more desperate: a diminished Medicare system would offer them less. The enormous taxpayer-financed subsidies to the private insurance companies would increase pressure against the government plan. Washington Post columnist E.J. Dionne thus headlined about the bill on 18 November 2003, "Medicare Monstrosity," and he observed: "How do you know this bill is such a great deal for the drug companies and [health insurers such as] HMOs? On word of an agreement last week, [their] share prices soared." As for the sick and poor, those people were to be shoved off in a Medicare boat now to be shot full of holes.
The key vote occurred on November 22nd at 5:53 A.M. in the House. Syndicated columnist Robert Novak headlined five days later, "GOP Pulled No Punches in Struggle for Medicare Bill," and he wrote that "There were only 210 yes votes ... (long past the usual time for House roll calls), against 224 no's. A weary George W. Bush, just returned from Europe, was awakened at 4 a.m. to make personal calls to [Republican] House members. Republicans voting against the bill were told they were endangering their political futures." An example cited was Republican Rep. Nick Smith, who was retiring, and his son Brad was gearing up to run for his seat. "On the House floor, Nick Smith was told business interests would give his son $100,000 in return for his father's vote," but Smith still refused the bribe, and so his son didn't get a chance to succeed him. (The gangsters additionally threatened to pour cash into the campaign of his son's Republican primary opponent. They did what they threatened to do, and Republican primary voters -- a faithful bunch of suckers -- chose Brad Smith's primary opponent, Joe Schwarz, who went on to beat the Democrat and to go to Congress.) Bush did, however, manage to persuade enough Republicans to pass the bill by 220 to 215. 204 Republicans voted for it; 25 voted against. 189 Democrats voted against it; 16 voted for. The lone Independent, Bernard Sanders, voted against it. When the U.S. major media reported on the corruption behind this bill, the slant was usually to play down the bill's having been rammed through by the Republican President and Republican congressional leadership, and the bill's having been opposed heavily by the leaderless Democrats in Congress; the focus was instead upon the corruption of drug-industry lobbyists. However, those lobbyists were not corrupt -- they were merely doing the job that their employers, the drug companies, and the insurers, paid them to do. By contrast, the politicians who voted for this bill were violating their solemn obligation to the public, who were their legal employer. Like all gangsters, these Republicans (that's almost all Republicans in Congress) simply despised the public. Thus, though the drug companies looked bad (or else appeared to be excessively focused upon their own profits, depending upon how one looked at this matter), the Republican Party itself, which had actually worked hand-in-glove with the pharmaceutical industry and with private health insurers to shape this bill and to pass it) did not -- the major news media covered over or hid the vileness and profound corruption of the Republican Party on the Medicare Prescription Drug and Medicare Supplement bill.
On November 26th, the AP headlined "Analysts: Medicare Drug Costs Will Rise," and opened, "Seniors will face annual increases in premiums and deductibles -- and a growing gap in coverage -- for the prescription drugs they buy under the new Medicare law, budget analysts say." The price-hikes under the new Republican law were geared to kick in during the period 2006-2013, well after the President's assumed 2004 "re-"election (is such corruption really "election" in the democratic sense?), so that, "By 2013, the eighth year of the program, the deductible and the coverage gap are both projected to grow by 78 percent," and, "Insurance premiums ... are projected to increase 65 percent ... by 2013."
In April 2004, the Lyndon B. Johnson School of Public Affairs at the University of Texas held a conference on the new law, and in 2006 they published a free e-book on the findings, titled "Big Choices: The Future of Health Insurance for Older Americans." Page 201 noted that, "The 2004 Medicare Trustees report ... projects the Trust funds have lost two full years of solvency due in large part to the extra costs of privatization in the new Medicare law." Even the Bush-appointed Trustees acknowledged that this new drug program would financially weaken Medicare by its privatization features (the very same features that would fatten the profits of insurers and drug-makers, while adding to the federal debt).
A few months before the price-hikes were due to begin, BusinessWeek, on 25 July 2005, reported (p. 42): "Health insurance may not be the sexiest of businesses, but that hasn't stopped investors from sending industry stocks soaring in recent months. A key reason for the runup is the expected bonanza from the long-awaited Medicare prescription-drug benefit. Starting next year, the federal government will start subsidizing insurers who offer extra drug coverage to as many as half the 42 million Medicare beneficiaries who are eligible. Some analysts expect insurers, who will offer a range of plans, to reap $10 billion from the program in 2006 and quadruple that in coming years."
In August 2005, the U.S. Chamber of Commerce (USCOC), which is dominated by large American corporations, mailed a colorful brochure to about a hundred million American households: "Introducing Medicare Prescription Drug Coverage: Peace of mind you deserve. Prescription drug coverage you need." Three months later, in October, the USCOC mailed out yet another full-color advertisement, headlined this time "People with Medicare Really Have Something to Smile About," and explaining: "That's because they can save on their drug costs by joining a Medicare prescription drug plan." A few weeks further on, the USCOC mailed out yet another such brochure, titled, this time, "Concerned About Affording Your Prescription Drugs?" and subtitled "COMING JANUARY 1, 2006: Security and Peace of Mind with Medicare Prescription Drug Coverage." And those were just the start of the USCOC's phenomenally expensive promotional campaign for this Bush drug plan. If the pharmaceutical trade organization, the Pharmaceutical Research and Manufacturers of America (PhRMA, which is one of the nation's biggest lobbying forces) had funded these multi-million-dollar promotional mailings directly, then perhaps the average boob might have recognized that there was something fishy here, and wouldn't have trusted these brochures, but evidently the USCOC radiated no similarly obvious self-interested stench. However, what was the backroom deal that had induced the USCOC, which represents the largest corporations of all types, and not merely pharmaceutical manufacturers, to foot the bill for what ultimately approached a billion full-color brochures being mailed out through the U.S. postal system? If the pharmaceutical manufacturers didn't compensate the USCOC in some way for that, then why were all big businesses, and not just the big pharmaceutical firms, funding this promotion of a new governmental drug program?
On 12 November 2009, Bloomberg News headlined "Chamber's Donohue Keeps Cash Coming After PG&E, Apple, Defect," and reported that, after a few large firms publicly quit the Chamber out of embarrassment over its huge (Koch, Exxon, etc.) campaign to discredit the threat posed by global warming, an even bigger influx of new membership contributions came in from firms which were pleased by what the Chamber had done. "The Chamber is the biggest spender among Washington lobbyists, shelling out $65 million in the first nine months of this year, according to the nonpartisan Center for Responsive Politics. That's more than the combined total of the next three biggest spenders, Exxon Mobil Corp., the Pharmaceutical Research and Manufacturers of America and General Electric." Moreover, "The Chamber doesn't disclose its funding sources. According to company Web sites, Dow Chemical Co., a backer of climate-change legislation, paid the Chamber at least $1.6 million in 2008; Chevron Corp., $250,000; Intel Corp, $286,583; and Prudential Financial Inc., $1.65 million. ... Waging such battles is what Chamber members expect, and why they pay dues, [Tom] Donohue [the Chamber's president] says. 'Companies find it a little dangerous to get too far out ahead of what Congress and others are doing,' he said in an interview. 'They look to us.'" In other words: America's aristocrats looked to the Chamber to oppose the President, Congress, the judiciary, and state governments, whenever those governments or political figures stood up for the public against the special interests of those aristocrats. During the George W. Bush Administration, the U.S. Chamber of Commerce was like an extension of the Republican National Committee, and during the Barack Obama Administration which followed, the Chamber was, again, like an extension of the RNC. The Chamber was, in essence, just a money-packed extension of the Republican Party, and it thrived no matter how bad the economic conditions in America became. It was an economic parasite upon the nation.
Incidentally, that statement by Bloomberg that Dow Chemical Co. was "a backer of climate-change legislation" was a lie: Dow, just like the other petro firms, opposed the Democrats' climate-change bills (not "legislation," because that part of Bloomberg' falsehood indicated proposed legislation is "legislation," which just isn't so: it's only "bills," the term that refers to proposed legislation.). In any case, Michael Bloomberg is always a supporter of Wall Street, and so Dow Chemical was described there as "a backer of climate-change legislation." The Sierra Club would wish that it were so.
The battle within the USCOC continued. In fact, on 23 July 2009, Capitol Weekly bannered "An Unusual Battle: Big Business vs. Small Business," and Nick Brockaw reported that the U.S. Chamber of Commerce was mute regarding a bill which "aims to eliminate the diversion of billions of dollars in federal contracts intended for small businesses from going to Fortune 500 corporations." The American Small Business League "has estimated that every year more than $100 billion in federal small business contracts are awarded to Fortune 500 companies. ... 'Both [the U.S. and California Chambers of Commerce] are funded by, and run for the benefit of, the Fortune 500 firms that I am trying to stop from receiving federal small business contracts,' American Small Business League President Lloyd Chapman said." So, the Chambers of Commerce were virtually pure representatives of the Republican Party: Wall Street (international U.S. firms).
Bush's prescription-drug plan was a perfect fascist scheme -- socialism for the rich, capitalism for the poor, marketed by Big Lie techniques. (On 25 August 2006, the AP headlined "Medicare Ads Paid by Drug Industry," and reported that, "The pharmaceutical industry quietly footed the bill for at least part of a recent multimillion-dollar ad campaign praising lawmakers who support the new Medicare prescription drug benefit ... The U.S. Chamber of Commerce claims credit for the ads, although a spokesman refused repeatedly to say whether it had received any funds from the Pharmaceutical Research and Manufacturers of America." The corrupt politicians who had voted for this program were now receiving PhRMA campaign cash, laundered through the USCOC -- Republican political payback, in "democracy" as conservatives practice it.)
The Congressional Budget Office initially estimated that 2.7 million retirees would lose employer-provided benefits because of this new law's incentives for employers to terminate group coverage; seniors would have to either purchase their own far costlier individual plans or else do without. On 14 July 2004, the lead story in the Sunday New York Times confirmed this problem, and even raised the estimated damages by more than a million people, when it opened, "New government estimates suggest that employers will reduce or eliminate prescription drug benefits for 3.8 million retirees when Medicare offers such coverage in 2006." These figures weren't even from the same source, the CBO, but came this time from the Department of Health and Human Services, part of the Bush Administration itself. Democrats said the new estimates confirmed that the Bush law would likely "prompt some employers to curtail drug coverage for retirees, forcing them, in some cases, to rely on Medicare's leaner benefits."
