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OMB Says Medicare Drug Law Could Cost Still More

White House Estimates Show a $42 Billion Increase Over 10 Years, but Administration Officials Dispute That

By Ceci Connolly
Washington Post Staff Writer
Sunday, September 19, 2004; Page A04

President Bush promised Congress that his Medicare prescription drug benefit would cost no more than $400 billion over 10 years, but once the legislation was enacted, federal actuaries boosted the estimate to $534 billion. Now, Bush administration projections indicate that the cost could be considerably higher.

According to internal White House budget office estimates of the long-term cost of Medicare, spending related to the new drug benefit could increase by $42 billion over the coming decade.

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The revised figure appears in a chart prepared during this summer's "mid-session review" by the Office of Management and Budget and Medicare actuaries. The document provides a detailed breakdown of an extra $176 billion in Medicare spending projected for the next 10 years. The chart, provided to The Washington Post late last week, identifies $42 billion of that increase "as related to MMA," the initials of the Medicare Modernization Act, the new prescription drug law.

Several budget analysts said the chart indicates that the price tag of the president's new drug program could total as much as $576 billion over 10 years.

"Using their own numbers, it costs over 10 years $42 billion more, and so, therefore, it's $576 billion," said Richard Kogan, senior fellow at the Center on Budget and Policy Priorities.

But administration officials over the weekend strongly disputed that the chart indicates that the drug program's projected cost has been increased by $42 billion.

Mark McClellan, administrator of the Centers for Medicare and Medicaid Services (CMS), said that Medicare's actuaries have not reestimated the cost of the drug law and that the new figures are primarily adjustments to the "baseline" or projected spending levels for a Medicare program likely to cost more than $4 trillion over the next decade. He said there is no way to anticipate at this point how the new prescription drug benefit will interact with other Medicare programs. He said it would be a mistake to simply add the $42 billion to $534 billion to come up with a new projected cost, noting that "related to" is not the same as "attributable."

Kogan called McClellan's explanation a "distinction without a difference."

Although once considered a political asset for Bush in his bid for reelection, the Medicare drug package has become a source of controversy, with a growing number of senior citizens telling pollsters that they are disappointed in the outcome.

"This shows once again that it's high time for the Bush administration to level with the American people about its misguided Medicare law," Sen. Edward M. Kennedy (D-Mass.) said after reviewing the internal projections.

The latest survey by the nonpartisan Kaiser Family Foundation found that nearly half of all Medicare beneficiaries have a favorable impression of the law and that less than a third expect to benefit from it.

Over the past two weeks, Bush has been buffeted by unfavorable developments in the Medicare program, including the disclosure of a record premium increase next year and revelations that the government concealed other cost projections. Also, the Government Accountability Office ruled that the administration should have withheld the salary of former Medicare chief Thomas A. Scully because he had wrongly prevented a federal employee from providing higher cost estimates on the prescription drug bill to Congress.

"They hide the truth about what's happening in Medicare," Democratic presidential nominee John F. Kerry said last week. "It's time we have a president who tells the American people the truth."

Joel Kaplan, deputy OMB director, said the agency publishes five-year projections only because it does "not believe anything beyond five years is a reliable or certain estimate." The 10-year projections were given privately to some members of Congress. Neither Kaplan nor McClellan challenged the actual figures, just the interpretation of them.


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