• Added Medicare Costs Put FY 05 Budget Deficit Over $500 Billion
• Democrats To Introduce Bills To End Medicare HMO Payments
• Thomas Says Employee Contributions Won't Count Toward Employer Subsidy
• PhRMA Offers Tauzin Some Golden Years
• UUP Sues Express Scripts for Inflating Drug Prices
• AFT Activist Leads Arizona Alliance
• President Turns Aside Centerpiece of AARP 2004 Agenda
• More Bad News for Private-Sector Retirees
• AFL-CIO Says, 'Don't Buy at Safeway'
• Anti-Aging Beer
• Discount Flower Service for AFT Members
• Quote of Note: The 30% Increase in Medicare Costs
• Web site of the Week: How Much Will You Pay for Drugs Under Part D?

ADDED MEDICARE COSTS PUT FY 05 BUDGET DEFICIT OVER $500 BILLION
A 30 percent underestimate of the costs of the recently enacted prescription drug program and Medicare overhaul will push the federal deficit over $500 billion for this year, congressional aides say. When President Bush signed the legislation on Dec. 8, the Congressional Budget Office said it would cost $395 billion in the decade from 2004 to 2013. On Jan. 29, the White House put the cost at $534 billion. The president was mum on the increase when he signed the Medicare measure into law. While it was moving through Congress, Bush, White House officials and congressional Republican leaders assured doubting conservatives that the bill's costs would stay within the $400 billion estimate. Bush's new budget also pegs this year's budget deficit at about $520 billion, far surpassing last year's $375 billion shortfall, the highest deficit ever. The president's budget does not include the costs of the Iraq war or the costs of reducing the alternative minimum tax, estimated at $162 billion in lost revenue over five years. Budget analysts say the administration's five-year goal, which sees the deficit being cut in half by 2010, glosses over the much bigger fiscal gap that looms over the next 10 years. Conservative Republicans say the new estimate confirms their worst fears, while Democrats say it vindicates their view that the Medicare law gave far too much money to drug manufacturers and insurance companies. "The new cost estimate is sure to put the issue right back on the table," says Ed Coyle, executive director of the Alliance for Retired Americans. "This gives the Alliance and its allies more time to make our concerns about this flawed bill known before the 2004 election." 


DEMOCRATS TO INTRODUCE BILLS TO END MEDICARE HMO PAYMENTS
Senate Democratic leader Thomas Daschle (S.D.) and House Democratic leader Rep. Nancy Pelosi (Calif.) announced plans Jan. 28 to introduce legislation to eliminate $12 billion in special Medicare payments to HMOs. Earlier, the Centers for Medicare and Medicaid Services announced that Medicare would increase reimbursement rates for HMOs by an average of 10.6 percent this March 1. The record increase--about five times larger than those in recent years--results from a change in the Medicare reimbursement formula mandated by the new law. The Democratic leaders also said they plan to introduce measures to repeal the ban on Medicare negotiating lower drug prices. Rep. Pete Stark (D-Calif.), ranking member of the House Ways and Means Health Subcommittee, released a study finding that, according to estimates from the Congressional Budget Office, by 2010, the amount beneficiaries must spend before catastrophic drug coverage begins could increase from $3,600 to more than $5,000, and catastrophic coverage might not begin until beneficiaries spend more than $9,000 out-of-pocket on drugs that year. 


THOMAS SAYS EMPLOYEE CONTRIBUTIONS WON'T COUNT TOWARD EMPLOYER SUBSIDY
House Ways and Means Committee chair Bill Thomas (R-Calif.) denies that employers will be able to exploit a technicality in the new Medicare law to pass more healthcare costs on to retirees while still receiving subsidies for providing retiree health coverage. In a recent letter to HHS secretary Tommy Thompson, Thomas wrote that allegations that "employers are entitled to the subsidy regardless of how much cost-sharing they require their retirees to pick up--is not supported by the legislative language in the statute or congressional intent." The Wall Street Journal had earlier reported that employers could count retiree contributions toward their subsidy. "This latest flap is just another indication of how complicated this law actually is," says Bill Cunningham, AFT associate director of federal legislation, "and what happens when you ram a complex bill through Congress with no time for members to analyze what's in it. There are going to be more unpleasant surprises in this law down the road."

PhRMA OFFERS TAUZIN SOME GOLDEN YEARS
U.S. Rep. W. J. "Billy" Tauzin (R-La.), who spent most of the past year shepherding the Medicare bill through the House, may be the latest Republican to move into the private sector. Tauzin was rumored to be poised to accept a highly paid position as president of the Pharmaceutical Research and Manufacturers of America (PhRMA), the trade association for the drug industry. But he backed off when word of the offer became public. On Feb. 3, Tauzin announced his resignation from the House, effective Feb. 16. He can't legally lobby Congress for a year, but he'll be free to lobby the White House as soon as he assumes his new position. The job offer is rumored to be worth $2.5 million, likely the largest compensation package on record for anyone at a trade association. Washington watchdog group Public Citizen has called for an investigation into whether he broke House ethics rules.Moving on now is John McManus, staff director of the House Ways and Means health subcommittee. McManus is setting up his own consulting office, specializing in health and Medicare issues. Others who have either jumped ship or announced plans to do so include: Tommy Thompson, secretary of Health and Human Services; Thomas Scully, administrator of the Centers for Medicare and Medicaid Services; and Thomas Grisson, director of the Center for Medicare Management.

