April 20, 2001
WASHINGTON, D.C. – George W. Bush will mark his 100th day as President of the United States on April 29. Consumers Union (CU) has looked at major actions by the Bush Administration to date that affected the consumer issues monitored by CU.
We are seriously concerned about the President’s decisions on several issues of great importance to consumers, including energy policy, healthcare, financial services, and telecommunications. Many of the Bush Administration’s actions in these areas have favored business interests at the expense of consumers:
1. President Bush refused to help consumers harmed by the Western electricity crisis. When power blackouts and skyrocketing energy prices surfaced in California, the President dismissed the crisis as a California problem that the state would have to handle on its own. This “California problem” is now affecting 11 Western states. Other areas of the country face similar problems due to electricity deregulation. Some states have reported that electricity suppliers have deliberately withheld power in order to drive up prices. Based on the significant evidence of price gouging, President Bush should instruct the Federal Energy Regulatory Commission to limit prices to actual costs plus a reasonable rate of return.
2. President Bush opposed comprehensive protections for patients in HMOs. The President announced on March 21 that he opposed the patients’ bill of rights sponsored by Senators John McCain (R-Ariz.) and John Edwards (D-N.C). The bill would help ensure that patients enrolled in HMOs receive better care. The bill’s provisions include a process for patients to appeal HMO decisions and the right to sue HMOs for decisions that result in injury or death. Aides said the President planned to support a much weaker proposal being written by Senators Bill Frist (R-Tenn.) and John Breaux (D-La.). The Frist-Breaux bill reportedly would provide fewer protections than either the McCain-Edwards bill or the Texas patients’ bill of rights that was enacted when the President was governor. The Frist-Breaux bill is also expected to contain a loophole to allow states not to implement federal patient protections under certain circumstances. The President should reconsider his opposition to the McCain-Edwards bill, the best choice among the managed care bills before Congress.
3. President Bush proposed large budget cuts and misguided plans for healthcare. The President’s budget would eliminate the Community Access Program established to coordinate care among public hospitals, clinics and other providers for those without health insurance. The President proposed a healthcare tax credit that is so small ($1,000 for individuals and $2,000 for families) that it will not make quality, comprehensive health insurance affordable to those most in need — individuals and families with modest incomes. This tax credit could actually lead some employers to drop coverage, leaving people with pre-existing conditions vulnerable to losing their badly needed employer based coverage. The president’s proposal for Medicare coverage of prescription drugs — known as “Immediate Helping Hand” — falls far short of providing the help that seniors and the disabled need. The program does not ensure that all Medicare beneficiaries can receive prescription drug coverage as part of their benefits. Nor does it sufficiently curb the increases in prescription drug prices paid by Medicare beneficiaries. The program is too complicated for many consumers to understand and too difficult for states to administer. The President should restore funding for the coordination function of the Community Access Program, provide all Medicare beneficiaries with coverage for fairly priced prescription drugs, expand Medicaid and CHIP programs so that they cover more children and adults, and work to make comprehensive, quality healthcare coverage affordable to all.
4. The Bush Administration refused to provide adequate funding for low-income energy assistance. The President’s budget would freeze the level of money for Low Income Home Energy Assistance Program, or LIHEAP, despite the fact that millions of consumers are paying record amounts for energy bills. The National Energy Assistance Directors Association estimated that 1.1 million families would be cut off from the program because of its failure to keep up with inflation. The Bush Administration needs to authorize enough funding to insulate the program from inflation and other price increases.
5. The Bush Administration decided to allow cable TV and telephone monopolies to expand. Many consumers pay exorbitant prices for cable TV and inflated charges for local phone service because their community has only one cable company and one phone company. Rather than challenge these monopolies, the Bush Administration has decided to let them grow even bigger. Last month, a federal appeals court threw out the Federal Communications Commission rules that limited how many cable subscribers one business could control. President Bush’s choice for FCC chairman refused to challenge the court’s decision. Instead, the FCC promptly suspended a deadline for AT&T’s cable empire to shed some of its holdings. The previous FCC chairman had set the deadline to prevent AT&T from having too much control over the cable market. As for phone companies, the FCC allowed local phone monopoly Verizon Communications to start offering long-distance service to its customers in Massachusetts, despite the fact that Verizon failed to adequately open its market to competitors. The FCC also allowed the local phone monopolies to increase fees to companies that connect Internet traffic, potentially driving up consumers’ Internet service charges. Instead of taking a hands-off approach to the cable and phone monopolies, the Bush Administration should take steps to rein them in and promote more competition.
6. President Bush endorsed a bankruptcy bill that excessively punishes honest consumers hit by unexpected debts. The President announced on February 28 that he supported a bill to make it harder for people to file for bankruptcy. Preventing abuse of the bankruptcy system is an idea that CU supports, but the real intent of this bill is to increase profits for the credit industry, which has spent millions on efforts to convince Congress to pass the bill. This bill is too harsh on honest people hit unexpectedly by hard times who seek bankruptcy protection as a last resort. It would make it much tougher for a family in dire financial straits to put its finances in order at a time when the economy is already shaky. One item that the president wants removed from the bill is one of the few that makes sense: a provision to close the loophole that allows wealthy debtors to keep their extravagant homes after they file for bankruptcy in certain states. One of the six states where the homestead exemption exists is the President’s home state of Texas. A reasonable cap on this exemption would help prevent abuse of the system. However, even with such a cap, the overall bill is unacceptable. Not only is it too hard on working families, the bill does nothing to discourage the credit industry’s hard-sell tactics and misleading practices. The President should reject the bill and ask Congress to come up with one that prevents bankruptcy abuse without punishing consumers unjustly.
7. The Bush Administration proposed killing a program to help low-income consumers who cannot afford to open bank accounts. The President’s budget would eliminate “First Accounts,” a new program to help lower-income people without bank accounts. It provides incentives to banks, thrifts and credit unions to offer low-cost, “no frills” checking accounts for lower-income people. It was intended in part to reduce reliance on check-cashing centers that charge large fees. The program is voluntary for financial institutions, yet many of them still oppose it. Instead of giving in to the financial industry’s demands, President Bush needs to support this program and help low-income Americans gain access to the financial products that others take for granted.
While Consumers Union disagrees with the President on the decisions cited above, the Bush Administration has also taken some actions that we believe are very beneficial to consumers. We hope to see the President take more positions like these:
1. President Bush permitted rules to help patients maintain the privacy of their medical records. Last year, then-President Clinton proposed rules to protect the confidentiality of personal medical information. The rules required doctors to ask for patients’ permission before disclosing their medical data to marketers and others not involved in patient care. President Bush took office before the rules took effect. Bush administration officials originally said the rules would have to be postponed and revised because they would be too expensive and complicated for the healthcare industry. However, the President decided to let the rules take effect without delay. The question now is how much the Department of Health and Human Services will change the rules.
2. The Bush Administration withdrew a proposal to end government testing for salmonella in school lunches. An Agriculture Department official said the government should repeal a Clinton administration regulation that required the meat industry to perform salmonella tests on hamburger served in school cafeterias. Agriculture Secretary Ann Veneman decided that the safety of schoolchildren was more important than industry complaints about the expense of the salmonella testing, and the proposal was dropped.
Contact:
David Butler
(202) 462-6262
Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers.