“Let’s Not Forget Medicare Advantage”: Selective Outrage Over Federal Health Care Costs
Knowing I’ve been both a critic of insurance company practices and a supporter of efforts to reform the industry, a FOX news producer reached out last week to get my take on accusations by conservatives that Obamacare will actually result in a bailout of big insurance companies.
Under the headline, “Bailing Out Health Insurers and Helping Obamacare,” The Weekly Standard on Monday urged Republicans to insist that future debt ceiling increases contain a no-bailout provision. The magazine also cited Sen. Marco Rubio’s, R-Fla., bill to repeal a provision of the Affordable Care Act designed to limit potential initial losses of insurers selling policies on the new health insurance exchanges.
I reminded the FOX producer that Republicans have been supporting — and vigorously defending — a much more expensive transfer of taxpayer dollars to private insurers than the one Obamacare foes are now concerned about.
Here’s the issue:
Lawmakers who drafted the Affordable Care Act knew that insurers would be reluctant to participate in the new health insurance exchanges — also called marketplaces — if the government didn’t create a temporary program to protect them against what’s known in the insurance world as adverse selection.
Insurers were concerned, for good reason, that the first people to sign up for coverage through the exchanges would be folks previously shut out of the insurance market — people who were older and sicker than the population at large. Those people couldn’t afford to buy coverage previously because insurers were able to charge them far more than younger, healthier people.
In many cases, insurers refused to sell coverage at any price to prospective customers with preexisting conditions. That’s a big reason why the number of uninsured Americans had reached nearly 50 million when Congress passed the reform law.
So it wasn’t the least bit surprising that the first few million who have signed up for coverage since the exchanges opened on Oct. 1 skew older than many expected. People who have been denied coverage for years are far more motivated to get insurance — and fast — than anyone else. There is not the same pent up demand among the young and healthy.
In anticipation of this, drafters of the reform law established a $25 billion risk fund to insulate insurers from big losses during the first three years. Although the risk fund has always been in the law, conservative pundits apparently just became aware of it.
Yes, $25 billion is a lot of money, but it is pocket change compared to the enormous amount of taxpayer dollars that have been flowing to private insurance companies for nearly three decades to keep them in the Medicare Advantage program, which has had the unwavering support of Republicans.
Republicans have long supported efforts to privatize Medicare, and the Medicare Advantage program is one of the ways they’ve tried to do it. Medicare Advantage is billed as a private alternative to traditional Medicare. When Americans reach 65, they can enroll in traditional Medicare or in a private plan operated by an insurer. If they opt for a private plan, the federal government still picks up the tab and transfers money to the private insurer every month.
As the U.S. Government Accountability Office explains it, the Centers for Medicare and Medicaid Services (CMS) adjusts the monthly payments it sends to private insurers to account for each beneficiary’s health status. As part of this risk adjustment process, CMS assigns each Medicare Advantage beneficiary a risk score — “a relative measure of expected health care costs,” as the GAO puts it.
We’re talking a lot of money here. In 2012 alone, the GAO calculated that the federal government spent about $135 billion on the Medicare Advantage program. The problem for taxpayers is that, according to the GAO, the government has been more than generous over the years to private insurers, having paid them way more than it should have because of shortcomings in how the risk scores are developed.
Interestingly, but not surprisingly, there was no mention of that, or any reference at all to the Medicare Advantage program, the biggest champion of which are Republicans, in The Weekly Standard’s “bail-out” story last week. If they are sincere in their alarm that Obamacare might reward private insurers with an extra $25 billion between now and the end of 2016, they should be apoplectic about the ongoing bailout known as the Medicare Advantage program.
By: Wendell Potter, The Center for Public Integrity, January 20, 2014
“The Modern Republican Party”: House Conservatives Fed Up With Conservative Caucus, Form Even More Conservative Caucus
The National Journal reports that a few liberty-loving Republican members of Congress, led by Rep. Justin Amash, have started a little caucus to represent the true, “hard-core” alternative to the Republican Study Committee. The idea that anyone needs a more “hardcore” Republican Study Committee seems to require some explaining. The RSC is (and has been for decades) effectively the House of Representatives’ “conservative caucus,” the group you join to announce that you are officially not a RINO. It is also a sort of miniature right-wing think tank with extensive ties to the business and other interests that fund the right and keep Republicans in line. For years, it has produced alternative budgets and decried compromise and criticized leadership for being insufficiently dedicated to small government.
It has, it turns out, been too successful. The RSC’s membership has increased rapidly as it became necessary for most House Republicans to signal their allegiance to ultra-conservatism; it now counts more than 170 members, including the most extreme members in the House, like Louie Gohmert, Michele Bachmann and Paul Broun, but also many more who rarely make headlines. There have been attempts to replace the RSC with something even more conservative in the past, but most of them — like Michele Bachmann’s pathetic “Tea Party Caucus” — were more about an individual lawmaker’s play for press than about creating an alternative organization.
