Monthly Archives: September 2012

The Truth about Obamacare Keeps Coming Forward

From the Manchester Union Leader last week came word of an interesting development.  In a debate, former Congresswoman Carol Shea-Porter, who looks to regain her seat this fall, admitted that Obamacare — which she voted for two years ago — WON’T reduce health costs:

Shea-Porter said the Obama health care plan will slow the increase in health care costs, but no one should expect them to drop. “Everyone knows that costs go up. For him [Rep. Frank Guinta] to say health care costs should drop when nothing else ever drops, it’s just not accurate,” Shea-Porter said.

But Guinta said Congress should try to reduce health care costs. “I’ve yet to hear anyone say ‘Thank goodness for the Affordable Care Act because it slowed my (premium) increase,’” he said.

And the reason Rep. Guinta has yet to hear anyone say Obamacare has cut their premium increases is because the law hasn’t fulfilled its promise.  Even fact-checkers have admitted this reality, when Politifact last month officially declared candidate Obama’s promise to “cut the cost of a typical family’s health insurance premium by $2,500 a year” a broken promise:

No cut in premiums for typical family

Back in 2008, we collected over 50 promises Barack Obama made about health care….When it came to health care premiums for the typical family, Obama said he would cut the annual cost by $2,500.  Months before Obama took office, a New York Times reporter dubbed it one of the most audacious pledges of the campaign.

We reached out to David Cutler, an economist who advised Obama during the 2008 campaign and helped calculate the $2,500 figure that appeared in Obama’s speeches.  He said the calculation encompassed total health care costs, not just premiums.  These would include out-of-pocket costs, employer-provided insurance costs, and taxes to pay for public insurance programs.

Cutler acknowledged that Obama made “occasional misstatements” that tied the $2,500 reduction to premiums and not total medical spending.  We can’t judge whether Obama misspoke, but we checked the Project Vote Smart database of public statements by politicians, which shows that Obama said premiums (and only premiums) would go down for the typical or average family by $2,500 repeatedly.  You can see examples throughout the arc of his 2008 presidential campaign here, here, here, and here.

It is also true that Obama used the number in a more expansive context sometimes, such as here during a speech in Newport News, Va, and here in a response to a report about Medicare and Social Security.

The 2008 New York Times article explains how Cutler and his colleagues calculated the $2,500 figure, a round number based on back-of-the-envelope arithmetic.

“That number is much simpler than the world of insurance actually is,” said Deborah Chollet, a health economist for Mathematica Policy Research, a nonpartisan policy analysis group….

In our search for evidence that the law might reduce the typical family’s premiums, we contacted the Department of Health and Human Services, the federal agency implementing the law.  The department could not provide proof that the average family would see a reduction, much less a $2,500 reduction.

In assessing this promise, we consider the following: An author of the $2,500 figure has disavowed its use as it relates to premiums alone.  An independent health care analyst projects that premiums will go up for the typical family.  The federal agency implementing the Affordable Care Act did not provide evidence that premiums will go down for the typical family.  We rate this a Promise Broken.

The fact that Democrats — and even President Obama’s own Administration –acknowledge that the law won’t meet the President’s stated promise is yet another way that the promise of “hope and change” has evaporated for families struggling to pay their insurance bills.

Is Obamacare Accelerating Health Cost Growth?

The Health Care Cost Institute yesterday released its annual report on the rate of health expenditure inflation, and the news was not good — not only are costs rising, they are rising at a faster rate than in prior years.  As the Washington Post reports:

Spending for private health insurance surged by 4.6 percent in 2011…That growth rate is faster than the rest of the economy and higher than the previous year, which had 3.8 percent growth.  Average spending on a private insurance patient rose to $4,547 in 2011, compared with $4,349 in 2010.  That statistic suggests that a recent downturn in health-care spending may have been a temporary product of the recession rather than a more permanent change, as some health-care economists have hoped.

As a reminder, candidate Obama said repeatedly his health plan would CUT premiums by an average of $2,500 per family — meaning premiums would go DOWN, not merely just “go up by less than projected.”  The campaign also promised that that those reductions would occur within Obama’s first term.  But while candidate Obama promised premiums would fall by $2,500 on average, premiums have risen by $3,065 since Barack Obama was elected President.

