• Bait-and-Switch Medicare Bill Soon To Be Law
• Medicare Bill Winners
• Medicare Bill Losers
• Why AFT Opposes the New Medicare Bill
• Democrats Who Supported Medicare Bill
• Republicans Who Opposed Medicare Bill
• A Perspective on the Medicare Vote
• A Strategy for Medicare's Future
• Health Insurer, Provider, Drug Company Stock Prices Up Sharply
• Healthcare Companies Spent Record $139 Million To Lobby Congress
• An American-made Dilemma
• Quote of Note: Another Explanation for AARP's Medicare Stance
• Web Site of the Week: www.unionplus.org/HolidaySavings
  

BAIT-AND-SWITCH MEDICARE BILL SOON TO BE LAW
 The Medicare Prescription Drug and Modernization Act (H.R. 1), passed Nov. 25, sets in motion the privatization of the traditional fee-for-service Medicare program. President Bush has pledged to sign it soon. The Senate voted 54-44 to adopt the bill, which squeaked through the House by a vote of 220 to 215. The House vote came only after the GOP-controlled House violated its own rule by several hours to give President Bush time to twist the arms of some reluctant members of his own party. An effort by Sen. Edward Kennedy (D-Mass.) to filibuster the bill failed 70-29. A second attempt involving budget-related objections, led by Senate Democratic Leader Thomas Daschle (D-S.D.), also failed 61-39. Passage of this bill makes winning truly comprehensive prescription drug coverage more difficult and jeopardizes the traditional Medicare program, but all is not lost. In 1989, when details of the Medicare catastrophic bill were finally revealed, Congress was forced to repeal it. A Nov. 19-20 Hart poll of seniors commissioned by the AFL-CIO found them opposed to the new bill by a margin of 64 percent to 19 percent. There will be new congressional efforts to correct the excesses in the bill.


MEDICARE BILL WINNERS

• Drug companies stand to reap an estimated at $139 billion in additional profits over the next 10 years.
• Insurance companies will get $12 billion as an incentive to provide service in certain areas of the country.
• Doctors, hospitals and other providers will get billions of dollars in extra payments and providers in rural areas will get an additional $25 billion over 10 years.
• Health maintenance organizations, hospitals and physicians will receive generous government subsidies for treating Medicare beneficiaries.
• Corporations and private businesses will reap $86 billion worth of payments and tax benefits as incentives to maintain their retiree health coverage.

MEDICARE BILL LOSERS

• Millions of seniors whose prescriptions cost between $2,251 and $5,100 per year will have no coverage but still must pay monthly premiums.
• As many as 9 million older Americans will see their drug coverage cut. They include more than 2.6 million people with retiree health coverage, according to the nonpartisan Congressional Budget Office, and people with coverage from state drug assistance and Medicaid programs.
• The employers of millions of public employee retirees will get none of the $16 billion in tax breaks that are part of sweeteners for businesses to maintain coverage.
• For a million seniors who buy drugs in Canada, the bill dropped a provision that would have made such purchases legal.
• More than 6 million "dual eligibles"--enrolled in both Medicaid and Medicare--will be moved to Medicare but may lose essential drug coverage from Medicaid.
• Four million seniors will not qualify for low-income protections because of a restrictive assets test.

WHY AFT OPPOSES THE NEW MEDICARE BILL

• Privatizes Medicare, which would leave seniors at the mercy of private insurers and allow HMOs or PPOs to set premiums and benefits. Private insurers do not guarantee premiums, can drop patients and tailor coverage to attract younger, healthier patients.
• Forces seniors to pay sharply increased premiums to stay in traditional Medicare if they do not move into an HMO or PPO.
• Includes huge gaps in coverage that--coupled with the higher premiums--will increase financial hardships for seniors with multiple health problems who live on fixed incomes. The gaps in coverage will leave half of seniors without drug coverage for part of the year.
• Threatens retiree health coverage by failing to provide adequate incentives for employers to maintain it.
• Does little to bring down the skyrocketing costs of prescription drugs. Zocor, which costs seniors an average of $3.77 per pill, only costs the Veterans Administration 66 cents each. The bill prohibits the Medicare program from using its tremendous purchasing power, much greater than that of the VA, to negotiate lower drug prices.
• Continues the ban on reimporting prescription drugs from Canada unless the U.S. Department of Health and Human Services deems them safe--something HHS refuses to do.