Consequently, it wasn't really by mere happenstance that, within days of this new program's start, the Wall Street Journal headlined, on 13 January 2006, "Low-Income Seniors Get Tangled In Unexpected Medicare Glitch," and reported that, "The new Medicare drug benefit, created to make prescription drugs more affordable for the elderly, is having the unintended effect of making it more expensive for some of the poorest older Americans to get their medications." That "more expensive" was, to put it mildly, an understatement: These seniors, on account of their poverty, had previously qualified for free drugs, directly from the drug companies, but, "they no longer qualify for free drugs because they are eligible for the new Medicare drug benefit." Behind this change stood an action by the Bush Administration: "Last fall, the office of inspector general for the U.S. Department of Health and Human Services" -- and this was the office whose first-term G.W. Bush occupant had been Janet Rehnquist, the daughter of the Republican U.S. Chief Justice, who was now a drug company lobbyist -- "warned drug companies they couldn't help patients enrolled in the Medicare plan with their out-of-pocket costs. ... The drug industry has blamed the government guidance for the elimination" of free drugs. The drug companies' saving money from this, while they were simultaneously enabled to blame the Federal Government for the problems that resulted for poor people, was one of many ways in which this Supreme Court "Justice"s daughter had already earned her keep as a pharmaceutical industry lobbyist, even before she left government "service" to lobby.
The next day, January 14th, the Washington Post headlined "The States Step In As Medicare Falters," and reported: "Two weeks into the new Medicare prescription drug program, many of the nation's sickest and poorest elderly and disabled people are being turned away or overcharged at pharmacies, prompting more than a dozen states to declare health emergencies and pay for their life-saving medicines." These very low income Medicaid recipients, who had previously received their medications without charge (which had cut costs for the Federal Government, because emergency room and surgical alternatives were far more expensive than these preventative prescriptions), were, under this new lobbyist-written law, being automatically switched into Bush's Medicare drug plan, where they were charged, sometimes, hundreds of dollars to fill a single prescription. "The states that have stepped in to help have already incurred several million dollars in unexpected drug bills, but Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services (CMS), said he did not have the authority to reimburse them." (His brother Scott McClellan was President George W. Bush's press secretary.) Bush's drug law was impoverishing not only the poor, but the states. However, one good reason why the states were stepping in to pay for these medications was in order to halt the vastly larger costs of skyrocketing emergency-room admissions that were already being caused to the states by Bush's new law. For example, on January 21st, The New York Times headlined "Medicare Woes Take High Toll on Mentally Ill," and Robert Pear reported numerous instances of mental patients who were being admitted into hospitals because their lack of required medications was causing them psychotic episodes. In some instances, "The patients take antipsychotic drugs for schizophrenia; more drugs to treat side effects of those drugs, like tremors and insomnia; and still other drugs to treat chronic conditions like diabetes and high blood pressure. 'If I didn't have any of those medications, I would probably be institutionalized for the rest of my life,' said Deborah Ann Katz, a 36-year-old Medicare [disability] beneficiary. ... 'I'd be hallucinating, hearing voices.'" So, the states were stepping in. Bush's people hadn't been concerned about these ill and poor individuals -- those aren't God's People, and they don't contribute to politics at all, not to the Democratic, and certainly not to the Republican, Party; they hadn't poured tens of millions of dollars into Republican lobbying firms and campaign advertisements.
On 20 January 2006, Times columnist Paul Krugman headlined "The K Street Prescription," and he contrasted the start of Bush's prescription-drug program, versus the start of Medicare itself under Democratic President Lyndon Johnson: "When Medicare began 40 years ago, things went remarkably smoothly from the start. But this time the people putting together a new federal program had one foot out the door; this was a drug bill written by and for lobbyists." Actually, it was written by lobbyists, but for their pharmaceutical and insurance benefactors -- not for themselves. (The bipartisan "Democrat" Barack Obama has been copying some of Bush's and Reagan's approach, as President Clinton did regarding the deregulation of Wall Street.)
Combining the worst of all possible worlds, this legislation, so costly to seniors, to states, and to the poor, and so profitable to drug companies and to health insurers (both of which types of businesses were big Bush contributors), was nonetheless set to boost the federal debt by at least another $724 billion, according to official estimates. Subsequent generations of Americans would therefore end up paying for this generation's drug and insurance companies' Republican boondoggle.
Howard Gleckman of BusinessWeek (not yet a Bloomberg property), on 1 December 2003, boiled the problem down in his headline "This Medicare Bill Is No Remedy: It avoids the question of who pays and does little to keep costs from soaring - Will seniors or taxpayers cover rising costs? Or will care be cut back?" Only Bush's financial backers had authentic cause to be pleased. In fact, within weeks after President Bush signed the new prescription-drug bill into law, one of its chief authors, Republican Congressman Billy Tauzin, began talks with the Pharmaceutical Manufacturers Association to become appointed their President, as The New York Times reported a year later, on December 16th, under the headline "House's Author of Drug Benefit Joins Lobbyists." Congressman Tauzin was now retiring from Congress to rise in the power structure, from having been a mere legal scribe, to becoming instead a paymaster to such scribes. (However, actually, lobbyists usually write the first draft of Republican bills; so, Tauzin would now become a scribe who really mattered.)