The problem is, the RSC, by any measure, won the battle for the House Republican caucus long ago. More than three-quarters of the GOP conference are now members, including everyone in leadership besides Boehner and Majority Whip Kevin McCarthy. Its primary “rival,” the “moderate” Republican Main Street Partnership, currently has fewer than 50 members in the House.
This criticism is nothing new. Many RSC members, including some former chairmen, have long expressed concerns about its membership—which now stands at 179 of 233 House Republicans. If three-quarters of the GOP Conference belongs to the RSC, they argue, the group cannot possibly practice the ideological purity on which its reputation was established.
“The RSC today covers a fairly broad philosophical swath of the party. It’s no longer just the hard-core right-wingers,” [South Carolina Rep.. Mick] Mulvaney said, adding: “If you want to pay dues, you can get in.”
What Mulvaney doesn’t seem to understand is that the RSC is still “just the hard-core right-wingers,” it’s just that now the vast majority of the Republican conference is “the hard-core right-wingers.” When everyone is a true conservative, then, how do you distinguish yourself as a true conservative? Easy! You just stake out a new position to the right of the right-wing majority. Hence, Amash’s “House Liberty Caucus,” which has a Rand Paul-ish name and a (somewhat fluid) membership of “core” House conservatives, like Mulvaney, Rep. Raul Labrador and Rep. Jim Jordon.
So, while Amash and others insist that the Liberty Caucus is a complement, not a competitor to the RSC, the National Journal says that “several RSC members are considering leaving the group altogether next year and pouring their energy into growing the Liberty Caucus.” In other words, a few years from now, don’t be hugely surprised if the far-right RSC is the “mainstream” House Republican caucus to the “conservative” Liberty Caucus, all without any Republican having moved even slightly toward “the center.” (Either that or this Liberty Caucus will flame out after failing to repeal Obamacare by 2016 or whatever.)
This is the entire story of the modern Republican Party, writ small: ratcheting ever rightward.
By: Alex Pareene, Salon, January 18, 2014
“Obamacare’s a ‘Bailout’ Now?”: Conservative Critics Are Getting Desperate
Conservatives used to say Obamacare is socialized medicine. Now they say it is a “government bailout” of insurers.
The new claim is just as misleading and cynical as the old one.
The latest conservative playing thing is a pair of previously obscure Obamacare features: “reinsurance” and “risk corridors.” Their mechanisms are a bit complicated to explain. (Read here if you want the details.) What matters is their shared purpose, which is to reimburse insurance companies that end up taking heavy losses—say, because the new marketplaces don’t attract enough young, healthy subscribers. Remember, insurers depend on premiums from people in good health to subsidize the costs of the sick. Without the right mix, the premiums insurers collect won’t be sufficient to cover the cost of clams. They’ll lose money, raise premiums in the future, drop out of the market altogether, or some combination of the three. In short, bad stuff will happen.
To Obamacare supporters, reinsurance and risk corridors are tools for stabilizing the insurance market and easing the transition from the old system to the new. (That’s why I’ve been calling them “shock absorbers.”) But the provisions started attracting scrutiny from the right in the fall, when policy watchers like David Freddoso of Conservative Intelligence Briefing first wrote about it. Now reinsurance and risk corridors are getting more sustained attention from the Weekly Standard, Fox News, and the conservative movement writ large. Republican Senator Marco Rubio has sponsored a bill to repeal the risk corridors. “Why should taxpayers have to bail out health insurance companies in the increasingly likely event that ObamaCare leaves them with financial losses?” Rubio wrote this week, in an op-ed for the Fox website. “This is government favoritism and corporate cronyism at its worst, and it’s taxpayers that will pay the price unless we stop it.” Insurers are sufficiently spooked that, as Buzzfeed’s Kate Nocera has reported, they are undertaking a lobbying campaign to keep the provisions in place.
The bailout analogy is potent. And it’s certainly accurate to say that, under Obamacare, some insurers may collect payments from the government to help offset losses. But the analogy breaks down after that.
Bailouts typically start with companies taking egregiously irresponsible actions and end with the government forking over mind-boggling sums of money to save them. Think of the savings and loans institutions misleading the public about the state of their finances in the 1980s—or the financial industry making those bad home loans and risky investments a decade ago. Each of those involved grievous management errors, frequently skirting the limits of legality. The federal outlays to save those banks were in the hundreds of billions of dollars.
With Obamacare, the situation is different. Projecting future insurance costs inevitably involves a little guesswork. With a brand new program like Obamacare, it inevitably involves a lot of guesswork. Even the smartest, most responsible actuaries might not get the numbers right, for reasons Sy Mukherjee of ThinkProgress explains:
Insurance companies were sort of shooting in the dark when they set premiums for Obamacare’s first year. They had to approximate how many people would enroll, how old the customers would be, how sick they would be, how much insurers would have to pay out in claims — but the whole enterprise was, ultimately, a series of educated guesses.
