Published on Thursday, March 25, 2004 by the New York Times
Medicare Official Testifies on Cost Figures
by Robert Pear
WASHINGTON 4 — The chief Medicare actuary, Richard S. Foster, told Congress on Wednesday that last June he provided the White House with data indicating that prescription drug legislation would cost 25 percent to 50 percent more than the Bush administration's public estimates. That information did not make its way to Congress for six more months.
Mr. Foster said he had shared his cost estimates with Doug Badger, the president's special assistant for health policy, and with James C. Capretta, associate director of the White House Office of Management and Budget. But he said that Thomas A. Scully, who was then administrator of the Medicare program, directed him to withhold the information from Congress, citing orders from the White House in one instance.
In testimony before the House Ways and Means Committee, Mr. Foster said he had struggled to preserve the independence and integrity of his office. It was his first public appearance since a furor erupted over his assertions that Mr. Scully threatened to fire him if he disclosed his cost estimates to Congress during debate on the Medicare bill. The law, signed by President Bush in December, adds drug benefits to Medicare and significantly increases federal payments to private health insurers.
Mr. Foster said he had been told to withhold information from lawmakers of both parties. Moreover, he said, Mr. Scully stated that he was "acting under direct White House orders" in telling the actuary not to respond to a request from the chairman of the Ways and Means Committee, Representative Bill Thomas, Republican of California. Mr. Thomas was a principal architect of the Medicare bill.
An aide to Mr. Scully sent an e-mail message to Mr. Foster on June 20 saying that the actuary would suffer "extremely severe" consequences if he provided Congress with information requested by Mr. Thomas and other lawmakers.
Mr. Thomas disclosed on Wednesday that he called Mr. Foster in June to say that the actuary should not worry about such threats.
"I supported you then," Mr. Thomas told Mr. Foster at the hearing. "I support you now."
Mr. Foster said he had evidence that Mr. Scully was indeed acting under instructions from the White House and from Mr. Badger, in particular.
"There's evidence regarding Mr. Scully's comments about acting on direct White House orders," Mr. Foster said. He refused to give details, but said he would provide them to the inspector general at the Department of Health and Human Services, who is conducting an independent investigation.
Trent D. Duffy, a White House spokesman, said Mr. Badger did not remember telling anyone to withhold information from Congress.
Federal law says the chief actuary shall follow "professional standards of actuarial independence" and can be removed from his job "only for cause." But Mr. Foster testified that a lawyer at the department had told him that Mr. Scully had the legal right to prohibit the actuary from sharing information with Congress.
Mr. Foster identified the lawyer as Leslie V. Norwalk, acting deputy administrator of the Centers for Medicare and Medicaid Services. She is leading the administration's effort to carry out the new Medicare law.
William A. Pierce, a spokesman for the department, confirmed Mr. Foster's account of the conversation. "Leslie provided legal advice to Rick Foster, and we agree with her analysis," Mr. Pierce said.
Mr. Foster was calm and even-tempered in his testimony. "I did not especially want to be fired, but I was not afraid of it," he said. Last summer, he said, "I ultimately decided to resign in protest." But he added, "the staff talked me out of that."
Mr. Scully denies threatening Mr. Foster, but confirms having told him to withhold certain information from Congress.
President Bush was urging Congress to create a drug benefit under Medicare, but said the legislation could not cost more than $400 billion over 10 years, and Congress accepted that ceiling.
The shape of the legislation was continually changing, but Mr. Foster said, "The range of our estimates was $500 billion to $600 billion all the way through the process," from June to November.
In their public statements, administration officials cited lower figures. "We are spending $400 billion," Mr. Scully said in a letter to The New York Times published on Nov. 20.
In a report accompanying a 1997 law, Congress said it was imperative for the actuary to provide Congress with impartial cost estimates for legislative proposals. But Mr. Foster said Mr. Scully told him that directive "meant nothing" because it was not in the statute.
At the hearing, Democrats complained that they had been misled. Representative John Tanner, Democrat of Tennessee, said, "Every Republican and Democrat on this committee ought to be outraged at the willful, deliberate, sinister withholding" of information.
Representative Kevin Brady, Republican of Texas, told Mr. Foster, "I wish your information had been made public at the time." But Mr. Brady said the $400 billion figure was an honest estimate from the Congressional Budget Office.
Mr. Foster's testimony emphasized the huge fiscal implications of the new Medicare law. The drug benefit "is expected to increase total Medicare costs by nearly one-fourth in 2006," Mr. Foster said.
Copyright 2004 The New York Times Company