Republicans were predicting that this new Medicare drug law would mean a big boost for the President's chances in the 2004 election: as usual, Republicans were treating the general public as mere suckers to be exploited by Republican financial backers, instead of as constituents to be served by genuinely progressive legislation. This is like the medieval manor system, with America's voters and patients filling in as the serfs. In fact, earlier in November of 2003, on the 6th, only weeks before passage of their Medicare act, the Bush Administration had slammed the door to the importation of inexpensive prescription drugs from Canada -- thereby making all the more cynical this sham prescription drug "benefit." That door-slamming was especially noteworthy because the new prescription drugs law, passing only weeks later, explicitly prohibited the U.S. Government from doing anything to lower the prices of prescription medications -- despite the fact that the U.S. price-inflation rate on these drugs (and on medical care generally) was the highest of all the eight components of the U.S. Consumer Price Index, and despite drug prices already being vastly higher in the U.S. than in any other country. Instead of lowering prices for drugs, the Bush bill simply subsidized from taxpayer funds the private insurers who purchased the drugs. This is what enabled some consumers to experience "discounts" -- not price reductions -- either by drug companies or by insurers: taxpayer-paid subsidies to those Republican-backing corporations.
Bush's excuse for banning the importation of drugs from Canada, where drugs cost far less, was his claim that American-made drugs are safer than Canadian pharmaceuticals. Not only was no evidence ever presented to back up that allegation, but American drugs are routinely imported from abroad anyway, by drug manufacturers themselves -- only at artificially high prices which the American drug makers set, when they resell these pills to U.S. consumers. The only interest the U.S. President had was protecting the interests of U.S. pharmaceutical firms ripping off America's consumers and taxpayers.
Bush's excuse for prohibiting the Federal Government from negotiating lower prices from the drug manufacturers was that to do so would be "socialism." Democrats had wanted the government to use its huge purchasing power under a prescription-drug bill so as to negotiate lower drug prices for consumers and for taxpayers. Consumer organizations also favored this. As Ron Pollack, of Families USA, put it, on 8 November 2006, explaining why the restoration of Democratic control of Congress would be good for both taxpayers and consumers, "Among all of the top-20 drugs prescribed for seniors, the V.A. [Veterans Administration, under legislation passed by Democrats in previous years] has achieved much lower prices than the lowest prices charged by all Medicare Part D plans. The median price difference is an astounding 46 percent." These are some of the reasons why the very same prescription drugs have vastly higher prices in the U.S. than in any other nation. Moreover, the give-aways to pharmaceutical companies survived even after Democrats (barely) retook control of Congress. As the New York Times columnist Paul Krugman explained on 20 April 2007 under the heading "The Plot Against Medicare," "The Senate failed to end debate on a bill -- in effect killing it -- that would have allowed Medicare to negotiate over drug prices. ... 42 senators, all Republicans, voted no on allowing the bill to go forward." Furthermore, "The NAACP and the League of United Latin American Citizens have become patsies for the insurance industry ... sending letters to Congressional leaders opposing plans to scale back the subsidy" to private insurers -- the subsidy which was part of the Republicans' scheme to drain Medicare and pour that taxpayer cash into private insurance and drug companies. As Krugman explained, removing these subsidies would have covered the "cost to provide all children in America with health insurance," but the NAACP and LULAC went with the Republican line on that matter. Those Tribal liberal groups went for bogus insurance industry arguments directed at their Tribalism, which claimed falsely that Blacks and minorities were benefiting from taxpayer subsidies to private insurance companies. This is why, even though Democrats now had a bare majority in the Senate, the Republican scams still survived, with the aid of "Democratic" interest-groups.
President Bush and the Republican Party paid off their pharmaceutical and insurance company financial backers massively via their Medicare Part D Prescription Drug law. But actually, the corrupters (conservative industry) and the corruptees (conservative politicians) supported each other, while they jointly cheated the public: both taxpayers, and patients. On 2 March 2009, rawstory.com headlined "GOP Senator Orrin Hatch's Charity Tied to Massive Pharmaceutical Donations" and reported that, "The same year [Hatch's] Utah Families Foundation received massive gifts [$170,000], Sen. Hatch voted on a bill relating to Medicare Part D. Hatch voted against a bill requiring that the government negotiate discounted prices from drugmakers." This same day, the Washington Times bannered "EXCLUSIVE: Sen. Hatch's Secret Drug Firm Links," and reported that not only was his foundation financed by the drug industry, but one of Hatch's sons was the lobbyist for PhRMA, and "Pharmaceutical and health product companies already rank at the top of Mr. Hatch's political supporters, donating more than $1.25 million to his campaigns since 1998." Any Democrat who was that corrupt would have been hounded out of public office -- Democrats wouldn't tolerate national-level corruption -- but Utah was one of the three most-Republican states in the nation, and therefore accepted Hatch's corruption, since he broke no laws. However, his foundation broke at least one law: it "has been delinquent for nearly a decade in filing its required annual reports." Hatch remained popular in his state, even though he was virtually owned by corrupters.
Bush's Part D drug plan was corrupt in other ways, too. For example, Wendell Potter at huffingtonpost headlined on 18 February 2013, "Obama's 'Scheme' Will End the World as We know It, Says Big Pharma...Good!" and he reported that, "Before the Medicare Part D drug program was created in 2006, the pharmaceutical industry paid rebates to the government to help pay for those folks' medications. The rebate program ended when Part D went into effect. ... As a result, taxpayers are paying more now than before, even though drug companies are getting billions of dollars in revenue that they never had before. ... So the president [Obama] will be asking Congress to reinstate the rebates." (Of course, Congressional Republicans blocked that.)
