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President Bush acknowledged applause during a signing ceremony of the Medicare bill at Constitution Hall in Washington in December 2003.
President Bush acknowledged applause during a signing ceremony of the Medicare bill at Constitution Hall in Washington in December 2003. (Getty Images File Photo)

Medicare bill a study in D.C. spoils system

Page 2 of 9 -- "It became a feeding frenzy," said Robert M. Hayes, president of the Medicare Rights Center, a New York consumer group critical of the bill.

GOP leaders added final details behind closed doors at a joint House-Senate conference committee, amid intense lobbying.

A Globe analysis of federal lobbying disclosure reports found that drug companies, hospitals, doctors, nursing homes, HMOs, and other health care companies and trade associations spent $311 million lobbying Medicare and other bills in 2003. The disclosure reports do not make it possible to determine exactly how much money was spent lobbying directly on the Medicare bill, though it is clear most activity was focused on the measure, the prime health policy legislation of the year.

As they deliberated, members of Congress occupying key committees gathered hundreds of thousands of dollars in health-care industry campaign contributions.

"The Medicare program has now become a vast arena of special interest politics," said Robert E. Moffitt, a policy analyst at the conservative Heritage Foundation. "It has been transformed from a system where we were providing health coverage for seniors, into a system where there is a massive redistribution of income among health care providers."

To date, most attention has focused on increased payments to Medicare HMOs worth up to $46 billion and new profits that pharmaceutical companies will get after the full drug benefit begins in 2006. Goldman Sachs Group Inc. said the bill would increase drug industry revenues by 9 percent, or $13 billion in the first full year, or more than $100 billion over eight years. A Boston University researcher who is a critic of the drug industry estimated new profits at $139 billion over eight years.

For several years before 2003, the drug industry fought a Medicare prescription benefit because it feared government price controls. Drug executives dropped their opposition after congressional leaders agreed to a provision that specifically prohibits the agency that runs Medicare from negotiating drug prices, letting companies set prices in the private marketplace.

Less attention has been focused on other aspects of the bill. For instance, the government agreed to pay about $71 billion in subsidies to discourage corporations from dropping senior citizens from existing private health plans and forcing them into Medicare. Hospitals across the country will receive billions in higher reimbursements for patients who are admitted to the hospital for everything from appendectomies to open-heart surgery.

The White House defends the bill as a total revamping of Medicare, including the introduction of long-term, systemic changes that rely on private competition and other market forces that will make it efficient and affordable.

"The president promised seniors not just a drug benefit, but a stronger, more modern Medicare system," said White House spokesman Trent Duffy. "A drug-only approach to Medicare would have added a costly benefit to a shaky Medicare foundation."   Continued...

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