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Friday, January 20, 2006

Paul Krugman: The K Street Prescription

Paul Krugman continues his discussion of health care reform with a look at how the influence of lobbyists corrupted the Medicare reform process:

The K Street Prescription, Medicare on Drugs, by Paul Krugman, Commentary, NY Times: The new prescription drug benefit is off to a catastrophic start. Tens of thousands of older Americans have arrived at pharmacies to discover that their old drug benefits have been canceled... More than two dozen states have taken emergency action. ...

[T]his was a drug bill written by and for lobbyists. Consider the career trajectories of the two men who played the most important role in ... the Medicare legislation. Thomas Scully was a hospital industry lobbyist before President Bush appointed him to run Medicare. ... Mr. Scully had good reasons not to let anything stand in the way of the drug bill. He had received a special ethics waiver from his superiors allowing him to negotiate for future jobs with lobbying and investment firms - firms that had a strong financial stake in the form of the bill - while still in public office. He left public service, if that's what it was, almost as soon as the bill was passed, and is once again a lobbyist, now for drug companies.

Meanwhile, Representative Billy Tauzin, the bill's point man on Capitol Hill, quickly left Congress once the bill was passed to become president of Pharmaceutical Research and Manufacturers of America, the powerful drug industry lobby. Surely both men's decisions while in office were influenced by the desire to please their potential future employers. And that undue influence explains why the drug legislation is such a mess.

The most important problem with the drug bill is that it doesn't offer direct coverage from Medicare. Instead, people must sign up with private plans offered by insurance companies. This has three bad effects. First, the elderly face wildly confusing choices. Second, costs are high, because the bill creates an extra, unnecessary layer of bureaucracy. Finally, the fragmentation into private plans prevents Medicare from using bulk purchasing to reduce drug prices. It's all bad, from the public's point of view. But it's good for insurance companies ... and it's even better for drug companies... So whose interests do you think Mr. Scully and Mr. Tauzin represented?

Which brings us to the larger question of cronyism and corruption. Thanks to Jack Abramoff, the K Street project orchestrated by Tom DeLay is finally getting some serious attention in the news media. ... But most reports on the project still miss the main point by emphasizing the effect on campaign contributions. The more important effect of the K Street project is that it allows the party machine to offer lavish personal rewards to the faithful. If you're a congressman, toeing the line on legislation brings you free meals in Jack Abramoff's restaurant, invitations to his sky box, golf trips to Scotland, cushy jobs for family members and a lavish salary once you leave office. The same rewards are there for loyal members of the administration...

I don't want to overstate Mr. Abramoff's role ... he doesn't seem to have been involved in the Medicare drug deal. It's interesting, though, that Scott McClellan has announced that the White House, contrary to earlier promises, won't provide any specific information about contacts between Mr. Abramoff and staff members. So I have a question for my colleagues in the news media: Why isn't the decision by the White House to stonewall on the largest corruption scandal since Warren Harding considered major news?

Previous (1/15) column: Paul Krugman: First, Do More Harm
Next (1/22) column: Paul Krugman:  Iraq's Power Vacuum

    Posted by on Friday, January 20, 2006 at 12:15 AM in Economics, Health Care, Politics | Permalink  TrackBack (1)  Comments (3)

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