Furthermore, the Bush Medicare plan included also a $10 billion taxpayer subsidy for Health Maintenance Organizations, to assist HMO's, despite their vastly higher overhead costs, to "compete" against Medicare Part B, by offering Medicare Part D - private insurance companies competing for the business, otherwise called "Medicare Advantage." This was the feature that was expected gradually to destroy Medicare Part B (the LBJ-Medicare supplement plan). Once Democrats took control of the Congress in 2007, they announced their intention to "Lower Part B Premiums For Seniors By Eliminating the HMO Slush Fund." In other words: congressional Democrats wanted to stop the raiding of Medicare Part B that was being done to subsidize Medicare Part D. On 7 May 2007, Robert Pear headlined in The New York Times, "Methods Used by Insurers Are Questioned," and he reported that, "Insurance companies have used improper hard-sell tactics to persuade Medicare recipients to sign up for private health plans that cost the government far more than the traditional Medicare program." The Insurance Commissioner in Mississippi reported that, "Abusive Medicare insurance sales practices are spreading rapidly." Complaints by seniors were simply flooding in.
Perhaps the reason the rapacious new "drug benefit" and the "Medicare Advantage" plans were supposed to be a big political boost for the President was that they supercharged his political kickbacks from drug and medical insurance firms, and therefore raised yet higher his own advertising budget to fool voters during the 2004 election campaign. Consequently, for example, the AP headlined on 11 May 2004, "Medicare Contractor Firm Donates to GOP," and opened, "The first round of companies to get the go-ahead from the Bush Administration to offer Medicare prescription drug cards includes some big players in lobbying and campaign fund raising. An executive with one company, Medco, helped throw a $100,000 fund-raiser for President Bush." Still, the sailing turned out to be not entirely smooth for the AARP concerning this particular scam: on 16 January 2004, the AP headlined "45,000 People Quit AARP Over Medicare." Unfortunately, that constituted only 3 in 100,000 members, and therefore, this consumer boycott had negligible impact. Furthermore, the AARP subsequently won back some of those members by advertising on television saying that the AARP -- which had just helped to pass this prescription-drug bill that was going to maintain and even increase prescription-drug prices -- was fighting in Washington to lower prescription-drug prices. Like conservative politicos usually do, the AARP played the public for fools and won. (However, the AARP's protesters seem to have had some impact after all, because, in 2005, the biggest opponent of President Bush's plan to privatize Social Security was the AARP, which recognized that they weren't going to be getting any piece of that action, it was just a dead duck.)
The biggest direct beneficiaries of this drug bill were the Republican Party and the AARP (which benefited only through the sales commissions it won via sales of UnitedHealth Group Incorporated's Medicare prescription drug plan, which AARP marketed). Both of them benefited only indirectly, and AARP's winnings from the plan were indicated in an article that appeared in the Wall Street Journal on 21 April 2006, under the headline "Large Insurers Are Big Winners." It said that, "New government enrollment data released yesterday show that, as of April 18, nearly 20 million people are enrolled. ... By far, the biggest winner in the race to sign up seniors is UnitedHealth Group Inc., which has used an alliance with AARP to help it grab more than 3.9 million new customers." Republicans saw such results as being a victory of the "invisible hand" of God, as against "socialistic" democratic governmental control of medicine. However, in 2000, UnitedHealth Group's PAC gave 85% of its $216,081 contribution total to Republicans, and the company gave $594,050 in soft money for the 2000 election cycle, of which 86% went to Republicans. Furthermore, UnitedHealth Group's CEO, the physician William McGuire, donated $23,000 personally, from 2002-2005, 100% of which went to Republicans. From 1992-2006, he contributed $117,467, of which $4,000 went to Democrats, less than 4%. That money, both corporate and personal, was coming back to him in spades now. Thus, perhaps some of this "invisible hand" wasn't quite so invisible after all, but more like a pickpocket's hand, if one watched it closely. In fact, on 18 April 2006, the Wall Street Journal headlined "As Patients, Doctors, Feel Pinch, Insurer's CEO Is Worth a Billion." Dr. McGuire "has amassed one of the largest stock options fortunes of all time," and a statistical analysis by the WSJ suggested that inside dealing was involved in this: "The Journal's analysis of 12 options grants to Dr. McGuire from 1994 to mid-2002 found that if the options had been randomly dated [which would have indicated that there was no insider dealing here], the odds of their occurring at such propitious times were about 1 in 200 million." An accompanying chart showed that each time McGuire received an options grant, the stock was at a low and immediately soared thereafter. If backdating of these options was the reason for this, that would be not only fraudulent, but also insider trading -- illegal. On 18 March 2006, the WSJ had headlined about this apparent backdating phenomenon, titled "The Perfect Payday: Some CEOs reap millions by landing stock options when they are most valuable. Luck -- or something else?" Wherever it's something else, it's a crime involving not only the CEO but also his board of directors, and the crime's victims are outside investors. (These crimes turned out to involve the Bush Administration's SEC as well, which had been looking the other way instead of looking out to protect investors.) Then, on 12 May 2006, the WSJ headlined "United Health Could Be Forced To Restate Profit: As SEC Steps Up Probes, Firm Says Options Problems May Mean $286 Million Hit." This news story closed: "Yesterday, Carl McDonald, an analyst with CIBC World Markets in New York, wrote in a report that the implication from the company's filing was that United Health had found 'evidence that options