Sep 122004

The Government Accountability Office (GAO) yesterday charged former Bush administration Medicare official Thomas Scully broke the law and should repay his government salary after ordering his actuary to withhold high estimates of the president’s prescription drug plan from Congress last year. The GAO said, "Federal law prohibits a federal agency from paying the salary of an official who prevents another federal employee from communicating with Congress." Since the law probably would not have passed if Congress had known of the higher estimates, the GAO’s ruling means the Bush administration achieved passage of landmark domestic legislation by unlawfully withholding information. (Act now to try to undo the harm done to Medicare: Send a letter to your member of Congress calling to bring the Medicare legislation before the House for debate and a fair vote.)

THE TRUE STORY: Though previous investigations have stopped short of charging Scully with criminal behavior, the facts of the case have been known for some time. An internal investigation by the Department of Health and Human Services (HHS) in July confirmed that Scully threatened to fire Richard Foster, his chief Medicare actuary, if Foster told Congress that drug benefits would cost much more than the White House acknowledged. At the time, the Bush administration was struggling to convince Senators from both parties the bill was worth its supposed $395 billion price tag, even though it included massive benefits for health care providers and private insurers, failed to allow Medicare to negotiate drug prices and prohibited the importation of low-cost drugs from Canada. Foster’s numbers indicated the law would cost nearly $150 billion more than lawmakers had been told by the Congressional Budget Office (CBO). His estimate was above President Bush’s self-imposed "ceiling," and likely would have "led to several conservative Republicans voting against the bill." The measure passed narrowly, with lawmakers knowing of no alternative to the CBO’s estimate.

FOSTER SPEAKS OUT: In a public statement, Foster revealed he had been ordered to withhold the data by Scully, for what he considered "inappropriate" political reasons. He said Scully’s decision to "restrict the practice of our responding directly to Congressional requests" was part of a "pattern of withholding information" which surrounded the bill. Ironically, in June, 2003 Scully had defended the cost estimates of his actuaries on some elements of the new legislation even though they conflicted with CBO numbers. He told the Senate Financial Services Committee, "The difference is that our actuaries have looked extensively ? obviously I’m biased towards my actuaries."

THE PRICE TAG FLIP-FLOP: Less than two months after it was signed, the Bush administration officially changed its estimate to confirm closely with Foster’s own prediction, admitting the new law "would cost at least $530 billion over 10 years, or one-third more than the price tag used when Congress passed the legislation." At the time, several conservatives admitted they would not have voted for the bill if they’d known the true cost. Rep. Jeff Flake (R-AZ) told USA Today, "It’s safe to say that the votes would not have been there with a higher number. It was a bitter enough pill for many to swallow at $400 billion. At $550 billion, it would have been a bridge too far."

CAUTION: REVOLVING DOOR: Like many Bush administration officials, Scully was appointed to his position after lobbying for the interests he was then asked to regulate. He represented the nation’s for-profit hospitals as a lobbyist before being joining the administration in June 2001. Eight months after Scully landed the job, the agency "moved to settle final claims involving HCA Inc., a hospital chain that was the biggest member of Scully’s former employer, the Federation of American Hospitals." Scully said he’d stay out of the case, but an attorney who represented the whistleblowers said the final settlement represented "a total sellout by Scully, who totally negotiated it behind Justice’s back."

THE POSTGAME SHOW: Scully left the Bush administration in December 2003, just after the president signed the Medicare bill, to work for two firms representing drug manufacturers and Medicare providers who benefited from the law. As a study by Common Cause points out, "These jobs did not just drop into his lap in December. He had apparently been negotiating with healthcare-related firms at the same time he was helping the Administration push the controversial prescription drug legislation through Congress, which directly affected those industries." Remarkably, Scully’s conflict of interest was sanctioned by the Bush administration, which granted Scully an ethics waiver "so that he could negotiate with potential employers while he helped write the Medicare law." Continuing its permissive stance towards corruption, HHS spokesman William Pierce said the department does "not see the need to act" on the GAO’s latest recommendation.

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