• New Medicare Law Could Be Bonanza for Employers, Hurt Retirees
• FDA Says No to Canadian Drugs
• U.S. Health Spending Hits Record High: $1.6 Trillion
• Former CMS Head Scully Now Drug and Insurance Lobbyist
• Undertrained, Overworked Nurses Can Fall into Medical Errors
• Bush Watch: Nation’s Jobless Recovery Tightens Grip
• Avoiding the Winter Blues
• Magazine Discounts for Great Winter Reading
• Quotes of Note: Medicare Employer Subsidies
• Web Site of the Week: http://www.financinglongtermcare.umn.edu

NEW MEDICARE LAW COULD BE BONANZA FOR EMPLOYERS, HURT RETIREES
Large companies that provide health benefits to retired employees likely will post big earnings gains as a result of the employer-subsidy provision in the new Medicare law, the Wall Street Journal reported Jan. 9. A closer look at the employer subsidy reveals that it may do less to preserve retiree benefits and more to fatten employers' profits. Right now, employers can deduct their contribution to retiree health as a business deduction—a tax benefit that is left unchanged. Under the new law, the federal government will begin to provide additional tax-free subsidies for companies in 2006. These subsidies will cover 28 percent of the cost of prescriptions that exceed $250 for each retiree who does not join the new Medicare prescription plan but remains in the employer's plan. The companies can receive as much as $1,330 for each retiree that year. (The dollar figures will be adjusted in subsequent years to reflect increases in the cost of drugs.) These tax-free subsidies will be significant for companies with large numbers of retirees who qualify for Medicare because prescription drug costs account for a large part of their retiree health benefit costs. But a little-noticed provision in the Medicare law allows companies to collect subsidies based on both employer and employee contributions toward prescription drug costs. Employers will be able to reduce their contributions and shift more costs to retirees without a corresponding reduction in their subsidies, since the total cost of the coverage will remain the same. Retirees will then be expected to pick up the balance. By reducing their contributions to roughly 40 percent to 50 percent of total costs—equal to the subsidy plus tax deductions—private employers will be able to offer nominal drug benefits for free. By further slashing contributions and shifting more costs to retirees, corporations can pocket subsidy dollars as profit, according to the Journal. Benefits consultants have begun to develop employer-sponsored prescription drug coverage plans that will allow companies to shift more of the cost to retirees.

"This is just another sweetheart deal that slipped through when the vote was taken," said Bill Cunningham, AFT's associate director of federal legislation. "It casts a whole new light on the Republican leadership's decision to ram a 1,000-page bill through Congress in just a few days. As more and more seniors come to understand what’s in this law, they're going to like it less and less." Cunningham vowed that the AFT will target eliminating this glaring giveaway to employers at the expense of retirees as one of its top priorities. 


FDA SAYS NO TO CANADIAN DRUGS
On Dec. 24, U.S. Food and Drug Administration pharmacy affairs director Tom McGinnis said that a safe, legal program to reimport lower-cost, U.S.-manufactured prescription drugs from Canada would likely cost hundreds of millions of dollars. He added that the FDA would never rely on Canadian inspections of prescription drugs to determine their safety. McGinnis said, "We've never accepted inspection results from another country. [A reimportation program] is just not going to work." Health Canada spokesperson Emmanuel Chabot defended the safety of the Canadian inspection system, saying "We conduct regulatory reviews of drugs to ensure there is sufficient evidence of safety, efficacy and quality before they receive authorization to be sold in Canada." In recent months, a number of state and local governments have asked the federal government to allow them to import prescription drugs from Canada. More than 12 states--including Iowa, Illinois, Minnesota and New Hampshire--have considered or plan to implement reimportation programs. Kevin Concannon, director of the Iowa Department of Human Services, said "There's more protection of pharmaceutical manufacturers than there is of patients." The U.S. demand for prescription drugs from Canada has exploded because of high domestic medication costs and a lack of adequate prescription drug coverage among residents. As a result, pharmaceutical companies such as AstraZeneca, Pfizer Canada, GlaxoSmithKline, Eli Lilly and Bayer have limited supplies to Canada or raised the prices of their products in Canada to limit sales from Canadian pharmacies to U.S. residents. The new Medicare law only permits imports if the secretary of Health and Human Services certifies them as safe. 