Regardless of whether or not Obamacare was the cause of the acceleration in health costs in 2011, the news once again illustrates how the 2700-page law has failed to live up to Barack Obama’s promise to lower costs for struggling American families.

Kaiser Premiums 2012

Obamacare’s Taxes Hitting the Middle Class

Even as President Obama claims he doesn’t want tax increases to hit struggling middle class families, evidence has piled up in recent weeks about the effects Obamacare’s massive “temporary refund adjustments” have had on the economy.  Earlier this month medical device manufacturer Welch Allyn announced it was laying off ten percent of its workforce — amounting to several hundred jobs — due to the “new onerous U.S. Medical Device Tax scheduled to begin in 2013 as mandated in” Obamacare.  To these workers, the idea that Obamacare’s tax increases will not affect the middle class is a broken promise.

Separately, many federal workers received a version of the e-mail below, noting that Flexible Spending Account limits will decline in 2013 from $5,000 to $2,500, thanks also to Obamacare. (It’s also interesting that, unlike the rebate checks issued under the law, the e-mail contains absolutely zero references to “the Affordable Care Act” or “Obamacare” in explaining the reason for this tax increase.  Coincidence?  I think not.)  Candidate Obama promised families their costs would decline by $2,500 – but instead, middle class families will lose $2,500 in tax-free savings.  It’s yet another example among many about how President Obama has broken his promises — and those broken promises are breaking the back of the middle class.

From: FSAFEDS@shps.com
Sent: Friday, September 14, 2012 02:41 PM

Subject: IMPORTANT: 2013 Healthcare Reform Changes Regarding Health Care Flexible Spending Accounts
Dear FSAFEDS Participant,

The healthcare reform legislation introduces a change in the maximum amount you can contribute to your Health Care Flexible Spending Account (FSA).

Effective for the 2013 Benefit Period the maximum amount you can contribute to a Health Care FSA will be $2,500.

For the Benefit Period beginning January 1, 2013, all individuals participating in a health care flexible spending account will no longer be able to contribute up to $5,000 annually. The new maximum annual amount will be $2,500.

Here are a few Q&As:

1. How will this impact my 2012 Health Care FSA?

This change will have no impact on your 2012 Health Care FSA. If you elected greater than $2,500 for the 2012 Benefit Period, you will still be reimbursed for eligible expenses up to the amount of your annual election.

2. I’m not sure how much I will need to elect for the 2013 Benefit Period. What should I do?

During the Federal Benefits Open Season for the upcoming 2013 Benefit Period, you should carefully estimate the amount you elect to contribute to your Health Care FSA. Remember, once Open Season is over you cannot change your annual election amount unless you experience a Qualifying Life Event (QLE).

3. What if Congress passes legislation this year which reverses some of the healthcare reform changes impacting FSAs?

We will keep you informed in the event there are further changes regarding your FSAFEDS account. You may also check the Message Board at www.FSAFEDS.com for updates.

If you have questions, call us toll-free, at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 a.m. until 9:00 p.m. Eastern Time, or via email at FSAFEDS@shps.com.

Sincerely,
FSAFEDS

Obama Administration, Asleep at the Switch…

Yesterday various press outlets reported that the Administration warned hospitals and other medical providers about questionable Medicare billing tactics that could range from abusive to fraudulent.  But that’s not the real story – the real story is how the Administration was asleep at the switch for years, allowing these abusive practices to continue, even accelerate.  A study by the Center for Public Integrity published in the Washington Post more than a week ago, and highlighted in this space, noted that “thousands of doctors and other medical professionals have billed Medicare for increasingly complicated and costly treatments over the past decade, adding $11 billion or more to their fees — and signaling a possible rise in medical billing abuse.”

So what did the Administration do when this major Washington Post expose appeared, questioning $11 billion in Medicare spending as questionable, abusive, or even downright fraudulent?  Exactly nothing.  Only when a second, similar story appeared in the New York Times this weekend did Secretary Sebelius finally send a letter questioning provider billing practices, and promising vigilance on this issue — with “vigilance” hopefully meaning something, after her Department’s years of neglect.