Will the guesses prove wrong? Humana officials told investors last week that the risk pools look a little worse than they had anticipated. But, as Sarah Kliff of the Washington Post just reported, officials at Wellpoint say their risk pools seem ok while the CEO of Aetna described the demographics as “better than I thought they would have been.”
Truth is, no insurer will be sure about its beneficiaries for many months, until the open enrollment period ends and the newly insured have a few months in which to file claims. That makes it impossible to know what kinds of losses, if any, insurers will take. But even if the losses are significant, the taxpayers won’t be in for another Wall Street-style bailout.
For one thing, the reinsurance money comes from the insurers themselves, who pay a tax on each beneficiary. It’s basically a transfer of funds, from all carriers to those companies inside the Obamacare marketplaces that end up with unusually unhealthy members. In this sense, it’s an insurance policy for the insurers—and one they more or less finance on their own.
The payouts from risk corridors are a little different, in the sense that those dollars come directly from government funds and have no actual limit. But the risk corridors also build up government funds—in effect, by claiming some of the profits from insurers who reap unexpected windfalls. The Congressional Budget Office, in its overall cost estimates for the Affordable Care Act, assumed that the inflow and outlfow would be roughly the same, so that the risk corridor program as a whole would be budget neutral. Even if CBO’s prediction is wrong, and the government ends up spending more than it raises, the difference is likely to be modest. The formula for payouts calls merely for government to share in high losses or gains, not to take them on completely. It’s enough to protect the insurers, the thinking goes, but not enough to cause a massive outlay. Meanwhile, lower-than-expected premiums are likely to save the government much more money than the risk corridors would ever pay out.
Conservatives might object to reinsurance and risk corridors on principle, regardless of amounts involved. That would be a perfectly legitimate argument, except for one thing: Reinsurance and risk corridors are already a feature of some government programs, most prominent among them Medicare Part D. The reinsurance and risk corridors in Obamacare and Medicare Part D are remarkably similar, except that Obamacare’s are temporary and Medicare Part D’s are permanent—which is to say, they are still part of the program.
What’s that? You haven’t heard Republicans attacking Medicare Part D as an insurer bailout? Maybe that’s because of one other, obvious difference between Part D and the Affordable Care Act. Only one of them was signed into law by a guy named Barack Obama.
Update: The Rubio bill would repeal only the risk corridors. Originally, I wrote that it would repeal both provisions. My apologies for the error.
By: Jonathan Cohn, The New Republic, January 16, 2014
“Tea Party Consulting Scam”: The Real Conservatives Funded By The Senate Conservatives Fund
It’s worth reading Politico’s Manu Raju and Maggie Haberman’s recent story on the Senate Conservative Fund, an independent political group that used to specialize in backing “insurgent” primary candidates over “establishment” ones, and that now devotes the bulk of its spending against actual incumbent Republican elected officials — including, most notably, Senate Minority Leader Mitch McConnell. The SCF’s leader, Matt Hoskins, has a “core team of five staffers” and no board of directors to answer to. The organization reports that it raised more than $9 million in 2013. It spent some of that money on campaigning for its chosen candidates. It has spent some of that money on … other things.
But without a board of directors, Hoskins and his team can choose to spend with little accountability.
Such expenditures include purchasing hundreds of thousands of dollars’ worth of conservative commentator Mark Levin’s books to hand out to donors as a freebie for their contributions. His group also paid $143,360 over three years to a luxury design firm to renovate office space in Washington townhouses, according to campaign-finance filings.Between May 2010 and October 2013, Hoskins and his company, Bold Colors, have been paid, in total, $463,750, with an additional $72,000 from the SCF’s super PAC, records show.
To sum up: The SCF has paid more than a half-million dollars to the consulting firm run by the head of the SCF. But the detail that caused a minor conservative media shit storm was the detail about the SCF buying up Mark Levin’s book in bulk. A spokesperson for the RNC — the “establishment” — tweeted about it, which led to a bunch of true conservatives complaining about the dastardly accusation that Levin is somehow on the take, just because this group sent a bunch of money this way and he sends a bunch of donors their way. Levin said that the RNC spokesperson, who sent one tweet calling attention to the Politico story, “will not silence me with his sleazy inside-the-beltway tactics.”
