When President Bush signed the Medicare Reform bill into law recently, there was dancing in the suites! How often can Congress hand Wall Street billions in public money, and at the same time fatally wound the hated Medicare program? Let’s see how they did it.
In truth, AARP is a big business selling insurance products and mail order prescription drugs, with a huge stake in how Medicare was “reformed.”
With drug prices soaring, Americans have been clamoring for relief. Lobbyists for the insurance and pharmaceutical industries joined forces with right-wing ideologues to push a bill that would use this urgent need as a fig leaf for a massive infusion of corporate welfare, all while privatizing Medicare. Provisions of the complex, 681-page, $400 billion bill include: • Seniors must move into a Health Management Organization (HMO) or Preferred-Provider Organization (PPO) or pay sharply higher premiums to stay in traditional Medicare. Those premiums will exceed $140 billion in new premiums over the next 10 years. • Drug coverage must be purchased from private insurers who will receive $12 billion in government incentives. • $71 billion in subsidies will encourage corporations to maintain drug coverage for retirees. This amount covers 28 percent of corporate costs but by dumping retirees, corporations will save 100 percent. • Government is blocked from negotiating lower drug prices, while insuring $139 billion in additional profits to drug companies (over eight years). How will this affect Indiana? Over 120,000 Hoosier retirees will be forced out of generous employer programs into the inadequate Medicare drug plan, all to save corporations billions each year. Nearly 775,000 Hoosier Medicare recipients will pay more for doctor visits and lab work. To be eligible for catastrophic drug coverage where Medicare pays 95 percent of drugs, an astonishing $4,020 must first be paid out of pocket. Robert Kuttner, editor of The American Prospect, says a lot of people won’t even be able to afford the upfront costs. He says the bill is a “calculated first step toward ending universal Medicare in favor of vouchers.” One of the most cynical provisions not only continues the ban on cheaper imported drugs from Canada but also establishes a commission to study how to dismantle price controls in other countries that currently hinder the profitability of American drug companies. Not surprisingly, when agreement on the bill was announced, stock prices of drug companies soared on Wall Street. It is obvious why pharmaceutical and insurance companies supported this bill. But why on earth did AARP, the largest seniors group in the U.S., vigorously support it, too? Let’s take a look at this prestigious organization. AARP was founded in 1958 by a retired educator, Dr. Ethel Andrus, under its original name, American Association of Retired Persons. Aggressive marketing has seen AARP grow to 35 million members. In 2002, the organization had revenues of $636 million. About 60 percent of that came from selling insurance products and mail order prescription drugs. According to Public Citizen (www.citizen.org), AARP earns over $10 million yearly selling its membership list to corporations. The AARP magazine goes out to 21.5 million households and is a major source of advertising revenue, with ads for drugs, cars and cereal bringing in $76 million last year. For royalties, the group lends its logo to insurance and investment plans. Last year those royalties were $218 million, with health insurance accounting for the lion’s share. CEO William Novelli is paid nearly $500,000 yearly to run AARP. Novelli is no bleeding heart liberal. He is co-founder of one of the largest public relations firms in the nation, Porter-Novelli (PN). PN’s Web site boasts of working with clients like drug giants Wyeth, Pfizer and GlaxoSmithKline, all of whom stand to reap a windfall from this Medicare reform. Novelli’s conservative credentials include working on a team that helped Richard Nixon get elected and writing a fawning introduction to Newt Gingrich’s new book, Saving Lives and Saving Money. According to Time magazine, Gingrich has his own health care “think tank” that advises AARP. Calling himself a “change agent,” Gingrich worked closely with AARP to include several of his own provisions in the final bill. While in Congress, Gingrich’s dream was to make sure that Medicare would “wilt on the vine.” Thanks to CEO Novelli and AARP, his dream is now coming true. The truth is that AARP is a big business with a huge stake in how Medicare is “reformed.” The $7 million AARP spent lobbying for the bill’s passage was money well-spent, considering the projected return. Public Citizen notes that this bill will increase AARP’s yearly royalties by $58 million and insurance premiums by $17 million. AARP denies any ulterior motives but critics are unconvinced. In response to its support for the Medicare bill, 85 members of Congress have dropped their membership. Indiana AARP spokesman Cliff Willis states that they have received very few complaints here in Indianapolis. When NUVO suggested that this may be due to AARP’s unlisted phone number, Willis said that the number is plainly posted on their Web site. For seniors without Web access that phone number is (317) 423-2277.