U.S. HEALTH SPENDING HITS RECORD HIGH: $1.6 TRILLION
U.S. healthcare spending reached the $1.6 trillion mark in 2002, an increase from $1.4 trillion in 2001, according to a report issued Jan. 8 by the Centers for Medicare and Medicaid Services. Health spending now accounts for nearly 15 percent of the nation's economy, the largest share on record. CMS said about 45 percent of total spending came from public sources (federal, state and local). About 32 percent of the overall expenditure came from the federal government. For 2002, Medicaid funded 16 percent of aggregate spending; Medicare, 17 percent. Private health insurance contributed 35 percent of the total. Out-of-pocket payments by individuals accounted for 14 percent of total expenditures. More than half of that increase came from the rise in spending for prescription drugs. The overall growth rate was 9.3 percent, the largest increase in 11 years. Health expenditures per person averaged $5,440 in 2002, up from the 2001 average per person of $5,021. Prescription drug costs continued to rise in 2002, jumping 15.3 percent. Hospital spending increased in 2002 by 9.5 percent. Spending for physician services grew by 7.7 percent. Healthcare spending in 2002 grew 5.7 percentage points faster than the overall economy. Even though more than 43 million Americans are uninsured, the United States devotes a larger share of its economy to healthcare than any other industrial country.

More info: http://content.healthaffairs.org/cgi/content/abstract/23
/1/147. 


FORMER CMS HEAD SCULLY NOW DRUG AND INSURANCE LOBBYIST
Tom Scully, who resigned last month as administrator of the Centers for Medicare and Medicaid Services, has accepted a position with an Atlanta-based law firm, Alston & Bird, which represents hospitals, pharmaceutical companies and other healthcare companies and is registered to lobby Congress on behalf of Johnson & Johnson and the National Association for Home Care. Scully, who will work in the firm's D. C. office, headed CMS for three years and helped draft the Medicare law.

 
UNDERTRAINED, OVERWORKED NURSES CAN LEAD TO MEDICAL ERRORS
Nurses' long hours, insufficient training and overload of paperwork often contribute to medical errors that cause preventable deaths and injuries, according to a report released late last year by the Institute of Medicine of the National Academies. The 327-page report, "Keeping Patients Safe: Transforming the Work Environment of Nurses," examines nursing staffing at hospitals, nursing homes and other environments amid a nationwide nursing shortage. It offers a series of recommendations for nursing reform, including:

• Prohibiting nurses from working more than 12 hours during a 24-hour period or more than 60 hours a week;
• Stepped-up staffing levels: one licensed nurse on duty for every two patients in intensive care wards and one registered nurse for every 32 patients and one nursing assistant for every 8.5 patients in nursing homes;
• Limiting the number of temporary nurses allowed on staff because some studies found that temporary workers contribute to higher rates of medical errors;
• More training for nurses throughout their careers; and
• Allowing nurses to halt admissions when they believe staffing levels are too low.

AFT Healthcare has long sought many of these measures, and a bill limiting overtime, strongly supported by the AFT there, has passed the New Jersey legislature. State healthcare affiliates intend to introduce legislation this year limiting the number of patients per nurse in New York, New Jersey and Wisconsin. The AFT is backing a similar federal bill, which is likely to be introduced this winter. 


BUSH WATCH: NATION'S JOBLESS RECOVERY TIGHTENS GRIP
U.S. job growth ground to a standstill in December, confounding both the Bush administration and congressional conservatives who have repeatedly pushed tax cut packages as a way to create employment. The actual numbers the U.S. Department of Labor announced on Jan. 9 fell 149,000 new jobs short of the150,000-prediction. The anemic gain of 1,000 jobs in December was overshadowed by continued losses in the high-paying manufacturing sector and in government jobs. The news came as an embarrassing surprise to the Bush administration and more pain for the nation, which enters 2004 with 2.5 million fewer jobs than when the president took office. Last year, the administration won more than $750 billion in tax cuts that it claimed would create 1.4 million additional jobs by the end of 2004, with 510,000 of them coming by the end of 2003. As of November, the "jobs and growth" plan trailed its target by more than 1.2 million jobs. The unemployment rate fell in December only "because of a huge decline in the labor force," says Lee Price, research director for the Economic Policy Institute. He also notes that the average duration of unemployment stands at more than 19 weeks, the highest since 1983, and highlights the failure of President Bush and Congress to extend unemployment benefits for American workers.

