DISSENTING VIEWS

H.Res. 776

Resolution of Inquiry for Medicare Prescription Drug Legislation Cost Information

Once again, this Committee turned its back on its obligation to get the facts for the American people. Our Republican colleagues rejected a resolution of inquiry that requested President Bush and directed the Secretary of Health and Human Services (HHS) to provide certain documents to the House of Representatives relating to estimates and analyses of the cost of the Medicare prescription drug program. The resolution was reported adversely on a near party-line basis.

This is not routine information that is at issue. The Administration, through Centers for Medicare and Medicaid Service (CMS) former Administrator Thomas Scully, hid important cost information that Congress should have seen prior to voting on the Medicare prescription bill in 2003. Mr. Scully threatened the CMS Chief Actuary with adverse consequences if he provided requested estimates to Congress, all the while making sure that the White House had the real information from the Actuary. Did the White House direct this coverup? We do not know.

Why does this matter? Most immediately, the Medicare bill that has since become law will contribute to an increase in Medicare premiums of more than 17 percent next year - the largest premium increase ever. Fifteen percent of that increase in premiums is because of multi-billion dollar overpayments to big insurance companies and health maintenance organizations (HMOs) that were included in the Medicare bill. These are the very same insurance companies that the Government Accountability Office (GAO) found receive more taxpayer dollars to treat beneficiaries than is paid under traditional Medicare. So millions of seniors are now paying billions of dollars - and getting nothing back for that money - to finance the Republican effort to draw seniors away from traditional Medicare.

Moreover, the manner in which the information was withheld was specifically forbidden by the Balanced Budget Act of 1997, in which the Chief Actuary's position was established. This provision was added because Republicans thought they needed to establish in statutory and report language the clear right of Congress to obtain the Actuary's estimates and analyses of cost of changes in Medicare. It specifically forbade the use of an "internal Administration clearance process" to keep this information from Congress. And yet, it was exactly such a "clearance process" that kept the Actuary from informing Congress before it voted to pass the Medicare bill that the estimated cost would be $500-$600 billion instead of the $395 billion the Administration and its Congressional allies claimed.

Congress, and the public, should know what the White House and the Department knew when the bill was being considered. We have repeatedly asked the Administration to turn over information on the cost estimates and have been ignored. We also asked Speaker Hastert and Senate Majority Leader Frist to investigate, and got the same treatment. So this resolution of inquiry was our last resort.

All Administrations, regardless of which party is in the White House, prefer not to give embarrassing or controversial information to the Congress. But the Committee on Energy and Commerce has a long history of obtaining the information it needs to do its work, whether it is for investigative or legislative hearings and regardless of the party affiliation of the person in the White House. This record is now sullied.

Congressional oversight is only credible if it is consistent regardless of the party in charge of the Executive Branch. Had President Clinton's Administration tried to hide the ball like this, Congressional subpoenas would have flown like confetti. But when the Bush Administration hides the ball, all we get from the Republican Majority is silence. The public deserves better.

In mid-June of 2003, the Minority staff of the House Committee on Ways and Means requested that Richard Foster, the CMS Chief Actuary, provide them with the cost estimates and analyses of the Medicare prescription drug legislation that he had prepared for CMS. During that month, this legislation was being considered by the Committee on Ways and Means, the Committee on Energy and Commerce, and the full House of Representatives. For decades, such estimates and analyses had been routinely provided to Congress through an informal, but important, working relationship between the Congress and the Office of the Actuary. Thomas A. Scully, then head of CMS, took it upon himself to deny information about the Actuary's projected cost of the bill to the Minority and - ultimately - to the full Congress for what he openly admitted were political reasons.

This action by Mr. Scully was at odds with the previous working relationship between Congress and the Office of the Actuary and Mr. Foster protested. According to testimony given by Mr. Foster before the Committee on Ways and Means on March 23, 2004, he was ordered by Mr. Scully to withhold the requested information from particular Members. Mr. Foster said that he understood from Mr. Scully and Mr. Scully's assistant that he would lose his job if he provided the requested estimates and analyses. On June 24, 2003, Mr. Scully informed a Minority staff member of the Committee on Ways and Means that Mr. Foster would "be fired so fast his head would spin" if he provided this information directly to the Committee staff. According to a Washington Post article and others, Mr. Foster memorialized the situation on June 26, 2003, and "dispatched an email to several senior assistants and private actuaries in which he called the situation 'nightmarish . . . I'm perhaps no longer in grave danger of being fired, but there remains a strong likelihood that I will have to resign in protest of the withholding of important technical information from key policy makers for political reasons."¹