were backdated.'" It was becoming apparent that the chief beneficiaries of Bush's Medicare prescription drug plan certainly weren't seniors, and probably weren't even necessarily the stockholders in the companies which had shaped it, but were instead the insider executives and board members at those firms. By no coincidence, those people were huge contributors to the Republican Party, not just from their personal funds, but also from the political slush funds (stockholder assets) they operated through the companies these executives controlled. The financial benefits to the people at the top of UnitedHealth were especially large. The WSJ calculated, on May 12th, that Mr. McGuire gained more than $2 billion. His COO gained nearly $1 billion. Two other of the company's executives gained approximately $100 million each. On 27 May 2006, the WSJ headlined an editorial "Backdate Backlash," and stated: "UnitedHealth has lost more than $17 billion of its market value since the backdating story broke." But that's not all: a few weeks later, on June 9th, The New York Times headlined "Health Insurer Is Told by State Not to Enroll New Customers," and reported: "New York State has banned United Healthcare's managed care plan ... from signing up most types of new customers. State regulators say they took the rare action because the company has persistently defied state rules. ... United Healthcare of New York is a subsidiary of UnitedHealth Group, based in Minnesota." Ten days after that, the June 19th issue of BusinessWeek headlined "The Customer: Satisfaction Not Guaranteed," and included a box, "Customer Disservice: These companies rate the worst in their industries in terms of customer satisfaction." All the listed firms were overwhelmingly Republican, including "Health Insurance: United Health Grp." So, the financiers of the Republican Party (such as Dr. McGuire) were cheating not only the public, and not only the outside investors in the companies they controlled, but also the consumers who purchased the goods and services of those companies. And, above all, U.S. taxpayers were cheated. Only those insiders and the Republican Party -- and their theocratic allies who preached Republican on Sunday mornings and brought the voters to the polls and won the resulting theocratic "invisible hand of God" laws -- benefited. Then, on 20 October 2006, the Wall Street Journal bannered "How Did UnitedHealth's McGuire Get Same Options Twice?" and reported that outside lawyers had discovered a 1999 transaction in which "Dr. McGuire and other employees were able to effectively get the same options twice, ... while skirting disclosure requirements and potentially violating accounting rules. For Dr. McGuire alone, the extra options are now valued at $250 million." Moreover, "Dr. McGuire's role in implementing the transaction is amply documented."
Nine days later, on October 29th, Reuters reported that the scope of the options-backdating scandal was far wider than was previously known: "The stock options timing scandal, which has already implicated at least 140 companies, could include hundreds more, according to a new analysis that found lax enforcement of corporate governance reforms that should have prevented the practice. ... A report released over the weekend from proxy advisory firm Glass Lewis & Co. showed that many firms may not have filed properly options timing paperwork as recently as 2005. ... Glass Lewis, in the report, said the SEC has not enforced the two-day filing rule, possibly leading to many more instances of backdating." By not enforcing this rule, numerous major contributors to the Republican Party had been enabled to rip off their stockholders. But yet there was more: Those contributors had also been enabled to rip off their fellow executives or board members, and they finally even ripped off taxpayers: On 7 December 2006, the Wall Street Journal bannered "How a Giant Insurer Decided To Oust Hugely Successful CEO," and asserted that UnitedHealth's board were dismayed to find that an internal investigation confirmed the report by the WSJ that Dr. McGuire had rigged the dates of his options. Then, five days later, the WSJ headlined "How Backdating Helped Executives Cut Their Taxes," and reported that, "New evidence suggests that corporate executives may have found another way to manipulate their stock options, this time to cheat on their income taxes." This is because "Those who hold their shares for at least a year pay a much lower capital-gains tax," and backdating enabled some executives to reduce their taxes by pretending to have held their shares for a year even when they had not. This cheating increased the federal deficit, and thrust their tax burdens onto others. However, since the SEC was, at last, being virtually compelled to investigate this, the WSJ headlined in another story the same day: "Another Consequence of Backdated Options: Stiff Tax Bills." Some executives would face huge fines, in addition to the back taxes which were due.
But finally, on 7 December 2007, the Wall Street Journal bannered "UnitedHealth Ex-CEO Forfeits $620 Million in Options Grants." This would "settle civil and federal-government claims" against William McGuire. An expert observed, "He still walks away with a lot." Steal a couple of billion dollars, return $620 million of it; the Mafia would drool, and perhaps they would also complain that they had been discriminated against for not receiving favors like that. Mafiosi go to prison, while America's aristocrats just receive wrist-slapping fines. McGuire had paid much bigger dues to the Republican Party, which rewards loyalty at least as much as does the Mafia itself.
Meanwhile, among the 250 "Commercial Health Plans" ranked by U.S. News & World Report, in their 5 November 2007 issue, none from UnitedHealth were named there as being among the "Best Health Plans 2007," and all were shown only on the magazine's supplemental website, such as "UnitedHealthcare of Mississippi" ranked #218 there, "UnitedHealthcare of Louisiana" ranked #215, and "UnitedHealthcare of Alabama" ranked #212. In terms of the three ranking-criteria of "Consumer assessment," "Prevention," and "Treatment," all of the UnitedHealth plans were ranked low. Dr. McGuire did fine, but his customers, quite evidently, did not.
