Fact Check on IPAB: “You’re Going to Get Less Health Care”

The President claims that IPAB will help reduce costs in a pain-free fashion.  But that’s not what he said in 2009.  In an interview with the Washington Post that January, he said this about capping Medicare spending (audio excerpt here):

What I think is probably the wrong approach is to think, well, the way to solve this is Medicare is spending X, and we’re just going to cap it at Y, and whatever that means in terms of people being thrown off the rolls or cutting benefits, you know, then so be it.  Because that doesn’t solve the underlying problem which is health care costs themselves are still escalating at a 6 or 7 or 8 percent rate.  All we’re doing is we’re just saying to people, you know what, you’re going to get less health care.

But that’s exactly what Obamacare does – it caps Medicare spending at pre-defined labels.  And according to Barack Obama circa 2009, that method – which he dubbed the “wrong approach” – means seniors are “going to get less health care.”

Fact Check on IPAB: Where Are the Appointees?

The President is claiming that IPAB is an innocuous board of “experts” designed to help improve health care. Well, if that’s the case, why hasn’t he appointed anyone to the board? As we pointed out on Monday, the President was supposed to nominate people to the IPAB by September 30 – but has instead ignored the law, and hasn’t appointed anyone, ostensibly because he’s afraid of nominating his controversial appointees before the election. That doesn’t sound like an innocuous board to me…

Commonwealth Fund Gives Obamacare an Epic Fail

The liberal Commonwealth Fund is out with a supposedly non-partisan comparison of the campaign health care plans offered by President Obama and Governor Romney.  There are many charts, graphs, and statistics in the 50-plus page report, but you really only need to read one phrase in the introduction to get the gist: “growth in health care costs and premiums exceeds that of family incomes…”

That of course is far from what candidate Obama promised.  Four years ago, Barack Obama repeatedly promised that he would cut premiums – not slow the rate of growth, but CUT them in absolute terms – by $2,500 per family.  Jason Furman – then a campaign advisor, and now a senior Administration official – went even further, telling the New York Times that “we think we could get to $2,500 in savings by the end of the first term, or be very close to it.”  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.  (A visual representation of this broken promise is below.)

The Commonwealth study does its best to compensate for this broken promise, by using the best possible assumptions about the rest of Obamacare.  For instance, to obtain better insurance coverage numbers for Obamacare, the report assumes that every state will implement the law’s Medicaid expansion – even though several states have already pledged not to do so, and the Congressional Budget Office agrees that many states will not.  But no matter how you slice it, even a liberal think-tank like Commonwealth has to admit that – on the metric struggling families care about most – Obamacare has been a massive failure.

In Defense of J.D. Kleinke

On Sunday the New York Times published an op-ed by American Enterprise Institute fellow J.D. Kleinke, entitled “The Conservative Case for Obamacare.”  In recent days, the piece has drawn a great deal of pushback from right-leaning commentators.

Some of the criticism is justified, for the article itself is internally inconsistent.  Even as it claims the law is market-based, the article talks about Obamacare’s “forcibl[e] repatriat[ion]” of individuals who choose not to purchase health coverage – and any “market” that relies upon coercion isn’t really a market at all.  It attempts to equate Obamacare with association health plans, when the former is the antithesis of the latter – association health plans were designed to allow small business to opt-out of onerous state benefit mandates, whereas Obamacare imposes a whole new cohort of benefit mandates at the federal level.

Kleinke’s article is also misleading and factually inaccurate on critical points.  He claims that “Republicans conveniently forgot that [an individual mandate] was something many of them had supported for years.”  The only problem with that claim is that Kleinke conveniently forgot that an individual mandate was something many Republicans had opposed for decades:

  • Conservatives made the claim in 1993 that an individual mandate was unconstitutional, claims which quickly gained resonance.
  • In “The System” – the seminal account of the Clintoncare debate – Haynes Johnson and David Broder note that by the time Senate Republicans gathered in Annapolis in mid-1994, the individual mandate was an area of much controversy within the Conference (page 363).
  • Senator Don Nickles – who introduced a bill that included an individual mandate in the fall of 1993 – introduced an entirely new version of the same bill seven months later – one which excluded the mandate.  In comments in the Congressional Record back in June 1994, Nickles noted that “as we received input from the states, it is my belief that this individual mandate should be dropped from the legislation.” (Record, June 16, 1994, page S7085).
  • Two dozen Senate co-sponsors – more than half the Republican Conference at the time – agreed with Nickles’ view, and dropped the mandate from the bill.