Mr. Foster's estimates - which consistently set the cost of this legislation at $500-$600 billion - were critically important for consideration of this Medicare prescription drug bill. Congress had set a cost ceiling of no more than $400 billion over the next 10 years. The Congressional Budget Office had provided an estimate of $395 billion. Nonetheless, in the House, it took nearly an hour-long roll call vote in June of 2003 to persuade enough Republican Members to support this bill, which passed by one vote. In July 2003, a number of conservative House members wrote to the Speaker requesting his assurances that the bill not exceed $400 billion, which the Administration gave, notwithstanding Mr. Foster's estimates. The Senate passed it only on the Administration's assurance that it would cost no more than $400 billion. In November of 2003, when the conference bill returned to the House floor, there was an unprecedented three-hour roll call vote to allow the Republican leadership and Administration, including the Secretary of the Department of Health and Human Services Tommy G. Thompson, to change the votes of wavering colleagues leading to a virtual party-line vote at dawn after members were told once again it would cost $395 billion. As the Wall Street Journal wrote, "[N]o one doubts that release of the higher cost estimates last fall could have killed the measure, which only passed by one vote after hours of arm-twisting in the House."²

Then in January of this year, shortly after President Bush highlighted the Medicare legislation in his State of the Union address and just prior to the release of the Administration's FY 2005 budget submission, the White House announced that the drug program would cost $534 billion. On January 30, 2004, White House Press Secretary Scott McClellan said that President Bush had learned of these higher estimates only in "the last two weeks." However, while the Administration had said their cost estimates were not "final" until after the bill was signed into law, Mr. Foster confirmed in his testimony before the Committee on Ways and Means on March 24, 2004, that he had given Mr. Scully preliminary estimates that were very close to the final estimate weeks before the final votes on the Medicare prescription drug bill. News articles reported that Mr. Foster's estimates had been provided to the Office of Management and Budget several months before.³ More recently, the cost of this legislation has been projected at $576 billion.⁴

Mr. Scully and Secretary Thompson have stated on several occasions that some of these estimates were conveyed to Members of Congress or their staff. Secretary Thompson said in a press conference in February that conferees and others were made "aware that we expected our final score would be higher."⁵ With the exception, however, of a June 26, 2003, memo to Rep. Rangel on the extent to which premiums for traditional Medicare would rise under a provision in the legislation,⁶ none of the complete requested estimates or analyses were provided to the Democratic Members of these committees, including those who were officially on the Conference Committee and responsible for negotiating this legislation prior to its passage. Subsequent testimony and media reports have made it quite clear that the projections were withheld from Congress for a political purpose - so that the Medicare Modernization Act would pass. Mr. Scully told a reporter in March of 2004 that he had denied the information to Democratic Members because they were trying to be "politically cute" on the eve of the first House vote.⁷ Mr. Scully later told an investigator from HHS's Office of Inspector General that information was not provided because it was "sought solely to defeat the legislation."⁸ These actions are exactly what the Conferees were trying to prevent in the Balanced Budget Act when they stated that there should not be an "internal Administration clearance process" because if Congress did not receive this information, its ability to make "informed decisions based on the best available information is compromised."⁹ There was no exemption to full disclosure of actuarial numbers for Members deemed to be "politically cute," or those who might be attempting to defeat legislation.

Further, Mr. Foster testified before the Committee on Ways and Means that this was not an across-the-board policy for all Members. Some responses to Congressional requests for information were approved by Mr. Scully, and others were not. Mr. Foster stated that he believed that there was "a political basis for making that decision" and said he "considered that inappropriate and, in fact, unethical."¹⁰ Full estimates and analyses to this date still have not been shared with the Democratic Members of Congress who served on the Medicare conference, and no justification has been provided.

There have been numerous written requests made for the cost estimates and analyses that the Administration had as far back as June of 2003. On February 3, 2004, Ranking Members Waxman, Dingell, and Rangel requested all cost information and analyses for the Medicare Prescription Drug bill from Secretary Thompson. On February 12, 2004, Ranking Members Rangel and Stark sent a follow-up letter to Secretary Thompson requesting the estimates and analyses after Secretary Thompson made a commitment to members of the Committee on Ways and Means at a February 10, 2004, hearing that he would restore access to the Office of Chief Actuary. On March 2, 2004, Ranking Member Waxman and every Minority member of the Committee on Government Reform sent another letter to Secretary Thompson requesting the information that Representatives and others had already requested. On March 15, 2004, Ranking Member Dingell sent yet another letter to Secretary Thompson requesting the information. Again, on March 17, 2004, Ranking Member Waxman sent a letter to Secretary Thompson asking for the information. On March 19, 2004, Ranking Members Waxman, Rangel, Dingell, Stark, and Brown sent a letter to the White House asking for all costs and estimates the White House had received. To date, none of these Members has received a complete response to their repeated requests and in most cases have received no response at all. In addition, Members of the "Blue Dog coalition" sent a letter on March 26, 2004, asking the President to look into the matter, noting that they were particularly troubled that such information was potentially withheld.