The Administration has asked questions of Medicare providers about their billing practices, but the real questions belong to the Administration:

  1. Why did the Administration wait so long to take action — and how many billions of dollars in questionable transactions were completed because this Administration decided not to examine billing practices for potential abuse and fraud?
  2. How can the Administration implement the 2700 pages of Obamacare if they can’t even ensure that existing laws and practices within Medicare are being followed?  Conversely, was the Administration asleep at the switch when it comes to questionable billing practices because HHS is spending all its time, personnel, and resources implementing Obamacare, rather than watching over Medicare?
  3. How can President Obama and Secretary Sebelius claim Obamacare helps crack down on fraud, when they allowed $11 billion in questionable transactions to go unchallenged?  Given this record, perhaps the Administration would be better off outsourcing oversight of Medicare to the Center for Public Integrity and the New York Times.

One final note: Three liberal advocates, including former OMB advisor Zeke Emanuel and former CMS Administrator Donald Berwick, penned an op-ed in this morning’s Wall Street Journal denouncing comprehensive Medicare reform, and claiming that government-run Medicare can do a better job containing costs because “the key to sustainable cost control lies in encouraging physicians and hospitals to focus on quality rather than quantity, and value rather than volume.” These claims would have somewhat more credibility if they weren’t co-authored by someone who, in nearly two years at CMS, allowed transactions potentially bilking Medicare for billions to pass through undetected right under his nose.  Given that track record, Dr. Berwick is in absolutely no position to give lessons on how to “save” Medicare.  Instead the old proverb rings true: Physician, heal thyself.

The Obama Administration’s Protection Racket

Shortly, President Obama will be addressing the AARP convention via satellite.  He will undoubtedly say nice things about AARP’s role as a “senior advocate.”  But what he won’t discuss are the ways in which his own Administration has allowed AARP to continue making billions in profits on its insurance business:

  1. AARP’s lucrative Medigap insurance was exempted in Obamacare from the ban on pre-existing conditions; medical loss ratio requirements; caps on insurance industry executive compensation; and the tax on all other health insurance plans.
  2. The Department of Health and Human Services didn’t think all these Obamacare exemptions were enough; last year they also exempted Medigap insurance from premium rate review — even though AARP, which carries the plan with the largest market share, earns greater profits the more seniors pay in premiums.
  3. At a conference hosted by America’s Health Insurance Plans in March 2010, HHS Secretary Sebelius encouraged the insurance industry to give up some of its profits, at a time when health insurance profit margins were about 2 percent.  Yet neither Secretary Sebelius nor anyone else in the Administration ever criticized AARP for making a profit margin of nearly 5 percent on its Medigap insurance.
  4. In April 2010, the Administration engaged in very public efforts to “encourage” insurance companies to ban rescissions and extend coverage to young adults earlier than is required by the law.  But no one from the Administration has taken similar steps to encourage AARP to stop discriminating against sick seniors applying for Medigap coverage.
  5. In a speech at an AARP conference in October 2010, Secretary Sebelius praised AARP as the “gold standard in cutting through spin and complexity to give people the accurate information they need.”  Yet the National Association of Insurance Commissioners (NAIC) has previously expressed concern about the potential for conflicts-of-interest associated with percentage-based compensation arrangements.  So Secretary Sebelius praised as the “gold standard” for “accurate information” an organization that has financial conflicts her insurance commissioner colleagues have criticized as ripe for abuse.

Why might the Administration look the other way despite these abuses?  Documents released by the Energy and Commerce Committee yesterday provide myriad reasons, showing all the political favors senior Administration officials asked of AARP as they rammed Obamacare through Congress:

