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NEWS RELEASE
Jan 20, 2004

Bush's State of the Union Address To Highlight Health Care Industry Priorities, Not the Needs of Patients

Fine Print Is Likely to By-Pass State Regulatory Requirements
Santa Monica, CA -- President Bush is expected to announce a health care plan tonight in his State of the Union address that will allow the politically powerful health care industry to circumvent state oversight and consumer protections but do little to increase access to care, according to the Foundation for Taxpayer and Consumer Rights (FTCR).

President Bush's plan to allow businesses to band together in order to avoid state health care mandates and HMO accountability laws, provide tax credits to the uninsured without caps on insurance costs, and to limit physician medical malpractice liability closely parallel priorities put forward by the health care industry.

"The way to provide more people with health care coverage is not by allowing profiteering and inefficient HMOs, pharmaceutical companies and negligent doctors to circumvent state law," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights. "This plan is designed for the health of the industry's bottom line, not the needs of patients."

Recently, Congress approved President Bush's Medicare prescription plan that guarantees billions of dollars to private insurers and pharmaceutical companies with no oversight of their rates.

The plan that President Bush is expected to announce will:

**Allow businesses to band together in order to avoid state health care mandates and shield insurers from liability when they harm patients

Allowing businesses to band together to bulk-purchase health coverage is a good idea, but President Bush is expected to support a plan by the Association of Health Plans -- the lobbying group representing health insurers -- that will circumvent state laws that require health insurers to provide basic health care benefits like maternity coverage and prescription drugs.

The new plan will also shield insurers from state consumer protections including Patients' Bill of Rights legislation passed in thirteen states. A central tenet of these laws holds HMOs and health plans accountable if a patient is harmed as a result of a decision to limit access to necessary care.

**Encourage health savings accounts and tax credits for the uninsured that offer little or no protection

Instead of addressing the root causes of enormous cost increase that have resulted in a record number of Americans who cannot afford health insurance, President Bush is expected to announce a plan that will provide tax credits and tax free health savings accounts.

Health savings accounts have been offered by health insurers for a number years but have been unpopular with consumers because they require individuals to pay more for health coverage but are not required to provide basic health care benefits mandated by state law.

Tax breaks to encourage consumers to purchase health insurance benefit President Bush's political supporters, namely HMOs and other health insurers, who are allowed to divert money away from patient care without oversight.

In fact, the independent market analyst, Weiss Ratings, Inc., reported that the nation's HMOs recorded a $2.3 billion profit in the first quarter of 2003 -- a 60% increase over the same time period in 2002. This comes on the heels of 81% increase in 2002 over 2001 levels.

In 2002 alone, insurance administrative costs increased 16.8%, making it the fastest growing component of health care spending over the past three years.

**Weaken medical malpractice protections

President Bush is expected to support an effort to circumvent the laws of many states by establishing a federal limit on the amount of money that patients can recover when they are harmed by physician negligence.

This proposal will appease political supporters and further undermine patients' rights even though medical malpractice makes up only a fraction of 1% of total health care costs.

"They always go after those who can fight back the least," said Scott Olsen whose son Steven was blinded at the age 2 as a result of medical malpractice.

Read more about Steven and about why the solution to medical malpractice is not by limiting a patient's rights but by regulating medical malpractice insurers at http://consumerwatchdog.org/healthcare/medmal.php

**Medicare Prescription Drug Benefit

The Bush Administration will use the new Medicare prescription drug benefit to encourage enrollment in private health plans despite the fact that those insurers are much more inefficient than the government-run Medicare program. Private health plans, who will administered the new drug benefit, will get to keep a big piece of the $400 billion earmarked to provide drug coverage in the form of overhead costs that can range up to 20% and more. In comparison to private plans, overhead costs for the Medicare program are closer to 3% annually.

The plan also guarantees a financial windfall for pharmaceutical companies by barring the federal government from negotiating bulk-purchasing discounts even though similar programs save the U.S. Department of Veterans Affairs and the Canadian government 30-60% on drug purchases.

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The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit and non-partisan consumer advocacy organization. For more information, visit us on the web at http://www.consumerwatchdog.org

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