Questionable Activities During and After Medicare Prescription Drug Legislation
Floor Speech
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Mr. PALLONE. Mr. Speaker, I yield to the gentlewoman from Illinois (Ms. Schakowsky).
Ms. SCHAKOWSKY. Mr. Speaker, I thank both gentlemen for their vivid description on what is wrong with the so-called Medicare bill that passed, the nonprescription drug benefit bill that passed the House, but I want to tell Members my reaction to the chairman talking about now and very seriously looking at going to work for the pharmaceutical companies and how the Medicare administrator is going to benefit. I feel that very personally and very deeply, for this reason. This kind of breach of trust is something that really affects me because it confirms the worst nightmares of the public about what we as Members of Congress do here.
I think all too many people have this view that Members of Congress come here and they try and line their own pockets for their own benefit, working with special interests. And then what they find is the smoking gun, a guy like the chairman of the Committee on Energy and Commerce, on which the gentleman and I both sit, taking a job and saying he is going to negotiate a job with the pharmaceutical industry, PhRMA, the lobbying organization. He has announced he is going to give up his chairmanship on February 16 and not run again, and that he is looking at this offer. We know he has turned down a million dollar offer already from another organization. We have heard it is between $2 million and $3 million, and go to work for PhRMA, the very industry that stands now to benefit the most from this so-called senior citizen prescription drug benefit.
The good news is that the seniors get how bad this bill is. But what I fear that they do not get is that there are Members of Congress who are sincere about trying to provide a real benefit to them and think that all that we are doing here is trying to line our own pockets, trying to rig the system so it helps the pharmaceutical companies, so it helps the HMOs, and that is pretty much what they have seen.
This bill is about an estimated $140 billion windfall for the drug companies, $140 billion windfall for the drug companies, because it is prohibited now from trying to negotiate. Like the Veterans Administration, we do not have to look far to see where an agency negotiates for lower prices. The Veterans Administration gets for veterans sometimes half the cost that other Americans pay when they go to the pharmacy, and about half the cost we are going to have to pay for under this bill because there will be no negotiation.
The Washington Post had an editorial on January 29 that said for the gentleman from Louisiana (Mr. Tauzin) to leave so soon afterward to work for the pharmaceutical association whose companies reaped substantial benefits from that bill provides a particularly pungent example of how quickly the "revolving door" between Congress and K Street is now revolving, and how lucrative this game has become for its participants.
The only thing I would disagree with, this is not about a revolving door, this is about a locked door. This was happening while the gentleman from Louisiana (Mr. Tauzin) is still in the Congress and still chairman of the Committee on Energy and Commerce. This is about a locked door where he kept out the gentleman from Michigan (Mr. Dingell), the ranking member on his committee, who was here when Medicare was passed in 1965, an expert on the subject, locked out of the conference committee.
I hope the public understands how extraordinary that is for the appointed members of a conference committee to be locked out of the process.
Also locked out, the gentleman from New York (Mr. Rangel), the ranking member on the Committee on Ways and Means. And let us be clear, when the gentleman from New York (Mr. Rangel) got locked out, it meant that the only possible representative of people of color in this country who have a lot at stake in this issue, were also locked out of that conference committee, which is now an all-white committee, I guess. We do not know. Who knows who they invited in from the pharmaceutical industry or the HMOs because the leading Democrats in the House of Representatives were locked out of that process.
And coming out of that locked door is, number one, a bill that is just a payoff to the HMOs and the pharmaceutical companies; and what comes out of that committee are job offers, big job offers. So what we have is now the gentleman from Louisiana (Mr. Tauzin) we think getting between $2-3 million, which is actually a pretty good deal for the pharmaceutical industry which stands to gain $140 billion. That is not too bad a deal to get a clever man like the gentleman from Louisiana (Mr. Tauzin).
They also got a guy named Tom Scully who was the Medicare administrator, the guy behind the scenes, who as a staffer helped write the bill and negotiate the whole bill. Where has Mr. Scully gone? Mr. Scully has gone to be a top health care lobbyist for the Washington firm of Alston & Bird. While serving as President Bush's director of Medicare and helping to craft the Medicare deal, Scully was actively negotiating with the lobbying firm. Recognizing the conflict of interest, the Bush administration granted Scully a special waiver to negotiate with the lobbying firm while serving in the Bush administration.
Here he is, he is with Medicare, he is the head man, he wants to look for another job, and Health and Human Services grants him a waiver while he is working on the Medicare bill to start negotiating for his next job. A waiver. Well, there was such an uproar over that, now they have said agencies cannot do that, only the White House can grant those sorts of waivers. So Scully is out the door.
