Entitled to Know

Make no mistake about it...the Bush administration clearly understands the value of a well structured and financed public relations campaign. Yesterday’s release of the first in a series of Treasury department “issue briefs”, signals the start of another run at defining Social Security reform in a way that best suits this administration’s ultimate goals...the creation of private accounts and massive benefit cuts. What the White House doesn’t seem to get is that sometimes even the best PR and Marketing strategy can’t sell misguided policy goals.

Here’s our analysis of this first Treasury brief entitled "Social Security Reform: The Nature of the Problem".

The Brief overstates the problem repeatedly by using the discredited “infinite horizon” calculation. The American Academy of Actuaries, the leading professional organization of actuaries, has warned that infinite-horizon projections “provide little if any useful information about the program's long-term finances and indeed are likely to mislead anyone lacking technical expertise in the demographic, economic, and actuarial aspects of the program's finances into believing that the program is in far worse financial shape than is actually indicated”.

Focuses on Benefit Cuts. Treasury Secretary Paulson says that Social Security can only be fixed by raising taxes or cutting benefits, yet he is focusing on benefit cuts.

Issue Brief Introduction: “Social Security can be made permanently solvent only by reducing the present value of scheduled benefits and/or increasing the present value of scheduled tax revenues.”

Secretary Paulson’s Statement : “While differences over personal accounts and taxes dominate the public debate over this issue, in my conversations I found that there are many other things on which people agree.”

Statement from the White House: The Associated Press reports, “But White House officials stressed that President Bush remains opposed to raising taxes."

So, while the Administration says tax increases and/or benefit cuts are the only solutions, they again propose only benefit cuts as the solution. To suggest that there are only “differences over personal accounts and taxes” (implying people agree on the need for benefit cuts) does not reflect the political reality.

Resurrects Privatization. The report makes it clear the Administration is interested in resurrecting privatization. However, rather than addressing it directly, the report uses “prefunding” as the code-word for privatization.

Issue Brief Statement: “Fairness to Future Generations Requires True Pre-Funding” and “Only if pre-funding is ‘real’ can this goal of fairness be achieved.

This is the setup to Social Security privatization. Remember when the White House renamed private accounts as “personal” accounts? The American people still understood this was the privatization of Social Security and they rejected it. The new buzz-word (for the same thing) appears to be “pre-funding”. Changing the terminology doesn’t change the fact that the political goals remain the same.

The Administration is merely resurrecting its arguments for privatization and laying the groundwork for President Bush’s plan for so-called progressive price-indexing of Social Security benefits, a plan which would cut benefits drastically affecting 70 percent of future retirees.

by Barbara B. Kennelly, President/CEO

Not surprisingly, the insurance industry’s million dollar ad and lobbying campaign is paying off on Capitol Hill and it appears a Congressional compromise to re-authorize SCHIP won’t include needed reforms to Medicare.

Congress Daily summarizes the closed-door negotiations and Speaker Pelosi’s comments afterwards:

House Speaker Pelosi said “We are working on agreements between [the] House and Senate to take two proposals to our respective caucuses in order to see where we go from here." House leadership sources speculated she was referring to breaking the House measure into separate Medicare and SCHIP bills to avoid confronting the Senate with the House Medicare funding language, which Senate negotiators have called a poison pill.

Of course, the President promises a veto of anything other than his proposal anyway so that’s no small part of the political calculations here.

Both the Medicare overpayments to private plans and the doctor’s fix appear destined for “to be determined later” status. The Health Care Policy and Marketplace Review’s latest posts on this can be found here and here.

According to a new GAO report, that’s the estimated price tag for the President’s failed Social Security Privatization Road Show two years ago. Most of those taxpayer dollars... $437,887...were spent for Air Force One and Air Force Two to shuttle the promoters in chief to 40 cities nationwide with another $370,000 in travel costs for Executive Office staffers. The kicker here is the GAO acknowledges these numbers probably aren’t complete...

“We could not test the validity of some of those costs because (the Executive Office of the President) withheld certain key information and Treasurydid not have supporting documentation for amounts it reimbursed EOP,’’ Comptroller David Walker wrote in the letter summarizing the review. “ We are, therefore, unable to provide reasonable assurance that the costs reported to us are complete and fully supported.’’

We can only imagine what the finally price tag would have been had the American people not made it abundantly clear that the more the President talked about his Social Security privatization scheme...the less they liked it. Too bad he didn’t figure that out a million dollars or so earlier.

The Swamp also has a good discussion of the GAO report.

The differences between Senate and House members trying to negotiate a compromise in their legislation to reauthorize and improve access to healthcare for children, SCHIP, remain. That, in our opinion, is a good thing. Not because we like gridlock but because this legislation is too important to seniors and children alike to take the easy way...which is to ignore the difficult issues tackled in the House bill but absent in the Senate version.

The House bill, called CHAMP, includes desperately needed reforms to private Medicare Advantage plans and is by far the better piece of legislation. Money currently being used to overpay insurers would go to improve health insurance access to children. More than a fair trade. Thankfully, House leaders are sticking to their guns...so far. Congress Daily describes yesterday’s closed door meeting this way:

"Senate Majority Leader Reid, House Majority Leader Hoyer, Senate Finance Chairman Baucus, and House Energy and Commerce Chairman Dingell attended the meeting in House Speaker Pelosi's office to discuss how to approach a conference report that would merge the bills. They made no decisions. 'We've got to find out how close are we. We know how far apart we are just without talking,' Rangel said. 'They cannot make commitments on their side, and we damn sure can't on ours, to say that we're compromising when we don't even know where we are.' From Rangel's perspective, ripping apart the House package might threaten its majority support. 'We put the baby together, and we made the baby with [Energy and] Commerce Committee and the Ways and Means committee, our caucuses, liberals, Democrats, pro-tax, anti-tax, cigarette people. We put this child together. And to split the child in half is very, very difficult to sell it to the parents,' he said."

While every major seniors and health advocacy organization (including the AMA and AARP) supports cutting millions in outrageous overpayments to private MA insurance companies and using that savings to improve insurance access for children...you can see just how much influence the insurance lobby still has on Capitol Hill...

“Before the meeting, Baucus said it would be very difficult to get the needed 60 votes for a conference report in the Senate if any Medicare provisions are added. Several Republican supporters of the Senate bill say they will not tolerate cuts to private Medicare Advantage programs that are part of the House bill.” Congress Daily AM, Sept 7, 2007

So in short, some in the Senate just "won’t tolerate" cuts to private plans which pay private insurers about $1,000 more than Medicare receives for the same beneficiary. They "won’t tolerate" cutting industry subsidies which will cost taxpayers $149 billion dollars over the next decade and cuts two years from Medicare’s solvency. And let’s not forget the extra $24 a year every Medicare beneficiary is paying to cover these subsidies...whether they’re in a private plan or not.

Clearly, the insurance industry does not want to lose the MA gravy train and it's lobbying hard to protect the sweetheart deal it wrote and passed through Congress in the 2002 Medicare Privatization...oops, we mean Modernization...Act.

That’s why we say in this instance...differences are a good thing. And we urge Senate to find the same courage their colleagues showed in the House and support SCHIP legislation that considers what’s best for children and seniors alike.

No doubt, you’ve seen AHIP’s (America’s Health Insurance Plans) television ads designed to scare seniors into believing that cutting millions in industry subsidies is somehow the same as cutting Medicare. This weekend, their president penned a letter to the Washington Post continuing the intergenerational war refrain, which has become a popular marketing ploy used by the Bush administration whenever it wants to scare one age group or the other.

If you want to get beyond the rhetoric, check out Robert Laszewski’s post today at the Healthcare Policy and Marketplace Review blog. He contrasts AHIP’s main points with the truth, such as:

“The Congressional Budget Office predicts that 3 million seniors—mostly rural Americans—will lose their Medicare Advantage coverage altogether if the House bill becomes law.” I am sure that is right. But the CBO is right more because the plans that have been gaming the Private Fee For Service payment system won’t any longer be able to do it and will leave those markets.

And then the big one: “There’s no justification for pitting children against seniors.” Damn right. So, why are you making this into a kids versus seniors issue?

While we don’t agree with all of Laszewski’s conclusions, it is refreshing to see someone looking past the PR to the actual truth of the matter. The post's discussion also provides more thoughtful insight into this "seniors versus children" propaganda.

The real question is...Can those who actually care about sensible healthcare options for seniors and children cut through this million dollar industry marketing blitz to persuade the Senate to take the House’s lead on SCHIP and MA reform?

Here’s a letter we’ve sent to the Senate urging they consider legislation that improves children’s healthcare access through SCHIP while also making desperately needed reforms to private Medicare Advantage plans.