Politics & Policy

Cover-Up Costs

The Bush administration may have broken the law on Medicare.

Recently revealed federal documents show that the Bush administration estimated last year that the new Medicare prescription-drug benefit could cost almost $600 billion, more than half again as much as it publicly predicted at the time. Even worse, the nonpartisan Congressional Research Service has concluded that administration efforts to conceal this and other unflattering cost forecasts of the proposal while it was debated “appear to violate a specific and express prohibition of federal law.”

Medicare’s chief actuary, Richard S. Foster, recalls sharing figures on the drug plan with his former boss, Thomas Scully, Medicare’s then-administrator. Last November, Foster’s numbers far exceeded the $395 billion, ten-year cost at which the Congressional Budget Office appraised the drug bill. Foster says Scully replied: “We can’t let that get out.”

Scully’s alleged comment epitomized the Bush administration’s evident desire to keep Congress and taxpayers ignorant of figures that showed this already controversial legislation might cost far more than CBO’s $395 billion valuation that the administration publicly touted. Fiscally responsible members of Congress, mainly Republicans, had little interest in a brand-new entitlement with a price tag higher than the $400 billion reserved for it in last year’s federal budget.

A page of one Foster estimate was faxed anonymously to Cybele Bjorklund, a Democratic Ways and Means health-policy analyst on January 30. It showed that Medicare’s Office of the Chief Actuary believed on June 11, 2003, that the drug benefit would cost $551.5 billion between 2004 and 2013. That figure outpaced CBO’s consensus number by 39.6 percent.

But on an additional page of that projection–pried from the bureaucracy by the legal advocacy group Judicial Watch–Foster added $48 billion for the Medicare Advantage program. This item brought the 10-year cost of the Senate’s drug bill to a whopping $599.5 billion. This was a full 51.8-percent higher than CBO calculated.

Had market-oriented congressmen, policy analysts, and pundits seen this sum, this entire project would have died more suddenly than HillaryCare. So, the Bush administration got busy suppressing these numbers.

According to Foster, when members of Congress and their staffers requested his drug-benefit cost estimates, Scully threatened to sack him if he complied.

“I felt a very strong responsibility on behalf of the public not to withhold technical information that could be useful in this debate,” Foster testified before the House Ways and Means Committee on March 24. “I had a difficult choice,” he added. “I could ignore the orders. I knew I would get fired…I considered that inappropriate and, in fact, unethical.”

Scully’s administrative assistant pressured Foster even further. In an e-mail the Wall Street Journal published March 18, Jeffrey Flick told Foster: “Work up the numbers and share them with Tom Scully only. NO ONE ELSE.” He continued in bold face: “The consequences for insubordination are extremely severe.”

The Bush administration may have shared its secret, higher estimates with selected senior Republicans who supported the drug benefit.

“[A]bsolutely, we knew about these numbers,” Ways and Means member Rep. Nancy Johnson (R., Conn.) said in the March 18 New York Times. On January 29, the White House stunned taxpayers by predicting that the enacted drug benefit officially would cost $534 billion, not CBO’s widely heralded $395 billion.

“I’m not surprised,” Ways and Means chairman Bill Thomas (R., Calif.) said. “I knew this would cost more.”

In a February 3 letter, top House Democrats told Secretary Thompson, “While we have no knowledge of what you communicated to Republican staff, we can say categorically that this information was not communicated to us or our staff.”

This shifty and dishonest behavior now also looks criminal.

An April 26 Congressional Research Service memorandum determined that the Bush Administration’s cover-up of Foster’s estimates may have violated at least five federal laws:

1) 5 U.S.C. § 7211 (Lloyd-LaFollette Act, 1912; Treasury and General Government Appropriations, 2003)

As Lloyd-LaFollette, the Congressional Right to Know Act, reads: “The right of employees, individually or collectively, to petition Congress or a Member of Congress, or to furnish information to either House of Congress, or to a committee or Member thereof, may not be interfered with or denied.”

2) 5 U.S.C. § 2302(b)(8) (Whistleblower Protection Act).

As the law clearly states: “This subsection shall not be construed to authorize the withholding of information from the Congress or the taking of any personnel action against an employee who discloses information to the Congress.”

The CRS paper, by Legislative Attorney Jack Maskell, amplifies this point: “[E]xecutive agencies and their officers do not have the right to prevent or prohibit their officers or employees, either individually or in association, from presenting information to the United States Congress, its Members or committees, concerning relevant public policy issues.”

3) 18 U.S.C. § 1001 (False Statements).