And then Erick Erickson stepped up to defend Levin and the SCF, with a completely insane post comparing the symbiotic relationship between the SCF and Levin to the fact that a National Republican Senatorial Committee staffer had child pornography on his computer. I mean, yes, one is a “guilt-by-association” argument with no coherent financial motive while the other is a clear-cut conflict-of-interest deal, but still, they both happened. Erick Erickson: master of analogies. Erickson writes: “It is just as ridiculous to accuse Mark Levin and the Senate Conservatives Fund of a quid pro quo relationship when they happen to be allies in a fight and also happen to be friends.”
Even if we didn’t live in a world where explicit endorsements-for-pay were common among conservative radio personalities, it wouldn’t be “ridiculous” to assume that buying hundreds of thousands of dollars worth of a host’s book would lead to the host saying nice things about you. But the problem for Erickson’s argument is that we actually do live in a world where conservative groups pay talk radio hosts obscene amounts of money to boost their groups. And one of the hosts who does this is Mark Levin. It is a thing he does. He endorses groups for money.
The Senate Conservatives Fund, with the help of various talk radio people, made itself the most prominent group fighting against the GOP establishment on behalf of the Tea Party. That led to them raising lots and lots of money. That money goes to people running the SCF, in the form of salaries and consulting fees, and it goes to the people promoting the SCF, in the form of direct payments and mass book purchases. None of this is illegal (as far as I know, anyway). Is it immoral? Is it unethical? Not many people are interested in answering that question. Nearly every prominent national conservative is in on the graft, and the marks are people who write checks to fund the advancement of conservative ideas or the election of conservative politicians. All of this is exceedingly well-documented. And it doesn’t matter.
The thing about this grand bamboozling is that the marks want to be bamboozled. When you tell them that Glenn Beck is paid to have certain opinions, they truly do not care. Sending people money to fight for a cause you strongly believe in feels good. The apocalyptic pitches may be obviously manipulative to anyone outside the target demographic, but they obviously work. And for years, the scheme actually worked in the larger sense, of enriching people and advancing the conservative agenda. With the financial (if not political) success of the SCF’s nihilistic approach to strategy, conservatives invested in the actual policy agenda are starting to worry.
By: Alex Pareene, Salon, January 14, 2014
“No One Was Audited At Bridgegate”: The Classic Conservative Right Wing “So’s Your Old Man” Argument
You know the worst sign for Chris Christie about Bridgegate? The line most of his conservative defenders (and not all conservatives are defending him) are taking isn’t really about the scandal at all. Here’s John Podhoretz at the New York Post:
Most government scandals involve the manipulation of the system in obscure ways by people no one has ever heard of. That is why George Washington Bridgegate is nearly a perfect scandal — because it is comprehensible and (as they say in Hollywood) “relatable” to everyone who has ever been in a car. This is the reason this one is not going to go away so easily, even if one accepts the contention that Gov. Chris Christie had nothing whatsoever to do with it….
And yet, you know what is also something everybody would find “relatable”? Politicians who sic the tax man on others for political gain. Everybody has to deal with the IRS and fears it. Last year, we learned from the Internal Revenue Service itself that it had targeted ideological opponents of the president for special scrutiny and investigation — because they were ideological opponents.
That’s juicy, just as Bridgegate is juicy. It’s something we can all understand, it speaks to our greatest fears, and it’s the sort of thing TV newspeople could gab about for days on end without needing a fresh piece of news to keep it going.
And yet, according to Scott Whitlock of the Media Research Center, “In less than 24 hours, the three networks have devoted 17 times more coverage to a traffic scandal involving Chris Christie than they’ve allowed in the last six months to Barack Obama’s Internal Revenue Service controversy.”
Why? Oh, come on, you know why. Christie belongs to one political party. Obama belongs to the other. You know which ones they belong to. And you know which ones the people at the three networks belong to, too: In surveys going back decades, anywhere from 80% to 90% of Washington’s journalists say they vote Democratic.
In debates from schoolyards to the presidential campaign trail, this is what used to be called a “so’s your old man” argument. It’s not a defense at all, but rather a counter-complaint suggesting that we ought to be talking about something else, or that the perpetrators of one forgotten offense should be brought to justice along with those we’re talking about.
The classic right-wing “so’s your old man” argument was enapsulated in the bumper sticker that sprouted up when Ted Kennedy ran for president shortly after prominently criticizing the policies and practices that led to the Three Mile Island nuclear spill: “No one died at Three Mile Island,” an unsubtle reference Chappaquiddick.
So never mind that the IRS “scandal” has been largely discredited as a scandal at all, or that its “victims” were not New Jersey motorists commuting to work but political activists trying to get a tax subsidy and the power to cloak donors–it’s part of the permanent conservative grievance list and involved alleged abuse of government power, so out it comes again!
That should be cold comfort to Chris Christie, being involved in the lesser of scandals. But that’s the best he can expect from conservative gabbers who don’t really want to help him other than as the enemy of their enemy.
By: Ed Kilgore, Contributing Editor, Washington Monthly Political Animal, January 13, 2014
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