  • Jim Messina, White House Deputy Chief of Staff: “We need [AARP CEO] Barry Rand to go meet with Ben Nelson personally and just lay it on the line.  ‘We will be with you, we will protect you.  But if you kill this bill, seniors will not forget.’  We are at 59 [votes in the Senate], we have to have him.” (page 7)
  • Jim Messina: “Can we get immediate robo calls into Nebraska urging [Ben] Nelson to vote for cloture?” (page 9)
  • Nancy-Ann DeParle, Director, White House Office of Health Reform: “Can AARP support accountable care orgs [sic] and some other delivery system reforms?” (page 26)
  • Jim Messina: “Latest top 25 targets list from House leadership” (page 35)
  • Ann Widger, Office of Public Engagement: “We would really like AARP to participate in this roundtable.” (page 37)
  • Ann Widger: “Did you guys put out any paper today on the McCain [Medicare] amendment?” (page 39)
  • Jim Messina: “[Rep. Larry] Kissel a problem…Help.” (pages 42-43)
  • Nancy-Ann DeParle: “Can you get me a copy of the [AARP] bulletin we discussed yesterday?” (page 64)

Secretary Sebelius has already admitted she has acted improperly in using her office to conduct political activities; the Office of Special Counsel last week concluded she violated the law to do so.  Given all of the above, it is not unreasonable to question whether the Secretary, and others within the Administration, have made a calculated political decision to grant special favors to AARP — and ignore its questionable business practices — because AARP endorsed Obamacare.

Yesterday President Obama claimed that he changed Washington “from the outside” by enacting Obamacare.  The pattern of conduct described above suggests just the opposite: That the President rammed Obamacare through only by establishing what amounts to a protection racket between the Administration and AARP – the former will allow the latter to continue overcharging seniors for insurance, so long as AARP uses its advocacy megaphone to endorse the President’s liberal causes.

Fact Check: Seniors ‘At the Mercy of Insurance Companies’

The Hill reports that, during his remarks to AARP this morning, the President attacked Republicans for leaving seniors “at the mercy of insurance companies.”  Well, in case you missed it, here are five ways the President and his Administration have left seniors at the mercy of one organization with insurance interests — AARP — by granting them special exemptions and ignoring their questionable insurance practices:

  1. AARP’s lucrative Medigap insurance was exempted in Obamacare from the ban on pre-existing conditions; medical loss ratio requirements; caps on insurance industry executive compensation; and the tax on all other health insurance plans.
  2. The Department of Health and Human Services didn’t think all these Obamacare exemptions were enough; last year they also exempted Medigap insurance from premium rate review – even though AARP, which carries the plan with the largest market share, earns greater profits the more seniors pay in premiums.
  3. At a conference hosted by America’s Health Insurance Plans in March 2010, HHS Secretary Sebelius encouraged the insurance industry to give up some of its profits, at a time when health insurance profit margins were about 2 percentYet neither Secretary Sebelius nor anyone else in the Administration ever criticized AARP for making a profit margin of nearly 5 percent on its Medigap insurance.
  4. In April 2010, the Administration engaged in very public efforts to “encourage” insurance companies to ban rescissions and extend coverage to young adults earlier than is required by the law.  But no one from the Administration has taken similar steps to encourage AARP to stop discriminating against sick seniors applying for Medigap coverage.
  5. In a speech at an AARP conference in October 2010, Secretary Sebelius praised AARP as the “gold standard in cutting through spin and complexity to give people the accurate information they need.”  Yet the National Association of Insurance Commissioners (NAIC) has previously expressed concern about the potential for conflicts-of-interest associated with percentage-based compensation arrangements.  So Secretary Sebelius praised as the “gold standard” for “accurate information” an organization that has the types of financial conflicts her insurance commissioner colleagues have criticized as ripe for abuse.

If the President is so worried about leaving seniors at the mercy of insurance companies, perhaps he should tell the people within his own Administration to stop granting political favors to Democrats’ cronies at the AARP.

David Axelrod, Pots, and Kettles

Obama campaign adviser David Axelrod appeared on MSNBC’s Morning Joe this morning, and repeated the old tropes that Obamacare “plowed [money] back into Medicare,” and that “Medicare’s length of life has been extended” due to Obamacare.  We’ve previously fact-checked all of these statements here.  But what caught us as interesting was this comment:

There’s an awful lot of demagoguery out there.  And in that environment, it’s very hard to have a serious discussion about issues like that.

