AARP Board of Directors Public Policy Meeting – Day 2

Medicare reform, litigation as a policy tool, pensions and economic security issues were topics at today’s meeting of the AARP Board of Directors’ annual Public Policy Meeting.

Board members heard presentations from Senator Paul Sarbanes (D-MD) on investor confidence and corporate accountability, and Representative Ben Cardin (D-MD) on pension reform. The Board also heard from James Tierney, former Maine Attorney General and Columbia Law School adjunct professor, on the role of litigation in public policy, and Senator Jay Rockefeller (D-WV) on Medicare reform. HHS Secretary Tommy G. Thompson also discussed Medicare and Medicaid issues.

Sarbanes said a major fight is looming on the horizon over Medicare and Social Security reform and said he was opposed to a strategy that would undercut the fundamental strengths of either program.

He cited a recent AARP study of the impact the stock market downturn has had on mid-life and older American investors and urged that it be distributed widely noting that it “demonstrated the iceberg of the issue.”

Noting that the SEC needs leadership, Sarbanes said he expects confirmation this week of a new Commission chairman who could be on the job next week. Essential, he said, is restoration of confidence and moral at the agency; and the end to the exodus of highly qualified staff from the agency. He expressed confidence that the SEC budget, under funded for many years, would be increased.

Sarbanes said he does not support the Administration’s fiscal policy that projects deficits into the future. The President’s budget, he said, contains no provisions for war. “It is reckless to give away any economic margin we have.”

Effort to construct a system to screen out the bad apples, raise the level of conduct and review, get auditors back to being auditors.

Cardin, an authority on tax policy, pension reform, and health care, urged AARP to continue to be key player in the pension reform debate.

Tax cuts during a time of war, potential domestic terrorism, and homeland security concerns don’t make sense, he said, noting that there is a need for shared sacrifice by the American people in preparing to meet the future. “The President has not come up with an economic strategy to address these issues.”

The US is first among industrialized nations in all economic indicators except in savings, he noted. “We’ve seen an erosion of private savings and retirement plans over the past several decades, an erosion of what people can put away for their retirement.”

Expand savers credits, no longer fund golden parachute, make it easier for roll-overs, and offer more choice in individual retirement savings plans. Skeptical of President’s plan and does not favor sheltering income, shelter doesn’t help, doesn’t encourage savings.”

Cardin said retirement accounts should be used for retirement. He said he does not favor allowing withdrawals of funds before reaching retirement age to be used for other purposes.

Tierney, the former Attorney General of the State of Maine, said public advocacy without a litigation component is like a carpenter without having access to his sharpest tools. “The process of litigation puts issues in front of us, brings them out of the dark.” Litigation is an essential part of public advocacy.

Rockefeller said that Medicare and Medicaid would be the critical issues and at the center of debate and controversy this year.

He urged AARP to be an activist organization and to use its membership numbers and power. “Don’t sit on the sidelines and watch events unfold as you have done in the past.”

Privatizing Medicare will not work, Rockefeller said. But private managed care plans can play a role and participate and compete for beneficiaries. Competition for lower premiums, not prescription drugs, are the carrot to get seniors into theses plans. Private insurers must offer Rx drug coverage where ever they live or how sick they are.

Rockefeller said the President’s budget of $400 billion over ten years to provide Rx benefit is insufficient. The real cost is closer to $700 to $800 billion. A prescription drug benefit is the only real reform the Medicare program needs, Rockefeller said. By adding the dividend tax cuts—$380 billion—to the $400 already in the President’s budget, you have exactly the dollars need to bring about a real prescription drug benefit. “We’ve got the money sitting in the President’s budget now,” he said noting that there is urgency in shooting down Medicaid proposal and putting our hands on the $400 billion and the dividend tax.

Block grants to Medicaid, he said, would undermine health care for those who need it the most and would allow state governors to eliminate coverage for certain classes of people forcing seniors into managed care in exchange for prescription drug coverage and. block grants to states for Medicaid, he said, is flawed policy.

Secretary Thompson said older Americans deserve a “new, better and refined Medicare. We want to offer the best program we possibly can including prescription drug coverage for every senior.” He promised that seniors would not be forced into Medicare HMOs in order to receive drug benefits. Thompson said that when details of the Administration’s Medicare plans were fleshed out, he hoped to return to AARP to discuss the proposals “to develop the best Medicare program possible.” He noted however, that if Medicare legislation was not enacted this year, it was unlikely to be considered during the Presidential election year in 2004. Thompson said he believes the $400 billion in the President’s budget proposal is sufficient to provide prescription drug benefits.