News your connection to The Boston Globe

Bush's Medicare scam


IT IS SUCH a simple word -- discount -- and therefore such a simple word to manipulate to the harm of consumers. For most Americans, however, it is the essence of retailing, the way people actually shop, especially for the most basic of the commodities they use all the time.


In medicine, discounting has also become critical to the ability of ordinary Americans living on ordinary incomes to have access to the prescription drugs they need at prices they have a chance of affording. Discounting is becoming as important to drug retailing, especially to retired people, as it has become to retailing in general.

That is why the use -- or abuse -- of this word by President Bush is about to become a major element in the growing controversy over what exactly was in the Medicare legislation that Republicans rammed through the House and Senate this month on Bush's behalf and that got his enthusiastic signature in a White House ceremony that had Reelection Campaign stamped all over it.

According to Bush and all administration underlings, retired people and others eligible for Medicare are about to get "discounts" on their drug purchases. The price breaks, the president has solemnly assured television cameras, will last between this year and the moment in 2006 when the new law takes full effect. Every person entitled to coverage will be getting a discount card, Bush goes on to note in his standard remarks, and the result of that card will be discounts ranging "from 10 to 25 percent" off the retail price of prescription medicines.

That is the official line.

From the fine print of the law itself, however, it appears to be a lie. When the first batch of regulations under the new law was issued by the Bush administration, the fine print described a system under which "discounts" are a goal, not a requirement. Retired people have a statutory right to "share" in savings that result from bulk purchasing of drugs, but whether that share is puny or substantial is a matter the Republicans and Bush are leaving up to private corporations.

The new legislation gives private firms that will actually run the drug benefits program the business opportunity to distribute these so-called discount cards to beneficiaries. However, any savings in the form of discounts and rebates that these firms are able to achieve in price negotiations with drug manufacturers belong to the private businesses, not to the folks taking the pills.

The idea that these savings off the listed price are passed on to consumers turns out to be something that is encouraged, even favored, but not by any stretch of the law's language required. Instead, whether anything is passed on, and if so how much, is left entirely to the discretion of the businesses that will run the drug benefit.

As Senator Edward M. Kennedy put it after uncovering this latest deception, "Only in this administration would the words Discount Card mean seniors get the card while corporations get the discounts."

As has turned out to be the case with every example of this kind of crooked behavior that has surfaced since the legislation was rammed through Congress, this is not a mistake; it has happened by design linking companies in the health business and their lobbyists to Bush and the Republican congressional leadership.

In the prescription drug legislation that passed the Senate last summer -- with the support of key Democrats like Kennedy -- there was an explicit requirement that every cent of the savings achieved via bulk purchasing must be passed on to beneficiaries. However, when the legislation was twisted into a partisan pretzel with Bush's support in negotiations with the House, that requirement had been removed. To state the obvious, the only reason to remove the pass-through requirement was to increase the profits of the benefit-managing businesses.

Recall that the Medicare boss representing the administration in the negotiations with Congress, Thomas Scully, was at the same time negotiating with lobbying and investment companies with major health interests about coming to work for them. In fact, within a week of the legislation's final passage, Scully had joined a lobbying firm as well as an investment company.

This latest scam fits neatly with another one that will also make it much harder for insurance companies and other companies managing the drug benefit program to negotiate discounts with drug companies. Also hidden in the law's fine print are provisions designed to restrict the number of drugs that will be on the lists of those suitable for each type of treatment, By restricting what goes on these lists, or formularies, the extent of any future discounts, could be severely limited -- a drug company goal.

And to the extent discounts aren't achieved in significant amounts, the ability of the program to offer a prescription drug benefit at anything near the Bush-advertised premium of roughly $35 a month will be just as severely restricted. The more people learn about this "benefit," the less appropriate that word is; the benefit is more like a burden.

Thomas Oliphant's e-mail address is

Globe Archives
Today (free)
Yesterday (free)
Past 30 days
Last 12 months