It is entirely true that there is an awful lot of demagoguery about Medicare and entitlements out there.  The problem for Mr. Axelrod is that most of it comes from Democrats:

  • As one House Member put it, if the President had proposed a true restructuring of our unsustainable entitlements, that would “cancel out any bludgeoning that Democrats might give the Republicans over Medicare and Medicaid.”
  • The Washington Post’s liberal Plum Line reported last year that Senate Democrats don’t want to pass Medicare reform because it would be “giving away the biggest [political] advantage” Democrats have had “in some time.”
  • Last November, Rep. Steve Israel, Chair of the Democratic Congressional Campaign Committee, in an interview with the Post “declined to say whether a [deficit] agreement to cut entitlements might have hindered his political strategy.”  In other words, Democrats WANTED the supercommittee to fail — so that they could resume their “Mediscare” political attack ads against Republicans.

If Mr. Axelrod wants to criticize the members of his own party for using Medicare as a political cudgel, we’re all ears.  But unless and until that happens, if the Obama campaign wants to complain about Medicare demagoguery, they might be wise to first look in the mirror.

Sen. Jim DeMint Op-Ed: AARP Sells Out Seniors

Originally published in Politico, September 21, 2012

President Barack Obama is scheduled to speak Friday via satellite to a convention sponsored by AARP. His speech will likely extol the virtues of “Obamacare,” and engage in scare tactics about conservative proposals to make Medicare sustainable. But here are five facts you’re unlikely to hear from the president, or AARP, about how each treats seniors:

First, while AARP poses as a disinterested senior advocate, it functions as an insurance conglomerate, with a liberal lobbying arm on the side. AARP depends on profits, royalties and commissions to make up more than 50 percent of its annual revenues. Membership dues from seniors account for only about 20 percent. The sums involved aren’t chump change: AARP’s $458 million in health insurance revenue in 2011 would rank it as the nation’s sixth most profitable health insurer.

Second, AARP wins when seniors lose. Because AARP receives a “royalty fee” of 4.95 percent of every premium dollar paid by seniors buying Medigap insurance from the organization, AARP earns more profit when seniors pay more in premiums. Even former AARP executives admitLINK that the billions of dollars raised from these business enterprises have compromised the organization’s mission and independence.

Third, AARP’s policy positions just happen to coincide with its financial interests. “Obamacare,” which AARP lobbied heavily for, could yield the group windfall profits of more than $1 billion over the next decade by forcing seniors off Medicare Advantage plans and into Medigap supplemental coverage. Conversely, AARP engaged in a secret lobbying campaign to block Medigap reforms last year that by one estimate would have saved nearly 80 percent of seniors an average of $415 per year – but cost AARP billions in profits.

Fourth, AARP knows it can protect its financial interests by aligning with Democrats, no matter what its members think. That’s one reason why AARP endorsed “Obamacare,” though the organization’s call response logs indicate opponents outnumbered supporters by more than 50 to 1.

Consider: One senior AARP executive wrote the White House in November 2009, saying “we will try to keep a little space between us” on health care – because AARP’s “polling shows we are more influential when we are seen as independent, so we want to reinforce that positioning….The larger issue is how best to serve the cause.”

“The cause” in this case is liberalism, the Obama agenda and “Obamacare” in particular.

Fifth, the Obama administration has reciprocated AARP’s support by giving the group preferential treatment. “Obamacare” exempted Medigap insurance – a market AARP dominates – from virtually all its new mandates, including the ban on preexisting condition discrimination. The Department of Health and Human Services exempted Medigap plans from insurance rate review, though AARP, whose plan is the most popular form of Medigap coverage, makes more in profit the higher premiums rise. Though the administration has publicly attacked other insurance companies with much smaller profit margins, it has not openly criticized AARP’s business practices.

It’s not that AARP and the administration don’t know better – they do. The AARP executive who wrote White House officials knew that AARP had to be “seen as independent.” He wasn’t independent, of course – comments about “serv[ing] the cause” make that clear. But he knew he had to appear impartial to AARP’s members.

And as a former state insurance commissioner, Health and Human Services Secretary Kathleen Sebelius must know that percentage-based “royalty” payments create a strong incentive for abuse. Nonetheless, Sebelius called AARP the “gold standard” for “accurate information” – though AARP makes more profits the higher the Medigap premiums rise for seniors.

As much as Obama claims to eschew Chicago-style politics, this administration’s crony relationship with AARP gives every appearance of being an old-fashioned protection racket. The administration lets AARP make billions of dollars in profits off seniors, as long as they continue to support “the cause” and funnel those profits toward supporting Obama’s liberal agenda.

That’s why the administration won’t speak out against AARP’s abuses; why Democrats who said they ended “the worst insurance industry abuses” in “Obamacare” exempted Medigap insurance from virtually the entire law, and why the Obama campaign is so willing to use AARP as a political shield in running negative attack ads against his opponent.

The president recently said, “no American should have to spend their golden years at the mercy of insurance companies.” What he won’t tell seniors today is that, thanks to his administration’s protection racket, that isn’t true.

Millions of seniors have been — and will continue to be — taken advantage of, because this administration’s protection racket turns a blind eye toward the insurance industry abuses of the AARP.

Sen. Jim DeMint (R-S.C.) is serves on the Senate Commerce, Science and Transportation Committee, which has oversight over AARP, as well as the Joint Economic Committee.

Fact Check: Access to Physician Services

In reviewing the transcript of the President’s speech before AARP, there was one dubious statement we overlooked, and it’s this: “A new study says that under their [premium support] plan, if just 5 percent of seniors switch to private plans, 40 percent of doctors who currently take Medicare would stop accepting it.  So think about that.  Millions of seniors would be forced to change doctors.”  As one might expect, there are several problems with this statement:

  • First, it wasn’t a “study” in any sense of the term – and it certainly wasn’t independent.  The President was referring to a back-of-the-envelope calculation by his former budget director in a Bloomberg column this weekOne might argue that the author of the study, Peter Orszag, might be slightly biased towards the President this November, seeing as how he used to work for him.
  • Second, Obama himself mis-characterized the Orszag column.  Here’s what Orszag actually wrote: “About 10 percent of the U.S. population is now enrolled in traditional Medicare, and an additional 5 percent has private Medicare plans.  Let’s assume, for the sake of argument, that the Ryan plan would cause another 5 percent of the population to shift…”  Orszag based his conclusions on 5 percentage of the entire American public switching away from Medicare, whereas the President said Orszag’s conclusions were based on 5 percent of seniors switching away from Medicare – a much lower bar.  So the President over-stated the impact of Orszag’s “study” and its effects on physician access.
  • Most importantly, Orszag’s conclusions – which were over-estimatedOrszag Study by the President – aren’t borne out by recent evidence.  Medicare Advantage enrollment HAS gone up by leaps and bounds in recent years – since 2003, it has more than doubled in both absolute terms and as a percentage of Medicare beneficiaries.  In other words, seniors have switched plans, as the chart nearby shows.  Yet the Medicare Payment Advisory Commission said this year that “overall, beneficiary access to [Medicare physician] fee schedule services is good.”  If Orszag believes that beneficiaries switching to private plans would cause doctors to stop seeing Medicare patients, then why did a 100 percent increase in Medicare Advantage enrollment not have a significant effect on access to physician services in traditional Medicare?

Peter Orszag has made ludicrous claims before.  He previously said that Obamacare’s CLASS act would be “on a firm financial footing of its own,” only to watch as the program collapsed even before it began.  Given the evidence above, his claims about physician access appear as logical as his claims about the CLASS Act, and should be taken just as seriously.

Fact Check: Paying in to Entitlements

The President just told the AARP that seniors pay in to Social Security and Medicare.  The problem is, that claim is half true.  While individuals obviously do pay in to the Social Security and Medicare programs, most beneficiaries receive more in benefits than they paid in in taxes.  An Urban Institute study about the entitlement benefits and taxes recipients will receive (and pay) over their lifetimes found that a senior with average wages retiring this year will have paid $58,000 in Medicare taxes – but will receive over $167,000 in Medicare benefits.  The Associated Press ran a story on this issue in December 2010, and its headline was clear: “What You Pay for Medicare Won’t Cover Your Costs.”

Our nation’s entitlement programs are in dire need of reform, to become more sustainable.  Perpetuating myths about their long-term viability, which the President’s comments imply by saying individuals fully-fund their benefits when paying into the system, only makes generating the political consensus necessary for true entitlement reform more difficult.