AVOIDING THE WINTER BLUES
Winter can be a tough time for everyone, particularly older people. But there are some things you can do to help elderly or ailing relatives get through winter reasonably active and mentally healthy.

• Keep drives and walkways shoveled and free of ice. You can hire someone to clear driveways and walks, but many communities offer free driveway-plowing services to senior citizens.
  
• Find out about heating bill assistance. If getting bills paid is a worry, find out if you or your loved one is eligible for an energy assistance program.
  
• Change furnace filters. For maximum efficiency, this may need to be done as often as once a month.
  
• Keep up social commitments, if possible. Continue to arrange rides to church, mosque or synagogue, the senior center or other activities.
  
• Don't forget group meals. Many communities offer group meals for seniors. There might be a senior center in town, or the hot meals might be served at a community center. The opportunity to visit with others can provide a needed break in a seemingly long day.
  
• Prepare and share a meal. You might like to enjoy a quiet meal together. Or if a neighbor offers to bring a casserole, suggest she stay and have a meal with your loved one.
  
• Buy and fill a birdfeeder. Some birdfeeders attach directly to a window, so your loved one can easily see the ongoing show the cardinals and chickadees provide.
  
• Offer to pick up and return books and videos. Your local public library may even have a delivery service for homebound people.
  
• Send a letter. Even long-distance caregivers can bring some light into a dark day. Make a point to send a note or letter, especially in the winter.

You can get more ideas from the Family Caregiver's Support Program by calling toll-free, 866/432-4324. This nationwide free service can give personal assistance to caregivers whatever the season. The Eldercare Locator Service will help you find your local Area Agency on Aging. Phone toll-free, 800/677-1116. Your agency will have information on services available to the elderly, such as meals, driveway or walk-clearing, assistance with heating bills and respite care.

 
MAGAZINE DISCOUNTS FOR GREAT WINTER READING
Do you want to save money on subscriptions to your favorite magazines? AFT PLUS can help. As an AFT retired member, you are entitled to magazine discounts through the AFT PLUS Subscription Services program. Save up to 50 percent on your favorite magazines and on gift subscriptions for your friends and family. Choose from more than 1,000 titles including Bon Appetit, Golf Digest, Good Housekeeping, Newsweek, Prevention and Sports Illustrated. Call 800/877-7238 to order, check a rate or obtain a current listing of publications. 

 
QUOTES OF NOTE: MEDICARE EMPLOYER SUBSIDIES
"It is unconscionable for companies to receive billions of dollars in corporate welfare courtesy of the American taxpayer by slashing prescription drug coverage and retiree health benefits."

--U.S. Rep. Bernie Sanders (I-Vt.)

“If there's a Medicare reform bill signed by me, corporations have no intention to dump retirees [from their existing drug coverage]....What we're talking about is trust.”

--President George W. Bush

WEB SITE OF THE WEEK: www.financinglongtermcare.umn.edu
A new educational resource for consumers, developed by a professor at the University of Minnesota, is now online providing up-to-date information on long-term care risks, costs and financing alternatives. "Financing Long Term Care: A Resource Center for Families" offers a variety of decision-making tools such as interactive planning and assessment tools, fact sheets, myths and facts, conversation starters and an online self-study.

Contributors and sources: Bill Cunningham, Shantel Edmonds , Inside AFT, Alliance for Retired Americans Friday Alert, Medicare Rights Center, New York Times, Wall Street Journal, Associated Press, Richmond Times-Dispatch, Baltimore Sun, Washington Times, Detroit Free Press, Hartford Courant, Caregivers USA Newsletter, AoA Electronic Newsletter e-News, BNA Health Policy Report, Kaiser Health Policy Report. Frank Stella, editor; Annette Licitra, copyeditor; Renee Turner, design.