So there is ample evidence that an individual mandate was not conservative orthodoxy back in 1993-94, let alone 2008.  Senator Nickles pointed all this out in a letter to the editor published in the Times earlier this year – meaning the facts were, and are, readily available for all those who wish to search for them.  Sadly, however, Kleinke, like Ezra Klein and others, failed to do so, perhaps because the “Republicans switched positions on the mandate to defeat Obama” meme is too politically valuable to abandon.  One would have hoped that an AEI scholar would have been slightly more thorough in his research than a liberal “JournoList.”  Unfortunately, that does not appear to have been the case.

On the other hand, it’s worth examining the behavior of liberal analysts over the past several months:

Given this behavior from the left’s purported “scholars,” Kleinke benefits himself from the soft bigotry of low expectations.  Yes, his piece is factually incorrect, and logically and philosophically inconsistent.  But hey – at least he’s not being two-faced about his position.

“Invisible Obama” Breaks the Law — and His Promise to Seniors

Throughout the last few months, President Obama has claimed that his Medicare plan will help improve the program.  He claimed in August that “I’ve strengthened Medicare….I’ve proposed reforms that will save Medicare money by getting rid of wasteful spending in the health care system.”  In his deficit speech last April, the President outlined those reforms:

We will slow the growth of Medicare costs by strengthening an independent commission of doctors, nurses, medical experts and consumer who will look at all the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services that seniors need.

The President of course was referring to the Independent Payment Advisory Board, a panel of bureaucrats created in Obamacare to enforce binding caps on Medicare spending – caps which the President’s 2011 deficit submission proposed lowering even further.

There’s only one problem with the President’s claims that he “strengthened Medicare” by creating the IPAB: President Obama has now violated the law by failing to appoint nominees to a board he created.  According to page 426 of the statute, the law appropriates funds for IPAB (originally $15 million, but lowered to $5 million last December) “for fiscal year 2012” – that’s the fiscal year that ended on September 30, i.e., yesterday.

So Obamacare contemplates IPAB being up and running NOW – yet President Obama has failed to nominate any appointees to the board.  If the President wants to save Medicare so badly – and IPAB is so critical to saving Medicare – what’s he waiting for?  Why is he breaking his promise to seniors?  And if IPAB is so innocuous and won’t harm seniors, why is he waiting until AFTER his re-election campaign to announce who he wants to put on the board – is it because the Administration plans on naming more radical appointees like Donald “Rationing with Our Eyes Open” Berwick to administer the IPAB’s new world order?

Clint Eastwood’s “empty chair” speech at the Republican National Convention generated much discussion as to its broader context.  When it comes to health policy, however, that empty chair takes on a clear meaning – the vacancies on the IPAB board, caused by a President who would rather abdicate his statutory duties than reveal the controversial plans he intends to implement after the election.

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-estimated 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 below 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: “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.

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 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.

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, 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 an inside-the-Beltway 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.

 

The Honorable Kathleen Sebelius

Secretary

Department of Health and Human Services

200 Independence Avenue, S.W.

Washington, DC 20201

Dear Secretary Sebelius:

Today my office is releasing a report, “Profits Before Principles,” regarding the insurance practices of AARP. The report finds that AARP has a strong financial interest in keeping Medigap supplemental insurance premiums high – because the organization receives greater profits the more seniors pay in premiums. In addition, AARP’s financial interests have been aided by the Patient Protection and Affordable Care Act (PPACA), which AARP not coincidentally endorsed. Experts agree that PPACA’s provisions will have the effect of driving seniors out of Medicare Advantage health plans and into Medigap supplemental insurance – a market where AARP enjoys the largest market share.

