April 12, 2006
Dear President Bush,
The Jack Abramoff scandal shows Americans have the best government money can buy. An Abramoff e-mail makes this clear:
“We're going to seriously reconsider our priorities in the current lists I'm drafting right now if our friends don't weigh in with some juice. If leadership isn't going to cash in a chit for (easily) our most important project, then they are out of luck from here on out,"
Jack states it pretty directly, put out “the juice” or the campaign money trough on which legislators gorge will dry up.
I recently found a strange thread woven through the health care side of government. It includes members your administration, Congress and lobbyists. Bear with me, as I summarize my findings.
In August 2005 Rep. Bill Thomas of California held hearings on tax exempt standards for hospitals. As the chair of the powerful House Ways and Means Committee, Rep. Thomas has much influence over health care legislation.
Early in his career Rep. Thomas attended the American Hospital Association annual meeting, often speaking. In 1999 he also gave a talk at the Federation of American Hospitals, the trade group representing for profit hospitals. Here Bill met and worked with Tom Scully, who eventually became the head of the Centers for Medicare and Medicaid.
Since 2000 Rep. Thomas attended or spoke almost exclusively at for profit hospital meetings. His campaign contributions come mostly from health care, almost $500,000 of the $1.67 million raised in his 2004 campaign.
As I read of the hearing, I wondered why our elected officials did not frame the issue differently. The report on the hearing stated:
The Committee Chairman, Rep. Bill Thomas (R-CA), described the question as “(W)hat is the taxpayer getting in return for the tens of billions of dollars per year in tax subsidy?” Health-related entities account for almost 60% of the total revenues of Section 501(c)(3) organizations. Tax-exempt hospitals account for three quarters of the revenues of all health-related organizations.
Chairman Thomas noted the trend of the IRS to lessen the requirements for a hospital to obtain tax-exempt status. For federal tax exemption, a hospital is not required to provide charity care. In 1983, the IRS dropped the requirement to maintain an emergency room. Thus, the Committee is asking whether there really is a community service mission that differentiates tax- exempt hospitals (which seem to engage in increasingly commercial behavior) from for profit hospitals. Certainly the provision of health care is common to both types of organizations, but the charitable component has been eroded.
I thought shouldn’t they be looking into the ever increasing burden of charity care borne by non-profit hospitals? According to the AHA, uncompensated care in 2004 reached $26.7 billion and Rep. Thomas conducted a hearing on the unfair competitive advantage of non-profit hospitals?
Searching deeper into the donation record, I found possible contributing factors. In 2004 the for profit hospital trade association mentioned earlier donated $13,000. Also, Triad Healthcare, a for profit hospital company contributed $17,000. I wondered if $30,000 would buy a hearing that essentially spouts their position. Admittedly, it took a year for the hearing to happen.
The contributions being mentioned in the Abramoff case frequently are less than $10,000 and they purchased influence. Would $30,000 go even further? Of course, I have no e-mails to answer this question. But somebody might. Can you have the Justice Department look into it?
I mentioned the strange web that weaves through health care in your administration. Do you recall the flap Tom Scully had with a subordinate over the release of higher cost estimates for Medicare Part D than originally shared with the House Ways and Means Committee? Democrats asked for more figures, while Republicans and the White House remained selective about which numbers to release. Leadership shared Mr. Foster’s participation estimates, but not his cost numbers.
Guess who ran the hearing on that matter? Tom’s good friend, Rep. Bill Thomas called Mr. Foster to explore the allegations. As President of the Federation of American Hospitals, Mr. Scully developed his relationship with Chairman Thomas between 1999 and 2001. In May 2001 Tom joined the Bush administration as head of the department administering Medicare and Medicaid.
It appears Tom had a benefactor in Rep. Thomas. The powerful chairman provided cover for Mr. Scully in March of 2004 before holding his August 2005 hearing parroting the FAH position. Did Tom have more than one benefactor? One article reported that you hold Tom Scully in high regard. Is that true?
What happened to Tom post “e-mail” brouhaha? In December of 2003 Mr. Scully left his position with the federal government. His December 15th retirement announcement said he was leaving to spend more time with his children and find more lucrative work. It did not take long as the following Monday Alston & Bird issued a press release announcing their landing of the political heavyweight. It is amazing what can happen over a weekend!
PR Newswire had this to say on Dec. 18, 2003:
Tom Scully, the former Bush administration official who previously headed the Centers for Medicare & Medicaid Services (CMS), has joined Alston & Bird in the law firm's Washington, D.C. office. Scully's initial focus will be on healthcare regulatory, strategic and public policy matters. The announcement comes on the heels of the firm's appointment of Colin Roskey, the Senate Finance Committee lead staffer on the Medicare bill that was signed into law by the President on December.
Other good things happened for Tom, post CMS. A health care investment house named Mr. Scully as senior advisor. Welsh, Carson, Anderson, and Stowe historically held a strong portfolio of health care companies.
WCAS and other investment houses see your health care strategies as ripe for profit making. Did you know The Carlyle Group, for which your father worked, announced last summer a major expansion in their health care holdings? They recently shared their intent to purchase Multiplan, the largest PPO in America. That is great timing as you continue to contract out Medicare and Medicaid to private insurers.
In June 2004 Tom spoke at America’s Health Insurance Plans meeting sponsored by a WCAS affiliate. The session was promoted this way:
Attendees will hear Mr. Scully address the various opportunities and threats posed by the legislation and new prescription drug benefits for private health insurers. Discussion will also center on regional competition for market position and the interaction between HMOs, PPOs and traditional Medicare.
In November of 2005 Welsh, Carson, Anderson and Stowe made a $25 million investment in MemberHealth, one of ten national Medicare Prescription Drug plan sponsors. Tom Scully landed a position on their Board.
Now that Medicaid modernization has passed, what opportunities will open for private insurers in this area? Who else sailed through your administration only to land on the outside and benefit handsomely? What will Rep. Thomas do after his retirement? Will he pursue lobbying on behalf of his for profit healthcare benefactors?
The country recently saw one powerful Republican resign as the stain of political corruption flowed into his office. Rep. Tom Delay’s two former staffers admitted guilt in the Abramoff scandal. Many believe he too will be indicted. The Standard Times ran a column to that effect in today’s paper. This remains to be seen. What is inside of Rep. Delay’s or Rep. Thomas’ closet? Maybe nothing, but the view from here suggests something could be lurking inside.
Sorry to share such a long and convoluted story but I wanted to give you a picture of influence buying, or at least the appearance of it in our hallowed halls of government. My hunch is you are already aware.