To find out how you will fare under the new prescription drug benefit, visit http://kaisernetwork.org/drugcalculator. For details on the bill, visit www.familiesusa.org.


DEMOCRATS WHO SUPPORTED THE MEDICARE BILL
These 16 House Democrats voted for the Medicare bill: Cramer (Ala.), Dooley (Calif.), Boyd (Fla.), Marshall (Ga.), Scott (Ga.), Alexander (La.), John (La.), Peterson (Minn.), Pomeroy (N.D.), Carson (Okla.), Wu (Ore.), Davis (Tenn.), Hall (Texas), Stenholm (Texas), Matheson (Utah) and Boucher (Va.).

These 11 Senate Democrats voted for the Medicare bill: Baucus (Mon.), Breaux (La.), Carper (Del.), Conrad (N.D.), Dorgan (N.D.), Feinstein (Calif.), Landrieu (La.), Lincoln (Ark.), Miller (Ga.), Nelson (Neb.) and Wyden (Ore.).


REPUBLICANS WHO OPPOSED THE MEDICARE BILL
 These 25 House Republicans voted against the Medicare bill: Flake (Ariz.), Shadegg (Ariz.), Musgrave (Colo.), Tancredo (Colo.), Feeney (Fla.), Miller (Fla.), Norwood (Ga.), Burton (Ind.), Hostettler (Ind.), Pence (Ind.), Moran (Kan.), Ryun (Kan.), Smith (Mich.), Gutknecht (Minn.), Akin (Mo.), Emerson (Mo.), Garrett (N.J.), Jones (N.C.), Chabot (Ohio), Toomey (Pa.), Barrett (S.C.), DeMint (S.C.), Wamp (Tenn.), Culberson (Texas) and Paul (Texas).

These nine Senate Republicans voted against the Medicare bill: Chafee (R.I.), Ensign (Nev.), Graham (S.C.), Gregg (N.H.), Hagel (Neb.), Lott (Miss.), McCain (Ariz.), Nickles (Okla.) and Sununu (N.H.). 


A PERSPECIVE ON THE MEDICARE VOTE

• The popular demand for an essential social need led a right-wing government to provide for that need, even if in a bastardized form.
• Republican leaders justified voting for the benefit by structuring its delivery by private entities without government price-setting. But they got much, much less than they wanted. They were forced to retreat because the AFL-CIO, Alliance for Retired Americans, AFT and others succeeded in making opposition to privatization a central issue in the debate.
• Once the drug benefit kicks in: 
  • The weak benefit will disappoint people, leaving them with large drug costs and creating the demand for more relief. Several polls already show that by a large margin, seniors think the benefits are inadequate.
  • Private insurance plans that deliver drugs will have to raise monthly premiums which are not guaranteed by the new bill.
  • The cost to the federal government--which will be paid in borrowed money due to the tax cuts--will be greater than anticipated, leaving a choice of raising taxes, cutting benefits or controlling drug prices.

In a few years, we will be back where we started, with a public outcry for government relief for an essential human service. And with an opportunity to provide a stark choice--control drug prices and expand the benefit or keep the private plans and cut benefits--a clearer choice than that in the current debate.


A STRATEGY FOR MEDICARE'S FUTURE
Here is a battle plan that the AFT, AFL-CIO and Alliance for Retired Americans will be taking a hard look at.

• Keep the issue of price controls alive by continuing the fight for reimportation and access to Canadian and Western European drugs, attacking drug company price gouging and supporting legislation that permits Medicare to negotiate prices.
• Support legislative efforts to correct the abuses in the new bill.
• Tell our story in the 2004 campaign by backing those U.S. senators and representatives who opposed this handout to drug and insurance companies and supported controlling drug prices and fighting privatization of Medicare.
• Take advantage of the backlash that will occur when the plan is implemented in 2006 and champion a solution that replaces the private, market drug benefit with a publicly provided, price-controlled benefit. This could be a key issue in the 2006 congressional campaign.