I am greatly concerned by AARP’s questionable business practices, and by the numerous exemptions granted to Medigap insurance – both legislatively and through your Department’s regulatory process – as a result of PPACA. Therefore, I ask you to respond to the following questions:

  1. The text of PPACA exempts Medigap supplemental insurance plans from several new requirements: Section 1103 exempts plans from medical-loss ratio requirements; Section 1202(2)(A) exempts plans from the prohibition on pre-existing condition exclusions; Section 9014 exempts plans from caps on industry executive compensation; and Section 10905(d) exempts plans from the tax applied to all other health insurers. Does the Administration support all these special exemptions for Medigap plans? Why or why not?
  2. My staff attended a PPACA implementation briefing for Senate Republican staff in April 2010. At that time, Jeanne Lambrew of your Department’s Office of Health Reform admitted that PPACA exempted Medigap insurance from the law’s new regulatory regime. If in fact the Administration does NOT support PPACA’s numerous exemptions for Medigap plans, why has your Department done nothing to publicize that fact in the intervening two-plus years since that briefing?
  3. Your Department continues to claim that PPACA “ended many of the insurance industry’s worst abuses” – even though you are fully aware that these changes do not apply to Medigap plans. For instance, HHS previously released a publicity brochure that says “starting in 2014, discrimination based on a pre-existing condition by an insurer will be prohibited in every state.” Why has your Department continued to repeat these misleading slogans, even though your staff admitted that seniors applying for Medigap insurance remain subject to pre-existing condition discrimination due to the special carve-outs included in PPACA?
  4. In your speech to the Democratic National Convention on September 4, 2012, you criticized Republicans for “let[ting] insurance companies continue to cherry-pick who gets coverage and who gets left out, priced out, or locked out of the market.” Likewise, during his speech at the Democratic National Convention, President Obama said that “no American should have to spend their golden years at the mercy of insurance companies.” Please detail the specific provisions included in PPACA that place new limits on Medigap insurers’ ability to “cherry-pick who gets coverage and who gets left out, priced out, or locked out of the market,” and ensure that no applicant for Medigap coverage with a pre-existing condition will be left “at the mercy of insurance companies.”
  5. In a speech on September 8, 2012, President Obama claimed that Medicare premium support proposals would lead to billions of dollars in greater profits for insurance companies. But a 2011 House Ways and Means Committee member report found that PPACA itself could lead to billions in profits for AARP, because the law’s cuts to Medicare Advantage will reduce enrollment in that program, and encourage seniors to purchase supplemental Medigap insurance instead. Do you agree with the Ways and Means Committee report’s premise that PPACA will lead seniors to migrate from Medicare Advantage coverage to Medigap plans – thereby increasing profits to AARP? If not, on what basis do you disagree with the non-partisan experts at the Congressional Budget Office and the Medicare Office of the Actuary, who have concluded the law will reduce Medicare Advantage enrollment by millions?
  6. In addition to the above exemptions, your Department added yet another Medigap carve-out to the ones included in the statute, by exempting Medigap insurance from PPACA’s rate review process. Why do seniors not deserve this supposed protection? If PPACA’s benefits are so good, why didn’t your Department extend them to seniors as well?
  7. Did AARP, or anyone associated with or paid by it, influence or attempt to influence the Administration regarding the numerous exemptions given to Medigap insurance in PPACA, or the regulatory interpretations of PPACA? If so, please provide details as to the dates, persons, positions, and circumstances of said efforts.
  8. The 2011 House Ways and Means Committee member report noted that for its Medigap plans, AARP receives 4.95% of every premium dollar paid by seniors. As a former insurance commissioner, do you think it’s appropriate that AARP has a perverse financial incentive to keep Medigap insurance premiums high?
  9. In a speech at an AARP conference in October 2010, you praised that organization as the “gold standard in cutting through spin and complexity to give people the accurate information they need.” As a former insurance commissioner, how exactly do you believe AARP can serve as a “gold standard” giving seniors “accurate information” about Medigap insurance plans, when the organization has a financial incentive to sell seniors more insurance than they may need or want?
  10. As a former insurance commissioner, you are no doubt aware that the National Association of Insurance Commissioners (NAIC) has previously expressed concern about the potential for conflicts-of-interest associated with percentage-based compensation arrangements. In fact, Section 18 of NAIC’s Producer Model Licensing Act recommends that states require explicit disclosure by insurer affiliates, and clear written acknowledgement by consumers, of any percentage-based compensation arrangement, due to the potential for financial abuses. Did you undertake any due diligence to ensure that AARP’s Medigap percentage-based compensation model was in full compliance with both the letter and spirit of Section 18 of the Producer Model Licensing Act prior to making your assertion that AARP constitutes the “gold standard” for giving seniors “accurate information?” If not, why not?
  11. Given that AARP holds the largest share of the Medigap market, why did your Department grant a special exemption for Medigap insurance from PPACA rate review? Why do you believe that AARP can act in a proper manner to control premium increases – even though the organization gains profits for every additional dollar Medigap premiums rise?
  12. At a conference hosted by America’s Health Insurance Plans in March 2010, you encouraged the insurance industry to give up some of its profits, at a time when health insurers were earning between 2 and 3 cents of profit for every dollar of revenue, according to Fortune 500 estimates. If you criticized other insurers for earning between 2 and 3 cents of every premium dollar in profits, why haven’t you criticized AARP for taking 4.95 cents of every Medigap premium dollar as pure profit?
  13. In April 2010, the Administration and you personally engaged in very public efforts to “encourage” insurance companies to ban rescissions and extend coverage to young adults earlier than was required by PPACA. Why haven’t you taken similar steps to encourage AARP to stop discriminating against sick seniors applying for Medigap coverage?
  14. At the April 2010 Senate Republican briefing, staff asked whether your Department would write a letter to AARP asking them to stop denying Medigap applications for individuals with pre-existing conditions. Jeanne Lambrew of the Office of Health Reform promised to look into the matter, but the letter was never sent. Why has your Department waited more than two and a half years to ask AARP to stop discriminating against sick and disabled individuals applying for Medigap insurance?
  15. Finally, please forward copies of any and all Administration documents – including those originating from outside your Department – from January 20, 2009 through today inclusive regarding: 1) the Medigap exemptions included in PPACA, and the Administration’s viewpoints and/or technical assistance provided regarding same during the drafting process; 2) the Administration’s administrative interpretations of the Medigap exemptions during the rulemaking process; 3) AARP’s positions on Medigap insurance plans, including but not limited to the exemptions included in PPACA; and 4) AARP’s position on PPACA, including but not limited to any policy changes AARP said it required to be included in the legislation for the bill to receive the organization’s endorsement.

