PrintMay 24, 2011
AARP's ObamaCare Endgame Revealed
We now have a clear picture of the treachery in which AARP has engaged since President Obama took office. The Daily Caller reports that the U.S. Department of Health and Human Services has granted Medigap policy sellers, including the American Association of Retired Persons, exemption from ObamaCare-mandated federal supervision of insurance premium hikes. "Medigap" is an industry term for a type of coverage that helps pay medical costs not covered by Medicare.
Non-Medigap insurers, not exempted from ObamaCare's rate reviews, must justify rate increases. In effect, the HHS exemption gives AARP the ability to generate profits not achievable by non-exempted competitors.
It's important to remember that AARP helped push ObamaCare through Congress by contributing to a $121 million advertising campaign and paying for millions of dollars worth of Washington lobbying. AARP has betrayed the seniors whose interests the organization allegedly protects and positioned itself to make billions after playing along with the Obama administration's corporatist favoritism.
Corporatism, or "crony capitalism," takes many forms. For instance, when seniors began to catch on to the systemic health care damage that ObamaCare would cause, President Obama and congressional Dems feared disappearing senior political support. As I discussed last August, it is at such junctures that "the Halliburtons, BPs, attorney groups, SEIUs, and AARPs, which donate in return for political favors that funnel dollars into corporate bank accounts," enter the picture. In crony capitalism, corporate entities fund misinformation campaigns that paint harmful government action as beneficial and shifty politicians as straight-up. In the case of ObamaCare, AARP leadership supported legislation which AARP members judged harmful and therefore rejected.
AARP used one especially creative tactic. The American Enterprise Institute (AEI) dissected an AARP analysis of prescription drug prices. Using cherry-picked data, AARP had surveyed 217 drugs, 211 of which increased in price over a year. By also excluding generic drugs from the analysis, AARP led members to believe that drug prices had increased 8.3 percent in 2009. Labeling the ploy as a dishonest scare tactic would be kind.
In fact, AARP painted for members a false portrait of an obscenely profitable pharmaceutical industry at a time when drug company profit margins were running a hardly obscene 16.4 percent, with generic drug makers recording a meager 6.5 percent. Still more indicative of AARP's manipulation of reality, the truth about price trends is that seniors pay less each successive year for the most-used drugs.
Specifically, an AEI study found that from 2006 to 2009, average prescription drug prices declined 21.3 percent. AARP had claimed a 27.3 percent increase. AARP's forty-nine percentage-point distortion had advanced a grotesque falsehood. Meanwhile, contrary to all experience with government price controls, ObamaCare proponents were claiming the ability to hold drug prices down as well as preserve quality and quantity of care through government intervention. AARP's manipulation of drug price data seems to have been aimed at encouraging seniors to believe that ObamaCare could actually buck the laws of the universe. The organization was selling the tall tale that ObamaCare would save the day while setting members up for higher costs and degraded care.
AARP leadership probably also hoped that the drug price deception would help convince seniors to calmly accept higher health care costs. Indeed, in November 2010, AARP was already warning its employees about insurance premium hikes, blaming ObamaCare. So with ObamaCare boosting AARP employee premiums, could AARP member premiums hikes be far behind? Now, seven months later, seniors discover that HHS will permit AARP, unlike AARP's insurance industry competitors, to adjust Medigap premiums without federal oversight.
The HHS exemption dials in AARP's endgame. Health care revenue expert David Catron explained the scheme. Catron wondered why AARP, dependent on insurance revenue, had decided to back ObamaCare legislation that could decimate the health insurance industry. Catron cited Democrats' proposal to "pay" for ObamaCare with funds robbed from Medicare Advantage, a non-Medigap supplier of supplemental Medicare insurance. AARP had in fact aggressively supported the Democrats' approach, pushing for ObamaCare legislation to be written in such a way as to gut Medicare Advantage.
To be sure, because Medicare Advantage is AARP's biggest insurance competitor, when MA gets weakened, AARP will emerge a winner. Fully executed, AARP's strategy will knock MA sellers out of the supplemental Medicare market and relegate seniors to the higher out-of-pocket expenses of traditional Medicare. Curiously, AARP's insurance revenue flows largely from Medigap plans designed to cover those out-of-pocket expenses.
So AARP's game is now crystal clear. The organization pushed legislation which will hurt seniors financially and in quality of medical care. AARP leadership betrayed current members to gain future members. The leadership learned well: corporatism creates prosperity for the few who play the game.
Prosperity for the many is another matter. General wealth increases when people with legal business ideas get equal opportunities to introduce those ideas to the marketplace. Entrepreneurs must be free to pour resources into products and services that people want. In such a system, companies win by providing the best products and services in the fastest, cheapest ways. Businesses and consumers win.
But in helping Democrats pass economically destructive legislation, AARP has helped number the days for revenue streams and jobs in insurance industry competitors that fail to negotiate the corporatist maze.
AARP has joined more than 1300 entities granted the freedom to compensate for the higher costs assured by Obamacare's overregulation of the health care and insurance markets. AARP's actions will end up contributing to seniors' health care quality falling and costs rising-by government fiat.
AARP has joined more than 1300 entities granted the freedom to compensate for the higher costs assured by Obamacare's overregulation of the health care and insurance markets. AARP's actions will end up contributing to seniors' health care quality falling and costs rising-by government fiat.
Where is the senior outrage?
A writer, physicist, and former high tech executive, Chuck Rogér invites you to sign up to receive his "Clear Thinking" blog posts by email at www.chuckroger.com. Contact Chuck at swampcactus@chuckroger.com.