Similarly, on May 14, 2004, Ranking Member Stark sent a letter to Dr. Mark McClellan, the new administrator of CMS, following Dr. McClellan's commitment to provide materials at a subcommittee hearing on May 11, 2004. Dr. McClellan has not provided the requesting Members with complete information.

Mr. Foster testified before the Committee on Ways and Means on March 24, 2004. It was his first public appearance and discussion on these issues in which he revealed the threats he received from Mr. Scully, that his estimates were consistently higher than those put forward by the Administration, and that he was pretty close to the number released in 2004 weeks before the final vote in 2003. Democratic members of that Committee requested an additional hearing under Rule XI in order to hear from additional witnesses.

Chairman Thomas held a hearing on April 1, 2004, pursuant to the Rule XI request, to continue discussions on the estimates. Witnesses were CMS Deputy Administrator Leslie Norwalk and CMS San Francisco Regional Administrator Jeff Flick (Mr. Scully's former special assistant). Mr. Scully declined to attend, citing fatigue. White House counsel Alberto Gonzalez declined on behalf of Presidential aide Doug Badger. At the hearing, Republicans refused to subpoena Mr. Scully and Mr. Badger.

On June 22, 2004, House and Senate Minority leaders Rep. Nancy Pelosi and Senator Thomas Daschle and numerous Ranking Members and Senators including Reps. Waxman, Dingell, Rangel, Stark, Hoyer, and Brown and Senators Kennedy, Graham, Lautenburg, Stabenow, and Clinton sent a request to House Speaker Dennis Hastert and Senate Majority Leader Bill Frist. Members not only asked for an investigation into the possible withholding of Medicare cost estimates but requested that these Congressional leaders ask the Administration to provide Members with the cost estimates and analyses they had been repeatedly asked for in other letters.

On September 8, 2004, having received no response, these Members sent a follow-up letter to Speaker Hastert and Majority Leader Frist requesting an investigation and the estimates and analyses. They also cited that by this time the Inspector General's Office and the Government Accountability Office had concluded in independent reports that suppression of information occurred. To date, neither the Majority leaders nor the Administration have provided Members with the cost estimates and analyses requested by Members in both houses of Congress.

On September 23, 2004, the Committee on Ways and Means held a markup on the Resolution of Inquiry. After a very short and uneventful series of statements from both the Majority and Minority, the Resolution was reported out of Committee unfavorably on a party-line vote of 19 to 12.

The Chief Actuary's position for the Centers for Medicare and Medicaid Services (CMS) was codified into law by Congress in 1997 as a highly independent office, specifically so that Congress and its committees could have guaranteed access to the Actuary's assessment of the "financial condition of the Medicare trust funds and in developing estimates of the financial effects of potential legislative and administrative changes in the Medicare and Medicaid programs."¹¹ Ironically, the momentum for this provision came from Republican members of the Committee on Ways and Means. The Republicans were concerned that they would not get full information from the Chief Actuary since they did not control the White House. The following statutory protections were provided: "The Chief Actuary shall exercise such duties as are appropriate for the office of the Chief Actuary and in accordance with professional standards of actuarial independence. The Chief Actuary may be removed only for cause." (42 U.S.C. 1317(b)(1)) (emphasis added)

The conferees were very specific about the role and responsibilities of the Chief Actuary in working with Congress. Contrary to a statement from HHS Secretary Tommy G. Thompson in February of 2004, the conferees believed that the Chief Actuary's estimates were critical to the work of Congress.¹² There can be no misunderstanding of their legislative intent.

The Office of the Actuary has a unique role within the agency in that it serves both the Administration and the Congress. While the Chief Actuary is an official within the Administration, this individual and his or her office often must work with the committees of jurisdiction in the development of legislation.

Beginning with the appointment of the first Chief Actuary for Social Security in 1936, through the enactment of Medicare and Medicaid in 1965, and through the establishment of the Health Care Financing Administration in 1977, the tradition has been for a close and confidential working relationship between the [Social Security Administration] and HCFA chief actuaries and the committees of jurisdiction in the Congress - a relationship which the Committees value highly. It is important to emphasize that the Senate Committee on Finance, the House Committee on Ways and Means, and the House Committee on Commerce all rely on their ability to seek estimates and other technical assistance from the Chief Actuary, especially when developing new legislation. Similarly, the Congressional Budget Office and the Congressional Research Service depend heavily on such assistance. Thus, the independence of the Office of the Actuary with respect to providing assistance to the Congress is vital. The process of monitoring, updating, and reforming the Medicare and Medicaid programs is greatly enhanced by the free flow of actuarial information from the Office of the Actuary to this committees of jurisdiction in the Congress.

. . . . The Committees rely on the actuaries to provide prompt, impartial, authoritative, and confidential information with respect to the effects of legislative proposals. When information is delayed or circumscribed by the operation of an internal Administration clearance process or the inadequacy of actuarial resources, the Committees' ability to make informed decisions based on the best available information in compromised.¹³