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American Action Network campaign

August 4, 2011 - Jim Anderson
On Wednesday, The Daily News published a half-page advertisement from the American Action Network.

The ad claims President Obama's Medicare plan will balance the budget on the backs of senior citizens and applauds U.S. Rep. Dan Benishek, R-Crystal Falls, for standing up for seniors and fighting to protect and preserve Medicare.

So, who, or what, is the American Action Network?

It’s a conservative advocacy group, or self-described "action tank."

It has tax-exempt status as a 501(c)(4) advocacy group. It spent about $26 million in the 2010 fall elections. American Action Network is not required to reveal the names of its donors, although filings show that at least some donors have contributed as much as $1 million apiece, according to the Washington Post.

Last fall, in some markets, American Action Network ran television ads claiming that the new health care law uses taxpayer money to subsidize drugs like Viagra for sex offenders and rapists. A PolitiFact analysis of one of those ads rated it a "Pants on Fire" deception. According to, "there's nothing in the legislation that supports, requires or even mentions such prescriptions."

That’s not to say that Wednesday’s newspaper ad is bogus, that Congressman Benishek should disavow it, or that President Obama is the chosen one.

It’s just a little background to keep in mind.

Wednesday’s newspaper ad is part of a nationwide campaign that supports a number of Republican freshmen in Congress — including Benishek. According to Politico, it’s part of a strategy to strengthen the standing of Republicans on “entitlement” issues, such as Medicare. It’s a fair guess that Benishek had nothing to do with the ad — it’s friendly support from an advocacy group.

The ad seeks to discredit attempts (mainly by Democrats) to make drug manufacturers pay more in Medicare rebates to the government.

Specifically, the Medicare Drug Savings Act of 2011 is proposed legislation that would make drug manufacturers pay a rebate to the government for Medicare Part D recipients who receive both Medicare and Medicaid.

According to Modern Healthcare, Medicare spent $61.7 billion on pharmaceuticals in 2010. By negotiating better prices for dual recipients of Medicare and Medicaid, it’s estimated that $50 billion to $100 billion could be saved over the coming decade.

Prior to 2006, the government received substantial rebates on drugs used by "dual eligible" Medicare and Medicaid enrollees, the bill’s sponsors say. However, beginning in 2006, the Republicans' Medicare Part D law eliminated the rebates, raising prices for the government and profits for manufacturers.

American Action Network takes a different view. It claims the Medicare Drug Savings Act will increase premiums and co-payments for seniors enrolled in Medicare, deteriorate benefits of seniors and undercut any net savings to the government.

The Democratic Congressional Campaign Committee says American Action Network is trying to shield Republicans from the fallout over their support for the House GOP budget bill. That legislation, written by Wisconsin Rep. Paul Ryan, would replace the current Medicare system for future seniors with government-subsidized private health insurance. (The Congressional Budget Office, in a preliminary projection, said the average 65-year-old in 2030 would have to pay about 68 percent of their total health care costs compared with 25 percent today.)

The political fight aside, it appears that pharmaceutical companies are, indeed, doing well under the current Medicare Part D system.

In Wisconsin, for instance, the state-administered SeniorCare prescription drug program has negotiated drug prices far below what the federal government pays under Medicare Part D. The 91,000 beneficiaries enrolled in Wisconsin’s SeniorCare cost the federal government a third of what it would cost for them to be enrolled in Medicare Part D, according to U.S. Sen. Herb Kohl, D-Wis.

Kohl also points to an analysis by the Organization for Economic Cooperation and Development (OECD) showing that, in 2009, the average price of pharmaceutical drugs in the U.S. was 30 percent higher than in the other 33 OECD countries.

Driving down prices for prescription medications paid by Medicare (as Kohl and others are trying to do) could well lead to higher costs elsewhere. But maybe, at this point, it’s a chance that needs to be taken.



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