UUP SUES EXPRESS SCRIPTS FOR INFLATING DRUG PRICES
AFT affiliate United University Professions and the Organization of New York State Management Confidential Employees have filed a lawsuit against St. Louis-based pharmacy benefit manager (PBM) Express Scripts. UUP, which represents some 28,000 state university faculty and professionals in New York, filed suit on Dec. 31 in state Supreme Court in New York City, charging that Express Scripts withheld rebates from customers and accepted payments from pharmaceutical companies to recommend higher-priced medications. PBMs negotiate reduced prices on prescription drugs for their customers, and the companies often receive rebates from pharmaceutical firms based on sales volume. The suit seeks both monetary and punitive damages. Express Scripts provides 1.1 million current and retired state employees with pharmacy benefit management under a contract that ends in 2005. "Our members are being shortchanged, and the taxpayers of New York state are being shortchanged," said UUP president Bill Scheuerman.

 
AFT ACTIVIST LEADS ARIZONA ALLIANCE
Luisa Kaufman, a retired UFT activist living in Arizona, was elected first president of the Arizona Alliance for Retired Americans. More than 100 senior leaders attended the founding convention in Phoenix Jan. 14-15. A former special education teacher, Kaufman is an artist and jewelry maker as well as a civic activist. An activist in UFT's Arizona retiree chapter, the New York City transplant first came to prominence during a demonstration on the Medicare prescription drug bill last year at Sen. Jon Kyl's office in Phoenix. Kyl's staff, unfamiliar with peaceful opposition, had Kaufman and four other activists arrested for trespassing when they demanded a meeting on the bill with the senator, who was one of the Republican conferees. Kaufman is joined on the Arizona Alliance board by Tom Bean, a retired elementary teacher from Eloy who serves on the executive board of the Arizona Federation of Teachers. Other Alliance state presidents include former NYSUT secretary-treasurer and AFT vice president Fred Nauman (New York) and former Wisconsin Federation of Teachers president Carston Koeller (Wisconsin).

 
PRESIDENT TURNS ASIDE CENTERPIECE OF AARP 2004 AGENDA
President Bush rejected AARP's principal agenda item in his recent State of the Union message, vowing that he would accept no changes in the new Medicare law. Just days earlier, in announcing its legislative agenda for 2004, AARP urged changing the new law to allow the federal government to negotiate directly with pharmaceutical companies for lower prescription drug prices for beneficiaries. AARP CEO Bill Novelli led AARP’s support for the new law based on the premise of passing and fixing it. AARP's Medicare agenda also includes allowing U.S. residents to purchase prescription drugs from Canada and calls for Congress to endorse AARP's prescription drug discount card. Following the president's address, AARP legislative director John Rother said that the group had abandoned plans to change the law this year. AARP acknowledges the resignation of 45,000 to 49,000 members because it endorsed the Medicare legislation.

MORE BAD NEWS FOR PRIVATE-SECTOR RETIREES
Retirees who get healthcare benefits from large corporations can expect their costs to increase substantially over the next three years, according to a new report by the Kaiser Family Foundation and Hewitt Associates. The survey, "Retiree Health Benefits Now and in the Future," was conducted before the new Medicare bill passed and released Jan. 15. It includes responses from 408 of the largest U.S. companies, each with 1,000 employees or more. Highlights include:

• 86 percent of employers say they expect to increase retiree premium contributions in the next three years.
• 71 percent increased retiree premium contributions in the past year.
• 20 percent say they are likely to eliminate retiree coverage for future retirees in the next three years.
• 10 percent say they eliminated benefits for future retirees in the past year.

Overall, 38 percent of companies offered retiree health care plans in 2003, down from 66 percent in 1988, according to Kaiser and the Health Research and Educational Trust. The survey notes that the changes mainly affect current workers or new hires, rather than current retirees.

 
AFL-CIO SAYS, 'DON'T BUY AT SAFEWAY'
Since mid-October, 70,000 grocery workers have stayed on the picket lines in Southern California, trying to hold the line on healthcare and good jobs in the supermarket industry. They're on strike or have been locked out by their employers, including Safeway-owned Vons, Kroger-owned Ralphs and Albertsons, for nearly four months. The AFL-CIO is asking you not shop at Safeway during the strike. The striking grocery workers are seeking your help because the company that owns Safeway has consistently refused to negotiate a reasonable contract. The grocery chains are demanding that the workers accept what amounts to a 75 percent cut in health coverage for new workers and a 50 percent cut for current employees. More info: http://www.unionvoice.org/ct/M7zeeVM1Fdtw/


ANTI-AGING BEER
A German brewery in Neuzelle claims to have produced the first anti-aging beer of the world. They've used water from a hot spring, algae, vitamins and minerals, etc. Of course, as with other peddlers of anti-aging remedies, they don't provide proof that their product actually works (customers may have to wait 120 years to find out for themselves.) In addition, the company's Web site promotion concludes with these words of caution: "Please be advised, that our anti-aging beer contains alcohol (4.8%)." More info: http://www.anti-aging-beer.com/index.htm. 


DISCOUNT FLOWER SERVICE FOR AFT MEMBERS
Valentine's Day is fast approaching. Remember the Union Member Flower Service, which offers AFT members a 15 percent discount on every order (minimum order $34.99). Selections include plants, floral arrangements and gift baskets. To make your selection online, go to http://www.unionplus.org/flowers or call the toll-free number, 888/667-7779. 


QUOTE OF NOTE: The 30% Increase in Medicare Costs
"I'm not the least bit surprised [about the nearly one-third increase in the cost of the new Medicare law]. Historically, our estimates of what these programs will cost have been so far off as to be meaningless."

 --U.S. Rep. John Shadegg (R-Ariz.)

WEB SITE OF THE WEEK: How Much Will You Pay for Drugs Under Medicare Part D?
Families USA (www.familiesusa.org), the healthcare advocacy group, has a nifty calculator that tells you how much you'll pay in 2006, when Part D goes into effect, and in 2013 the final year of the law’s projected costs. All you have to do is enter your estimated drug costs for 2003. It's a real eye-opener.