AAA Comments on Foster

Barbara Lautzenheiser, president of American Academy of Actuaries, issued the letter below in response to the situation involving Richard S. Foster, the U.S. government's chief analyst of Medicare costs (see "In My Opinion"). The letter was published in the April issue of The Actuarial Update.

March 26, 2004 Dear Colleagues, As many of you are aware, Richard Foster, the chief actuary for the Centers for Medicare and Medicaid Services, a former member of the Academy's Board of Directors, and a respected member of the profession, has been in the news regarding his role in the passage of the Medicare prescription drug bill. According to recent news reports, Mr. Foster's job was threatened last summer because he wanted to respond to a request from Congress for an actuarial analysis of a draft of the bill. His cost estimate was approximately $150 billion more than the $395 billion calculated by the Congressional Budget Office (CBO). The bill was passed in November using the CBO estimate, which by law is the only official estimate Congress can use. When the Bush administration submitted its FY 2005 budget proposal in February, the estimated cost for the Medicare prescription drug program was $534 billion, virtually the same as Mr. Foster's earlier estimate. As this letter goes to print, the Academy has not made an official public statement in response to the news reports. Both the General Accounting Office and the inspector general of the Department of Health and Human Services have launched investigations. While those investigations are in progress, the Academy intends to refrain from making any statements that could prejudice them in any way. We support the principle that sound, unbiased actuarial analysis should be available to decision-makers, in both the public and private sectors. The open exchange of information is crucial to our democracy. The news reports have brought to the public's attention the value of actuarial analysis and the role of the actuary in determining national policy. Sincerely, Barbara Lautzenheiser, President