Brains R Us
Getting Right in the Mind
By CRAIG MCGRATH
In the fall of 1995 the Gingrich Congress had been in place for eight months,
Republicans were still looking for new ideas, and at a Capitol Hill press
conference in September House Ways and Means Chair Bill Archer said he had
one. Dick Armey had already declared that "Medicare would not exist
in a free society," so Archer and Armey, along with House Whip Tom
DeLay, were flogging an idea that would help liberate elderly Americans
from an oppressive system that paid for their health care costs. The press
conference, sponsored by a think tank with its roots in Dallas, was the
beginning of the legislative campaign to create Medical Savings Accounts.
As Archer spoke, National Center for Policy Analysis President John Goodman
was standing behind the podium, just out of camera range. A Columbia Ph.D.
and former professor at Southern Methodist University, Goodman had been
waiting in the wings for years -- along with assorted right wing academics
who shared a fantasy about MSAs replacing Medicare. When they held their
Capitol Hill press conference in September 1995 Goodman, Archer, Armey,
and DeLay shared one mission: Sell the concept of Medical Savings Accounts
to the public as a way to begin privatizing Medicare. By the summer of 1997,
they had made the sale in the budget deal negotiated with Bill Clinton.
Thanks to a pilot program the Texans got into the bill's final language,
hundreds of thousands of seniors will be able to opt out of the Medicare
system and replace their health coverage with MSAs.
MSAs aren't the original thinking of the think tank that Goodman directs.
It is, rather, thinking borrowed from a place no less enlightened than Singapore,
where all workers are required to deposit money into Medical Savings Account.
In fact the NCPA's Executive Alert article on MSAs cites the NCPA's own
study, "Compulsory Savings in Singapore," as source material.
Think tanks notwithstanding, MSAs do not require a lot of thought. To cover
individual health care expenses, employers pay varying amounts of money
into accounts of individual employees, while at the same time raising the
deductibles significantly on those employees' health insurance policies.
If an employee gets ill, the company contribution that has been "given"
to the employee is used first to cover expenses. If that money is exhausted,
the employee must pay out-of-pocket until his expenses equal the new, higher
deductible. And at the end of the year, the employee keeps any money that
was not spent, either rolling it over into the next year's MSA, or paying
taxes and a 15 percent penalty for withdrawing it.
In this country, for example, Golden Rule Insurance Co. contributes up to
$1,000 annually to each of its employees, while at the same time raising
deductibles from $500 per person to $2,000 per person. Total out-of-pocket
expense by the employee for doctor visits, medication, and other treatment
is raised from $500 to $1,000 if taken up to the full deductible before
traditional catastrophic insurance kicks in. Quaker Oats has a similar policy,
but with only a $300 employer contribution and a similar high deductible
Unlike workers in Singapore, Americans are not required to contribute to
Critics describe the low employer contribution and high deductible as a
bribe not to get sick, and they argue that because the system often results
in fewer visits to the doctor, it can lead to serious illnesses that result
from lack of treatment. Others worry that once the MSA program is applied
to Medicare, it will encourage the healthy and the wealthy to opt out of
the program, leaving the chronically ill and disabled in a second rate system
-- a shift that could only please Armey, Archer, DeLay, and the corporate
CEO's who would just as soon see Medicare abandoned anyway.
IF THAT SOUNDS LIKE A LONG SHOT, consider NCPA's Briefing Analysis
#181 "How Medicare MSAs would work." According to NCPA, "Private
insurance companies such as Aetna and Prudential would offer high-deductible
insurance policies to seniors as an alternative to traditional Medicare.
The federal government would transfer that senior's allotment of Medicare
funds to the insurer, who would deduct the cost of catastrophic insurance,"
(no doubt getting a nice fee for their services) "and deposit the rest
of the money in the senior's MSA." Seniors would pay their medical
bills through an MSA debit card or pay cash and take a receipt to "the
financial institution managing the MSA." (Also getting a nice fee for
setting up and maintaining the MSA.)
Backing the think tank that is backing the legislators are corporate players
such as Forbes, Quaker Oats, and Golden Rule Insurance Company. The companies
claim they have cut health insurance costs by offering or requiring MSA's
for their employees. These corporations, among others, have also written
the checks that keep the Republican Party in control of Congress and the
National Center for Policy Analysis in control of this issue.
According to Federal Election Commission records, Golden Rule and its president,
Patrick Rooney, have been significant contributors to the House Republican
leadership, giving large amounts of money to Newt Gingrich's political action
committee, GOPAC, in the early and mid-1990's. Other conservative funders
also underwrite the NCPA directly. The John M. Olin Foundation of New York,
one of the heaviest hitters on the right, gives $75,000 to $100,000 annually
to the NCPA. The Lynde and Harry Bradley Foundation and the Sarah Scaife
Foundation also provide annual six-figure contributions to NCPA.
Since 1991 these grants, along with others from the right's array of foundations,
have enabled NCPA's budget to grow 25 percent annually, making it one of
the stars in the conservative constellation of right thinkers.
Goodman was behind the scenes at Bill Archer's press conference, but on
at least one program aired by the Public Broadcasting System he is in front
of the camera. Goodman has frequently co-hosted William F. Buckley's Firing
Line and has conducted "miniseries" on PBS with Buckley addressing
topics such as Medical Savings Accounts and the privatization of welfare
and Social Security. Firing Line's largest single underwriter, to
the tune of $250,000 a year, is the Olin Foundation. Olin, run by William
E. Simon, treasury secretary in the Nixon-Ford White House, helps create
the think tank that does the thinking for the Republican Congress and then
buys time on public television, where Goodman and Buckley can "market"
THE NATIONAL CENTER FOR POLICY ANALYSIS also is adept at expropriating
liberal terminology and converting it to its own use. It issued a report
called Progressive Environmentalism, offering a "pro-free enterprise
and pro-science" environmentalism. "Empowering people and the
private sector, rather than government bureaucracies," the center's
thinkers wrote when promoting the report, "offers the greatest promise
for a clean environment." Whatever that means, the NCPA, since its
inception in 1983, has opposed every major piece of environmental legislation.
It's not surprising that the vice-chairman of Southland Corporation as well
as an officer of the Atlantic Richfield oil company sit on NCPA's board.
Pierre "Pete" du Pont, unsuccessful Republican candidate for President
in 1988, is policy chairman of the board and makes appearances with Goodman
on Buckley's Firing Line.
Some of the information put out by NCPA can be wildly inaccurate. In promoting
the building of prisons across the country and noting that Texas was lagging
behind California on the prison construction front, the Center's Profile
report claimed, without any statistical support, that the year 1980 was
"the height of serious criminal activity in America," suggesting
that crime went down once Ronald Reagan took office. It ignores massive
federal and state data that showed crime rising steadily through the eighties
and early nineties.
In its Profile report, the NCPA takes credit for serving as co-author
of the Republican "Contract with America" and accepts credit from
the Wall Street Journal editorial page for the repeal of the Medicare
Catastrophic Coverage Act in 1989. On the same page of its Profile,
the center describes itself as a "non-profit, non-partisan tax-exempt,
public research institute." Non-partisan is something of a stretch
-- but the confluence of big money conservative foundations, giant insurance
companies, and Washington politicians probably means seniors will be paying
more and insurance companies will be earning more in an increasingly privatized
Craig McGrath is a freelance journalist working in Washington, D.C. A
version of this originally appeared in the Texas Observer.
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