The Bush administration violated two federal laws through part of its publicity campaign to promote changes in Medicare intended to help older Americans afford prescription drugs, the investigative arm of Congress said yesterday.

The General Accounting Office concluded that the Department of Health and Human Services illegally spent federal money on what amounted to covert propaganda by producing videos about the Medicare changes that were made to look like news reports. Portions of the videos, which have been aired by 40 television stations around the country, do not make it clear that the announcers were paid by HHS and were not real reporters.

The finding adds fuel to partisan criticism of the new law, which creates drug coverage and a larger role for private health companies in Medicare, in the biggest expansion yet of the program that provides health insurance to 40 million elderly and disabled people.

For months, Democrats have been assailing the substance of the law, saying it provides too little help to Medicare patients and too much money to pharmaceutical and managed-care companies. And now that it is beginning to take effect, Democratic lawmakers complain about the way the administration is promoting it. They have also accused President Bush's aides of concealing the true cost of the legislation while it was being debated last year.

In this instance, however, the GAO's legal opinion was not prompted by Democratic complaints. GAO officials said yesterday that they had decided on their own to examine the legality of the videos, after receiving the tapes this spring from HHS as part of a separate review of advertisements the administration had produced about the Medicare law.

The 16-page legal opinion says that HHS's "video news releases" violated a statute that forbids the use of federal money for propaganda, as well as the Antideficiency Act, which covers the unauthorized use of federal funds.

The finding does not carry legal force, because the GAO acts as an adviser to Congress. House and Senate Democrats immediately vowed to try to extract a refund of the $44,000 that the administration had spent for the three videos, two in English and one in Spanish. And they made it clear they would use the finding to try to further discredit the law, which surveys suggest is opposed by most voters.

Sen. Frank Lautenberg (D-N.J.) said he is preparing a bill that would require Bush's presidential campaign to reimburse the money.

Administration officials contended they had not erred with the videos, and they predicted that the GAO findings will have no effect on their efforts to implement the Medicare changes -- or on public sentiment. "That's an opinion of the GAO. We don't agree," said Bill Pierce, an HHS spokesman. Pierce said video news releases "are everywhere" in corporate public relations and in the public affairs work of federal agencies.

Democratic presidential candidate John F. Kerry (Mass.) called the videos "another example of how this White House has misrepresented its Medicare plan."

Two weeks ago, the Congressional Research Service concluded that the administration potentially violated the law in a related matter, in which the Medicare program's chief actuary has said he was threatened with firing a year ago if he shared with Congress cost estimates that the Medicare legislation would be a third more expensive than the $400 billion Bush said it would cost.

The House ethics panel, meanwhile, is investigating whether Republican leaders attempted to bribe or coerce a GOP House member to vote for the bill before it passed by a few votes before dawn after the longest roll call in House history.

The GAO objected to one part of the videos that were sent to TV stations this year. Each of the videos consists of three sections: video clips, information about the Medicare law and a segment called a "story package," which appears to be a news report. It is that last part that the GAO found illegal.

The English-language version of the story package concludes with a woman saying, "In Washington, I'm Karen Ryan reporting." The Spanish version has the same ending but shows a man who identifies himself as Alberto Garcia.

Pierce said the videos are not misleading because television stations know they had been produced by the government and because the stations are free to combine parts of the government-produced material with original reporting.

But the GAO decision said the story packages ran afoul of the law forbidding federal spending on covert propaganda because "in each news report, the content was attributed to an individual purporting to be a reporter but actually hired by an HHS subcontractor."

© 2004 The Washington Post Company

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