Then there is the top aide on the Committee on Ways and Means, John McManus, who was negotiating this bill as well. He left and he is going to have a job outside helping him make some money from the pharmaceutical industry. Here is what he said. "We accomplished what we set out to do. Helping people figure out how this gets implemented, that is what is interesting to me." Who are the people is he talking about that he wants to help figure it out? Is he going to help the seniors? I have not heard that he is going to go work for a senior citizen organization.
Mr. PALLONE. Mr. Speaker, the amazing thing to me, the fact that the White House, I guess because of the public pressure, because of people speaking out about what Scully did, are now saying that the department cannot grant the waiver, but the White House can. It seems to me the goal should be that there not be any waivers at all. Under what the Bush administration is now saying, they can still grant another waiver to somebody else to negotiate a bill, and then go work for the very company that they were negotiating with. I cannot believe that they said no more waivers by the department, but we can still grant the waiver.
Ms. SCHAKOWSKY. Mr. Speaker, the words that we want to come out of their mouths is that there will not be any more waivers, and that seeking a job in the private sector, particularly with an industry that you are now regulating in a sense or making decisions about, is not right. It is not right. It smells. People know that. They do not like it. This is why the public loses faith in government, and that is why I feel so strongly about it.
Mr. PALLONE. Mr. Speaker, that is exactly why the ethics law says you cannot do it, it is wrong. So why should any waivers be granted? And there is no basis for the waiver. I asked in the case of Scully why and if there were any special circumstances, and the answer was there was nothing of that nature, they just granted the waiver.
Ms. SCHAKOWSKY. Mr. Speaker, there are some aspects of revolving door that apply here, although I still believe that was about a locked door. These individuals were servants of the public while they are negotiating or figuring out their next move with the pharmaceutical industry. But we have got the door going the other way, too. We have a situation where an HMO lobbyist turns up as a Bush Medicare official. A woman named Julie Goon was just hired by the Bush administration. She is the former vice president of legislative affairs for an HMO trade association in Washington, and she is now the new Director of Medicare Outreach. Congress Daily reported that Goon will be in charge of "getting the word out to seniors, health care professionals, consumer groups and others about how the program works, HHS' progress in implementing it and what its impact on them will be, and for apprising the department of their reaction."
Before she got this job, Goon was named one of Washington's top lobbyists in Washington in 2002. Now she is head of explaining this Medicare bill and why it is such a great deal as Director of Medicare Outreach.
Mr. PALLONE. Mr. Speaker, the gentlewoman probably remembers within the last week or two that the President announced that he was significantly increasing the reimbursement for HMOs. The reason that was given was because so many of the HMOs dropped out of Medicare, did not want to cover seniors within the Medicare program, that they needed to provide significantly more resources to the HMOs if they wanted to get them back into the Medicare program.
It is obvious that under this bill that the HMOs are going to get significantly more money in terms of reimbursement rate than traditional Medicare. Again, that is just a function of the fact that the HMO industry was basically calling the shots at the White House, and here we go again with an example of someone within the industry now working at the White House on the very program that is increasing the amount of money that the HMOs will get.
Ms. SCHAKOWSKY. This is not only disgusting, but it is also very costly. We know now that this bill which helps seniors little and pharmaceutical companies and HMOs a lot, is going to cost not $400 billion but about $540 billion. Now is that additional cost meaning that we are going to help seniors more, that we are going to provide a more generous benefit, that they are going to be able to buy their prescription drugs any cheaper? No. The reason that the cost of the Medicare bill has been reassessed is because the cost of prescription drugs are going to go up, so taxpayers are going to have to take more money out of their pocket.
The cost to get the HMOs to keep providing the care, because HMO costs go up every year, is going to raise the price of this bill.
The other thing that was not talked about that I think a lot of seniors do not get is that the premium can go up every year, the copayment can go up every year. So what may start out as $35 could end up being $85 or even more in a few years.
Mr. PALLONE. If I could just throw this in a second, in that New York Times editorial that I mentioned, they specifically say, "Less well known is the likelihood that the drug coverage will actually become worse with each passing year. The premiums, deductibles and out-of-pocket expenditures will all increase rapidly, tied to increases in per capita drug expenditures under Medicare. By 2013, for example, the out-of-pocket spending required before a person qualifies for catastrophic coverage will probably be $6,400, well above the $3,000 required in the first year. That could be devastating for those struggling to survive on these benefits." It is built into the bill, but it keeps going up.
Ms. SCHAKOWSKY. It is built into the bill, but it is quite remarkable that before the ink is even dry on this bill, the price has gone up more than 25 percent, from $400 billion to $540 billion, and it has not even started yet. Not one dollar in benefits, so-called, has even gone out.
The seniors know that this is a bad deal. The seniors who pay more attention than anybody else already know. In polls that have asked them, they do not think that they are going to benefit sufficiently. But it is important that it be explained. This comes from today, from the Associated Press:
"The Bush administration launched a $9.5 million television advertising campaign Tuesday to rebut criticism of the new Medicare law. Understand, this is not a political commercial paid for by a campaign. You and I and all of our constituents are paying for a $9.5 million television advertising campaign to rebut criticism of the new Medicare law. The ad is to run on network and cable television through March, clustered around soap operas, game shows and news programs. Its theme is, 'Same Medicare, More Benefits.' "
Mr. PALLONE. Can I ask you again, you said that this is paid for by taxpayers?
Ms. SCHAKOWSKY. That is correct.
Mr. PALLONE. Explain that to me again?
Ms. SCHAKOWSKY. I am reading to you this. This is not a campaign expenditure:
"The administration is spending another $3.1 million for a newspaper, radio, and Internet effort in both English and Spanish. The 30-second ad addresses some of the major criticism of the law, including assertions that it will force seniors out of traditional Medicare and into managed care plans and that savings will be paltry from drug discount cards and prescription drug insurance starting in 2006."
Mr. PALLONE. I find that incredible. I have never heard of a situation where the government pays to rebut criticism of the program.
Ms. SCHAKOWSKY. This is correct. Quoting from the article:
"Health and Human Services Secretary Tommy Thompson played the commercial Tuesday for reporters. Four actors who portray Medicare beneficiaries ask how the law is changing Medicare. 'Can I keep my Medicare just how it is?' one asks. The announcer replies, 'Yes, you can always keep your same Medicare coverage.' At the end of the ad, another senior says, 'So my Medicare isn't different, it's just more?' The announcer, 'Right.'
"Several Democratic Senators already have criticized as propaganda a two-page flyer that HHS plans to make the basis of a letter to be sent later this month to the 40 million older and disabled Americans who are enrolled in Medicare. Asked whether he had consulted those Democrats about the accuracy of the ad, Thompson said, 'It's accurate.' "
Mr. PALLONE. So we now are standing here and basically pointing out why this bill does not benefit seniors, and the administration is going to spend taxpayers' money to say the opposite.
Ms. SCHAKOWSKY. Exactly.
Mr. PALLONE. That is unheard of. I have never heard of that happening.
Ms. SCHAKOWSKY. This is taxpayer advertising: $9.5 million on television; $3.1 million for newspaper, radio and Internet; and a mailing to 40 million seniors and persons with disabilities, all at taxpayers' expense to explain why this lousy bill is, in fact, good for them.
Mr. PALLONE. There has to be some way to stop that. It sounds to me like it is blatantly illegal. But we will have to look into it. I thank the gentlewoman.
Ms. SCHAKOWSKY. If I can go on for just a minute, when President Bush ran for office, he said our first priority will be to restore honor and dignity to the White House. But when you look at President Bush's top official in charge of Medicare getting issued a waiver to pursue employment in the health care industry while he continues to serve as administrator of Medicare, how can we call that honor and dignity? This confirms the worst of what people think about the way government is run.
When this first happened, I along with our colleague, the gentleman from California (Mr. Stark), wrote a letter to the Secretary of Health and Human Services, Tommy Thompson. A part of the letter says, "For 7 months Members of Congress who relied on Mr. Scully for information were kept in the dark about the fact that he was actively engaged in looking for employment with firms that have significant interests in the issues at stake. Financial conflicts of interest are designed to assure Members of Congress, entities with interests pending before CMS, and the public that Federal executive branch employees are independent and unbiased in their behavior. While we strongly believe that this waiver should never have been granted, at a bare minimum knowledge of it would have been valuable to us in weighing the advice provided by Mr. Scully."
This is just shameful. I think in order to restore the confidence that the American public should have in Members of Congress that we are operating in the public interest, in their interest, that when we come up with a bill, it is because it is going to help them get their prescription drugs, then we cannot allow this kind of behavior to continue. No waiver should be granted. An advertising campaign, paid for by the taxpayers, should not be allowed. If the gentleman from Louisiana (Mr. Tauzin) takes this job with PhRMA, for 1 year he will not be able to lobby Members of Congress and staffers, but he can still lobby the executive branch, the people that are writing all the regulations that have to do with implementing this particular piece of legislation that he crafted behind a locked door. I think that this notion of restoring honor and dignity to the White House, that is an important goal; but that goal has been undercut and betrayed by this administration and the conduct by the chairman of the Committee on Energy and Commerce.
But that, as that famous radio commentator is wont to say, is only half the story. The subsidiary, Halliburton Products and Services, and I am reading again from the transcript of this CBS piece, was registered at this address. It was in name only. There is no actual office here or anywhere else in the Cayman Islands, and there are no employees on the site.
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