In fact, on 29 January 2008, the Los Angeles Times bannered "Health Plan Faces Fines of $1.3 Billion," and Lisa Girion reported that, "California regulators are expected to announce today that they are seeking as much as $1.33 billion in penalties from Cypress-based PacificCare as a result of widespread problems stemming from its takeover two years ago by healthcare giant UnitedHealth Group Inc. In an investigation prompted by widespread complaints, the state Department of Insurance uncovered 133,000 alleged violations of state laws and regulations. ... Separately, the state Department of Managed Health Care alleged that 30% of the medical claims it reviewed [from UnitedHealth] were improperly denied." A physicians' organization praised the state's clampdown against UnitedHealth, and said that though the company "may claim this is [only] and administrative issue, ... that doesn't help someone who needs their heart surgery approved in a hurry." Dr. McGuire, who had changed careers in 1986, from being a doctor to heading this profit-making insurer, had switched to the business of making life hell for patients and doctors, no longer the business of helping them. He was a great Republican, who walked off into the sunset a billionaire from two decades of ripping off the public. The money that his company didn't spend on health care for patients, went instead into his own pocket, and lots of it ended up there; and there were lots of people who suffered, and lots who died prematurely, as a result of where this money went, and where it didn't
On 13 February 2008, Bloomberg News bannered "Cuomo to Sue UnitedHealth, Probe Reimbursement Policy," and reported that, "New York Attorney General Andrew Cuomo will sue UnitedHealth Group Inc. and subpoena 16 other insurers to investigate practices that allegedly cheated customers out of hundreds of millions of dollars." Cuomo, a Democrat, would sue UnitedHealth, "the largest U.S. health insurer, over practices that limit payments to customers by claiming their medical charges were unreasonably high. ... 'This is an industrywide investigation because we believe there was an industrywide scheme to deceive and defraud customers,' Cuomo said."
As for the effects that Bush's prescription-drug plan had on drug company profits, this result turned out to be what had been anticipated -- and then some. On 6 November 2006, the eve of the 2006 mid-term congressional elections, The New York Times bannered "As Drug Prices Climb, Democrats Find Fault With Medicare Plan," and Alex Berenson reported that, "For big drug companies, the new Medicare prescription benefit is proving to be a financial windfall larger than even the most optimistic Wall Street analysts had predicted. ... Wall street analysts say they have little doubt that the benefit program ... has helped several big drug makers report record profits and exceed earnings forecasts made earlier in the year. Companies have raised prices on many top-selling medicines by 6 percent or more this year, double the overall inflation rate. In some cases, drug makers have received price increases of as much as 20 percent for medicines that the government was already buying for people covered under the Medicaid program." Typical: "Pfizer, the world's largest drug maker, said its sales soared 14 percent in the United States in the third quarter, while rising only 3 percent internationally." These huge financial contributors to the Republican Party, and enemies of the Democratic Party, were thriving by these extra tens of billions of dollars, after having spent only tens of millions of dollars on deceiving faithful Americans to vote Republican. And even Democratic voters had to buy drugs; this way the Republican Party extracted financial contributions indirectly even from the people who knew better, Democrats -- this was sheer coercion.
By coincidence, the day earlier in the same newspaper, the Times, Mark Hulbert headlined "The Share-Price-to-Campaign-Contribution Ratio," and he reported on -- and linked to -- a major new study "providing a 'strong circumstantial case' that corporate political contributions were affecting the behavior of Congress, for the clear benefit of the companies. ... On average, the extra return earned by their stocks works out to a total benefit to each firm's stockholders of around $150 million a year, according to the professors." The top ten corporate political contributors were listed there. Although the Republican/Democratic contribution ratios weren't shown, I looked up each company on opensecrets.org, and every one (100%) of these top contributors gave overwhelmingly to the Republican Party.
The first big threat to the continuance of Medicare that resulted from this new legislation occurred in 2008, when President Bush and the Republicans in Congress tried to block Democrats from halting a 10.6% cut, which Bush's plan forced in the rate-schedule that traditional Medicare paid doctors for their services to their patients under Medicare. This pay-cut to doctors was expected to cause so many physicians to abandon traditional Medicare patients, the traditional Medicare program would likely collapse. This pay-cut to doctors was scheduled to start on July 15th, but just days earlier, on 9 July 2008, Bloomberg News bannered "Senate Votes Reversal of Cuts in Medicare Doctor Fees," and reported that, "The Senate voted final passage of legislation that would halt a 10.6 percent cut in Medicare reimbursements to doctors." The cause of the 10.6% cut the Republicans sought was in order to pay for the rising subsidy going to private insurers in Bush's "Medicare Advantage" program -- the Bush-initiated private competitor to Medicare Part B. Democrats wanted to salvage traditional Medicare, not to cut it to add to the high subsidies already being paid to those private insurers, which were such huge financial backers of the Republican Party. "The insurer payment cuts, which would total [cuts of] $12.5 billion over five years, include fees paid to private insurers." The Congressional Budget Office reported to Congress on June 24th that the cuts to private insurers (Medicare Advantage) that were in the Democratic bill would more than pay for abolishing the 10.6% pay-cut to the doctors who participate in the traditional Medicare Program (Part B). This report said: "New spending under the bill would be offset largely by reductions in payments to Medicare Advantage plans" and that "Other savings would come from modifications" to Medicare's astronomically high pay scales for equipment such as "home oxygen therapy" and other medical devices, by introducing "competitive bidding for durable medical equipment." (Medical equipment manufacturers were also huge supporters of Republican candidates, as compared to Democratic candidates.) The only reason enough Republicans voted, July 9th, for the Democratic bill, H.R.6331, was that this was an election year: Millions of seniors would otherwise vote Republicans out of office in November, on account of their physicians dumping them. Because of this electoral danger, President Bush's veto of the Democratic bill was overridden -- but just barely. Traditional Medicare was barely salvaged.