HEALTH INSURER, PROVIDER, DRUG COMPANY STOCK PRICES UP SHARPLY
Stock prices for health insurers have increased by an average of 30 percent this year, as odds for passage of the Medicare bill improved. Prices for Humana and PacifiCare Health Systems, two large healthcare corporations, have more than doubled in 2003. In November, stock prices for drug companies Pfizer and GlaxoSmithKline increased by more than 10 percent. Stock prices for Eli Lilly and Johnson & Johnson also have risen in recent weeks. The recent increases in stock prices of drug companies reflect investor confidence that the final Medicare bill would drop a provision making it easier to buy lower-cost, FDA-approved prescription drugs from Canada and other industrialized nations, a measure that would have reduced profits.


HEALTHCARE COMPANIES SPENT RECORD $139 MILLION TO LOBBY CONGRESS
Healthcare companies, led by drugmakers Merck and Eli Lilly, spent a record $139.1 million in the first six months of 2003 to lobby Congress on the Medicare bill. Pharmaceutical companies were the biggest spenders in the healthcare industry in the first half of 2003, according to PoliticalMoneyLine.com, a group that tracks contributions to political campaigns. Goldman Sachs has said the bill would increase drug sales over time by $13 billion a year. The healthcare industry, including doctors and hospitals, spent more money to influence Congress and other policymakers than any other industry group in the six-month period, according to PoliticalMoneyLine.com. Drugmakers led spending on lobbying among healthcare companies, accounting for $37.7 million of the total. Merck led the group, spending $4.4 million in the first half of 2003 compared to $4.7 million in all of 2002. The New Jersey-based drugmaker has 11 staffers and uses eight lobbying firms. Eli Lilly had the second-highest spending, with $2.9 million. Pfizer, the world's largest drugmaker, spent $1.8 million on lobbying. The New York-based company has 10 lobbyists and uses 23 outside firms, including Barbour Griffith & Rogers, the firm founded by Mississippi Republican governor-elect Haley Barbour.


AN AMERICAN-MADE DILEMMA
Joe Smith started the day early, having set his alarm clock (made in Japan) for 6 a.m. While his coffeepot (made in China) was perking, he shaved with his electric razor (made in Hong Kong). He put on a dress shirt (made in Sri Lanka), designer jeans (made in Singapore) and tennis shoes (made in Korea). After cooking his breakfast in his new electric skillet (made in India) he sat down with his calculator (made in Mexico) to see how much he could spend today. After setting his watch (made in Switzerland) to the radio (made in Thailand) he got in his car (made in Germany) and continued his search for a good-paying American job. At the end of yet another fruitless day, Joe decided to relax for a while. He put on his sandals (made in Brazil) poured himself a glass of wine (made in France) and turned on his TV (made in Indonesia), and then wondered why he couldn't find a good-paying job in...America. 


QUOTE OF NOTE: ANOTHER EXPLANATION FOR AARP'S MEDICARE STANCE
"We had to change. We had the boomers coming and you didn't want to be perceived by the boomers as just being for old people."

 --James Parkel
AARP President

WEB SITE OF THE WEEK: www.unionplus.org/HolidaySavings
As the season of giving approaches, it's a good time to practice union values. Look for the union label as you shop for those special gifts for your loved ones, and leave the Gap and other sweatshop-produced products on the shelf. It's the union thing to do.

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Contributors and sources: Bill Cunningham, Richard Kirsch, George Taylor, Inside AFT, Alliance for Retired Americans Friday Alert, Bloomberg News, Medicare Rights Center, Citizen Action New York, USA Today, Washington Post, New York Times, Kaiser Health Policy Report. Frank Stella, editor; Annette Licitra, copy editor; Renee Turner, design.