CRS explains: “In addition to criminalizing the giving of knowingly false information to the committees or offices of Congress, the statute also makes criminal the affirmative act of withholding by a ’scheme, trick or device’ from such entities, pursuant to such investigation or review, material information which one has an obligation to provide.”

4) 18 U.S.C. § 1505 (obstructing a congressional inquiry).

According to CRS: “[A]ctions which purposefully result in the transmission of knowingly false information to the United States Congress, and actions involving the intentional and active prevention of the communication of accurate information to the Congress and derogation of federal law or responsibilities, might in certain circumstances involve activities which constitute violations of federal criminal provisions.”

5) 42 USC § 1317 [H. Conf. Rpt. 105 – 217, 105th Cong., 1st Sess. 837 (1997)]

As CRS puts it: “Specifically, the position of Chief Actuary itself has been intentionally given a degree of independence from direct executive control by providing in law for removal only ‘for cause,’ and by requiring in law that the Actuary exercise ‘professional standards of actuarial independence’ in carrying out his functions.”

The Bush administration clearly trampled congressional prerogatives like a herd of elephants stampeding through a Zulu village. Nevertheless, congressional Republicans, to their discredit, appear to be stonewalling this matter.

The House Ways and Means Committee met April 1 to delve into this mess. Scully refused to appear. So did White House economic aide, Doug Badger, invoking executive privilege. Committee Republicans, who claimed back then that no laws had been broken, blocked Democratic efforts to subpoena Scully and Badger. Likewise, GOP committee members quashed a Democratic bid to require Scully aide Jeffrey Flick and Medicare attorney Leslie Norwalk, who did attend, to testify under oath. Not surprisingly, digging with spoons rather than shovels didn’t get them very far.

Frustrated that their requests for Foster’s other estimates and related documents have prompted Bush administration foot dragging, at best, all 19 Democrats on the House Government Reform Committee sued the administration in federal court May 17 to compel the release of these data. The plaintiffs cite the 1928 “Seven Member Rule” which entitles any seven members of that panel to executive branch information. So far, the administration has ignored a March 2 “Seven Member” request signed by the Government Reform 19.

Thus far, the only Republican who seems disturbed by all this is Nebraska Senator Chuck Hagel. In a March 16 letter to Health and Human Services Secretary Tommy Thompson, Hagel writes: “If your agency possessed higher cost estimates, those estimates should have been disclosed for full discussion and debate. Estimates by the CMS Chief Actuary are not binding on Congress, but the figures would have been helpful during the debate and should have been released.”

In the letter that Judicial Watch extracted from HHS on April 19, Hagel directly asks Thompson: “What do you know about the threat of termination and withholding from Congress that is alleged by Mr. Foster?”

Ten weeks later, Hagel still has not received a reply from Thompson.

So where should this scandal go next?

‐Tom Scully and Doug Badger should be subpoenaed to appear before the House Ways and Means Committee and the Senate Finance Committee. They should identify their supervisors–all the way up their respective chains of command–who knew about Foster’s estimates and the efforts to conceal them from the American people and their elected representatives.

‐Scully and other witnesses should testify under oath. Medicare staffers Jeffrey Flick and Leslie Norwalk should be brought back to Ways and Means, this time to deliver sworn testimony.

‐HHS Secretary Tommy Thompson also should be summoned to Capitol Hill to explain what he knew, when, and if he discussed any of this with President Bush.

Ways and Means Chairman Bill Thomas himself indicated he would pursue Administration officials if evidence arose of illegality. “If there was a violation of the law,” he told his committee April 1, “the chair stands ready to use whatever tool is necessary to get to the bottom of the violation of the law.”

‐Rank-and-file GOP House and Senate members should caucus with their leaders to determine whether senior Republicans hoodwinked them into voting for the drug benefit on false pretenses. If members of the drug-benefit conference committee and/or Republican floor leaders received and failed to share the Administration’s higher estimates, party backbenchers should remove these untrustworthy colleagues and replace them with others who will not lie to them.

‐The United States Department of Justice should conduct a criminal investigation to determine if members of the Bush administration violated any or all of the five federal laws cited above, or additional statutes. Anyone who fooled Congress into buying a brand-new, $534 billion entitlement by pretending it only had a $395-billion price tag should be prosecuted and, if convicted, sentenced to a federal penitentiary for the maximum allowable term.

Democrats complain most loudly about this outrage. Republicans, conservatives, and libertarians, however, should be at least as furious that federal bureaucrats in a GOP administration used coercion and lies to engineer a $534 billion expansion of the welfare state.

Deroy Murdock is a Manhattan-based Fox News contributor, a contributor to National Review Online, and a senior fellow with the London Center for Policy Research.


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