On 25 July 2008, the Los Angeles Times bannered "Medicare Part D a Boon for Drug Companies, House Report Says: Taxpayers pay up to 30% more for prescriptions under the privately administered program" than under the publicly administered one, and Nicole Gaouette reported there that, "U.S. drug manufacturers are reaping a windfall from taxpayers because Medicare's privately administered prescription drug benefit program pays more than other government programs for the same medicines. ... In the two years Medicare Part D has been in effect, drug manufacturers have taken in $3.7 billion more than they would have through prices under the Medicaid program." For example, "Bristol-Myers made an additional $400 million from higher prices for a single drug, the stroke medication Plavix." I looked up the political-contribution record of Bristol-Myers at opensecrets.org: it was about 75% Republican, an investment that had been returned to B-M hundreds-fold. The Republican minority on the House committee that issued this report objected to it, saying many seniors had "learned to love Part D." No wonder big business loves Republicans. But taxpayers and voters would hate them if only they knew the reality of robbing consumers and taxpayers alike.
The first study of the cost and efficiency of the "Medicare Advantage" or Part D health insurance plans came from the Congressional Budget Office on 28 June 2007; and, of course, the nation's major "news" media ignored it, because it found that, "Medicare's payments for beneficiaries enrolled in Medicare Advantage plans are higher, on average," than in the traditional government-operated plan ['FFS'] ... so shifts in enrollment out of the FFS program and into private plans increase net Medicare spending." In fact, this increase in Medicare costs was accelerating the fiscal problems that Medicare caused for the Federal Government. This CBO study, "Medicare Advantage: Private Health Plans in Medicare," also found that, "The additional cost to the government for Medicare Advantage plans subsidizes the beneficiaries who enroll in such plans." Those beneficiaries were the people who had responded to the rush of advertisements on television and elsewhere and dumped their existing government-operated Medicare Part B insurance and replaced it with one of these private for-profit "Medicare Advantage" "Part D" alternatives. Basically, these people were Republicans, since Republicans hate government (in a democracy; they loved Adolf Hitler and Benito Mussolini). Thus, everybody else (non-Republicans) were now paying hefty subsidies to those corporate-operated insurance plans, in order to prevent these for-profit plans from being obviously uncompetitive with the government-operated Medicare Part B insurance. In fact, the CBO study, under the sub-head "Medicare Advantage Plans Cost the Government More Than Traditional Medicare," said: "In 2007, CBO estimates, the average payment to such [Part D] plans is 12 percent above what traditional FFS [Part B] costs." Moreover: "The extra benefits and rebates offered by Medicare Advantage plans attracts enrolees, and the rising proportion of beneficiaries enrolling in the plans will add to the growth in Medicare spending." Consequently, "The higher costs of Medicare Advantage plans add about $2 to the monthly premium for Part B," and this would rise over time as more and more people signed up for Part D. The government was blatantly becoming socialism for the rich (here the stockholders and executives of private insurance corporations and drug companies) increasingly replacing what had previously been democratic socialism for everyone and especially for the poor. In other words: It was fascism replacing progressivism. It was government for the aristocracy, instead of for the public. But no major "news" media covered this report.
On the 10th anniversary of Medicare Part D, the former Republican economist Bruce Bartlett blogged at The New York Times, "Medicare Part D: Republican Budget-busting," and he explained how this program, which had been pushed and voted for by John Boehner, Eric Cantor, Paul Ryan, and virtually all other congressional Republicans, had already "added $318 billion to the national debt," and "will add $852 billion to the debt over the next ten years." Moreover: "From the beginning, Republicans decided to forego dedicated financing for Part D. Except for trivial premiums paid by recipients, the entire cost would fall on taxpayers," and it did "fall on taxpayers." So: all people who have signed up for Part D programs are receiving their benefits not from their premiums for it, but instead, overwhelmingly, from the subsidization by other taxpayers, including from the poor ones who are lots needier than those Republicans are. However, while all other Americans keep losing money on it, the drugmakers "earn" vast fortunes from it. In other words: It's a mega-corrupt scam, not at all like the original, Democratic LBJ-instituted, Medicare plan. Instead of being Robin Hood, it is Robin Hood in reverse - thoroughly Republican.
In life's necessities such as health care, perhaps "the free market" is oxymoronic, just a catch phrase for fascists to be able to make fools of conservatives, to the ultimate benefit of aristocrats who pocket the change, while future generations must pay the taxes in order to reduce the federal debt that was built up by all this corruption, even as the poor have sunk further into economic desperation.
Investigative historian Eric Zuesse is the author, most recently, of They're Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST'S VENTRILOQUISTS: The Event that Created Christianity.
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