I look forward to receiving your response on these issues within two weeks. If you have any questions, feel free to contact Alec Aramanda or Chris Jacobs of my staff. Thank you for your time, and I look forward to your reply.

Sen. DeMint Op-Ed: AARP Sells Out Seniors for Obamacare

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 admit 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.

This post was originally published at Politico.

Two Math Lessons for President Obama

In his speech to the Democratic National Convention a few weeks ago, President Clinton said that one of the new ideas Democrats brought to Washington was “arithmetic.”  Which is particularly ironic, given two developments associated with yesterday’s updated CBO estimates of the mandate taxes associated with Obamacare:

  1. The Administration claimed that the tax increase wouldn’t harm middle-class families because the tax “will only affect people who can afford health care but choose not to buy it.”  But the Congressional Budget Office estimated that 600,000 people with incomes UNDER the federal poverty level – that’s $15,130 for a family of two in 2012 – would pay higher taxes due to the Obamacare mandate.  CBO has also projected that the average premium in the Exchange will be $15,200 per family per year.  Last time I checked, $15,200 was greater than $15,130 – meaning some people may face higher taxes because Obamacare forces them to buy health insurance whose total premium could cost more than their family’s entire income.
  2. CBO also admitted that “most of the increase—about 85 percent—in the number of people who are expected to pay the penalty tax [since CBO’s April 2010 estimate] stems from changes in CBO and JCT’s baseline projections since April 2010, including the effects of legislation enacted since that time, [and] changes in the economic outlook, primarily a higher unemployment rate and lower wages and salaries.”  I could be wrong, but I thought it was better for unemployment to be going down, not up, and for wages to be going up rather than down.  In which case a President running for re-election on a slogan of moving “Forward” has in reality moved the American economy backward since CBO made its initial estimates two years ago.