W  A  S  H  I  N  G  T  O  N     U  P  D  A  T  E

Jan/Feb 04

Medicare Benefit Reform Viewed to Help Employers and Workers

The Medicare Prescription Drug and Modernization Act of 2003, while not complete in its reform, is the base and basis for future reforms and will necessarily have to continue to change as the numbers of Medicare beneficiaries greatly increases in future years.

The new Medicare Prescription Drug and Modernization Act of 2003 (Public Law 108-173, signed by President Bush on December 8, passed by the House on November 22 and the Senate on November 25, 2003), supported by The Aluminum Association through the Employer’s Coalition on Medicare, will help Medicare better meet its future obligations and will help reduce the retiree health care burden carried by manufacturers. The new Medicare reform law will help assure future success through increased emphasis on preventative health care (initial screening physical and better management of chronic health conditions), reduced regulatory burdens Medicare imposes on physicians, hospitals, pharmaceutical and device manufacturers, and by creating the seeds of future beneficial private competition both between private entities and ultimately with Medicare itself. It also offers new choices to seniors, an essential element to future competition.

The bill also provides for new consumption-based prescription drug coverage to be provided by competing private insurers with a federal fallback. Significantly, the new benefit is comparable to private drug coverage including an emphasis on individual responsibility. The bill also provides flexibility in benefit design and assistance to employers who sponsor retiree health coverage.

Energy Legislation Stalled in Congress

Congress is closer this year than it has been in decades to adopting a comprehensive national energy policy, but with the election year ahead much of the progress may be lost to disagreement and politics.   America continues to rely too heavily on foreign sources of energy, and we are doing too little to make use of our own energy resources.  Also, our current energy infrastructure and technology must be improved to meet tomorrow's energy requirements. 

This critically important legislation will help ensure that the aluminum industry, businesses and families have access to affordable and reliable energy, and by expanding and modernizing our energy infrastructure and developing new energy technology an effective national energy plan will promote strong economic growth and create new jobs.  National energy legislation will also promote America’s energy security.  America today remains dangerously dependent on foreign sources of energy and still lacks sufficient domestic production capabilities to meet our future energy demands.

Interior Unveils New Incentives to Boost Domestic Natural Gas Production

Interior Secretary Gale Norton this month announced new incentives for natural gas development in hard-to-reach areas of the Gulf of Mexico that will save American consumers an estimated $570 million a year, create as many as 26,000 jobs, and help to ensure the nation's energy security by boosting domestic production. As part of President Bush’s National Energy Plan, these new incentives offer developers royalty relief to tap into pockets of natural gas deep under shallow waters of the Gulf of Mexico that otherwise would not be economical to produce. The incentives should translate into more predictable fuel bills and new jobs.

“With demand for natural gas climbing as more American families and businesses choose this clean-burning fuel, we must provide incentives for development of known resources that are harder to reach,” said Norton. “These incentives will help ensure we have a reliable domestic supply of natural gas in the future.”

The Minerals Management Service estimates that energy consumers and businesses in California and Illinois would realize annual cost savings of $63 million and $24.5 million respectively.

Americans use 22 trillion cubic feet of natural gas per year. Residential consumers, factory workers and farmers are among those feeling the pinch caused by the gap between supply and demand for natural gas.

About half of all American homes -- around 56 million -- are heated with natural gas. Home utility bills have soared in many parts of the country. For example, natural gas bills in New York are expected to increase by nearly 50 percent in February, and residential consumers in Central Ohio are paying nearly double what they were charged for natural gas in June.   Forty percent of American industry currently depends on natural gas, and about 90 percent of new electricity plants to come online in the next decade will be fueled by natural gas. Some businesses are moving natural-gas-based manufacturing overseas, to places where gas is available at a fraction of the price in the United States.

The MMS estimates that undiscovered gas resources of up to 55 trillion cubic feet may exist in this "frontier" area. If converted into electricity, 55 TCF could provide nearly a 5-year supply of energy for every home in America.    The Energy Information Administration forecasts the demand for natural gas will increase by 42 percent in the United States over the next 20 years.