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2003-11-19 -- AARP Chief Under Fire On the Medicare Bill

 Wall Street Journal, Thursday November 20, 2003


AARP Chief Under Fire On the Medicare Bill

William Novelli Is Blasted By Disgruntled Democrats And Seniors Over
Endorsement

By LAURIE MCGINLEY Staff Reporter of THE WALL STREET JOURNAL

WASHINGTON -- For AARP chief William Novelli, the ride toward a
prescription-drug benefit alongside a Republican president is becoming
rocky.

Since Monday, when Mr. Novelli announced AARP's enthusiastic
endorsement of a Republican-led Medicare bill, he has come under
fierce, and increasingly personal, attack by disgruntled Democrats and
seniors.

Wednesday, in a protest backed by union groups, a band of AARP members
showed up to destroy their membership cards outside the group's
downtown headquarters here.

Other seniors have been demanding, on AARP message boards, that Mr.
Novelli be fired from his $420,000-a-year job running the
35-million-member group. AARP says it is getting about 1,500 calls a
day on the matter, and Mr. Novelli says most of the calls have been
negative. A new survey of AARP members commissioned by the AFL-CIO
shows that only 18% want Congress to pass the Medicare package.

Meanwhile, Democrats, calling AARP the "American Association of the
Republican Party," are vilifying Mr. Novelli as a longtime closet
Republican who forfeited his leverage and cut a lousy deal. Senate
Minority Leader Tom Daschle of South Dakota Wednesday charged that
AARP "may have a conflict of interest" because it might sell
prescription-drug policies to seniors under the legislation.

The 62-year-old Mr. Novelli says the criticism is harsher than he
expected but insists his decision was "the right thing to do. ... It's
like Kermit the Frog said: It's not easy being green. Well, it's not
easy being in the middle."

It is all the harder for the fact that it seems so unexpected. Long
associated with Democratic policy views, AARP finds itself on the
opposite side of the Medicare debate from liberal leaders such as
Massachusetts Sen. Edward Kennedy and Sen. Daschle.

The reason is a combination of Mr. Novelli's personality and the
political dynamics of this year's Medicare debate. Mr. Novelli, a
public-relations and marketing man who took the helm at AARP in 2001
from the cautious Horace Deets, is considered a pragmatist who was
determined to get a prescription-drug deal this year -- even if it
meant compromising more than others at AARP wanted, friends and foes
say.

Republican leaders courted him, knowing AARP's endorsement was
essential for overcoming objections from liberal senators and
conservative House members.

Mr. Novelli sees the marriage of convenience as a last chance to give
seniors a new drug benefit before an exploding budget deficit makes
the biggest-ever expansion of the 38-year-old program politically and
fiscally impossible.

To Democratic detractors, the pact he helped negotiate threatens to
undermine Medicare, the federal health program for 40 million elderly
and disabled people, by introducing limited competition between the
traditional program and private insurance plans, which could drive up
premiums for people who stay in the regular program.

Democrats aren't the only ones with misgivings. With the legislation
likely headed for the floor this week, supporters Wednesday were
making last-minute changes to win over the votes of wavering members.

Wednesday night, Republicans said cost estimates from congressional
budget analysts are very close to $400 billion over 10 years, the
amount set in previous budget legislation. That could help calm some
conservatives worried about cost, though many believe spending
actually will be much higher. House and Senate negotiators are
expected to meet Thursday to sign off on the final conference report.

Increasingly, the attacks on Mr. Novelli aren't about what is in the
bill. House Minority Leader Nancy Pelosi of California Wednesday
criticized Mr. Novelli for writing the foreword to an April 2003 book
on health care by Former Speaker Newt Gingrich, who in 1995 tried to
slash future Medicare spending. Democrats also have been circulating
e-mails noting that Mr. Novelli in 1972 worked on the re-election
campaign of President Nixon.

And the consumer group Public Citizen Wednesday distributed a memo
from two liberal Harvard Medical School professors, longtime advocates
of national health insurance, showing that AARP received more than
$123 million in royalties from insurance companies last year marketing
AARP-approved health and life insurance policies, and saying that AARP
would reap hundreds of millions from the bill.

Mr. Novelli says he doesn't know whether AARP will sell
prescription-drug policies to Medicare beneficiaries but staunchly
denies that the group's stance was motivated by financial
considerations. Currently, some of the AARP-approved policies on the
market offer drug coverage. But AARP spokesman Steve Hahn says these
policies, which aren't subsidized by the government, would be rendered
obsolete by the legislation, which calls for government-funded drug
coverage. In addition, Mr. Novelli says he is an independent, not a
Republican, and that it is in AARP's interests to align itself with
neither party.

Everyone involved knew AARP would be an important player in the
Medicare drug legislation this year. Asked at a September CNBC dinner
whether there would be a bill this year, Sen. Kennedy pointed at
fellow guest Mr. Novelli and said "you need to talk to him."

When House-Senate negotiators deadlocked on contentious issues, House
Speaker Dennis Hastert and Senate Majority Leader Bill Frist began
consulting Mr. Novelli to try to win the group's endorsement. Unlike
many Democratic lawmakers, Mr. Novelli had already concluded that no
bill could pass without some direct competition, called premium
support, that Democrats oppose. So he agreed to its inclusion even
though it angered Sen. Max Baucus (D., Mont.), who was trying to kill
the idea.

Now under heavy fire from liberals, Mr. Novelli says he worked to
limit the experiment and doesn't expect it ever to take place in any
event. "It's a fig leaf" to assuage conservatives, he says.

Some observers see echoes of how Mr. Novelli handled the tobacco issue
when he headed a group called Campaign for Tobacco-Free Kids. The
group was the only public-health organization involved in secret talks
with the tobacco industry and state attorneys general to try to reach
a settlement on government regulation of tobacco and other issues. The
resulting settlement, unveiled in the spring of 1997, was attacked by
many antitobacco activists as too weak. Critics said Mr. Novelli,
founder of the Porter Novelli public-relations agency, was more
interested in making a deal than in making good policy.

Mr. Novelli's view is different: that overreaching by much of the
public-health community was responsible for the demise of tobacco
regulation on the Senate floor. They "were holding out for the
perfect," he says, "and as a result, we lost comprehensive tobacco
legislation."

He is unlikely to back off on the Medicare deal. In a profile on the
Web site of Mr. Novelli's alma mater, the University of Pennsylvania,
the AARP chief says he is guided by a Finnish haiku: Problems worthy
of attack prove their worth by attacking back.