2003-11-21 -- AARP advocates for rich seniors and the drug and insurance
industries.

The mechanics of how the new Medicare Bill strips Mediciad
prescription benefits from many of the sickest and poorest seniors and
disabled.



New York Times, November 21, 2003
http://www.nytimes.com/2003/11/21/opinion/21KRUG.html

AARP Gone Astray

By PAUL KRUGMAN

"This is a good bill that will help every Medicare beneficiary," wrote
Tom Scully, the Medicare administrator, in a letter to The New York
Times defending the prescription drug bill. That's flatly untrue. (Are
you surprised?) As the Center on Budget and Policy Priorities points
out, the bill will force millions of beneficiaries to pay more for
drugs, thanks to a provision that cuts off supplemental aid from
Medicaid. Poorer recipients may find previously affordable drugs
moving out of reach. (See report below.)

That's only one of a number of anti-retiree measures tucked away in
the bill. It contains several Trojan horse provisions that are clearly
intended to undermine Medicare over time - it will allow private
insurers to cherry-pick healthy clients in selected cities, and it
will heavily subsidize private plans competing with traditional
Medicare. Meanwhile, the bill prohibits Medicare from using its
bargaining power to cut drug prices; drug company stocks have soared
since the bill's details became public.

Yet the bill has a good chance of passing, thanks to an endorsement
from AARP, the retiree advocacy organization, which has already begun
an expensive advertising campaign on the bill's behalf. What's going
on?

Let's step back a minute. This is a bill with huge implications for
the future of Medicare. It's also, at best, highly controversial. One
might therefore have expected an advocacy group for retired Americans
to take its time in responding - to make sure that major groups of
retirees won't actually be hurt, and to poll its members to be sure
that they are well informed about what the bill contains and don't
object to it.

Instead, AARP has thrown its weight behind an effort to ram the bill
through before Thanksgiving. And no, it's not urgent to get the bill
passed so retirees can get immediate relief. The plan won't kick in
until 2006 in any case, so no harm will be done if the nation takes
some time to consider.

Many of AARP's members feel betrayed. The message boards at the
organization's Web site have filled up with outraged posts. A number
of those posts say something like this: "Now you're just an insurance
company." Indeed, that may get to the heart of the matter.

Over the years AARP has become much more than an advocacy and service
organization for older Americans. It receives more than $150 million
each year in commissions on insurance, mutual funds and prescription
drugs sold to its members.

And this Medicare bill is very friendly to insurance and drug
companies. Senator John Breaux, one of only two Democrats who
participated in negotiations over the bill, takes the controversy as a
good sign: "No one got everything they wanted." But as Jonathan Cohn
points out in The New Republic, drug and insurance companies got
exactly what they wanted: no efforts to limit prices, generous
subsidies and lots of additional business. For example, insurance
companies that offer an alternative to Medicare will not only be able
to pick and choose their customers, but will also get 30 percent more
per client than the government spends on the average Medicare
recipient.

So do AARP executives support this bill because they hope to share in
the bounty? Maybe, but it probably runs deeper than that. Once an
advocacy group becomes as much a business as a service organization,
its executives are likely to start identifying more with industry
interests than with the groups they are supposed to serve.

Thus it may seem odd on the surface that William Novelli, AARP's chief
executive, wrote a glowing preface to Newt Gingrich's book on health
care reform. After all, Mr. Gingrich has long advocated turning the
administration of Medicare over to private companies - an unpopular
idea, and also an expensive one (forget the clichés about inefficient
government: private companies have much higher overhead than
Medicare). But what looks like wasted money to taxpayers and retirees
looks like opportunity to private providers. Enough said.

Am I being too cynical? How could I be? In case you haven't noticed,
we live in a golden age of pork: the other big piece of legislation
marching through Congress, the energy bill, makes the Smoot-Hawley
tariff look like a classic of good government.

So it should come as no surprise that Medicare "reform" appears likely
to be another triumph for the coalition of the bought-off - a
coalition that, sadly, includes AARP.