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Articles by John Hoff

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AARP opposes Medicare bill which reduces its profits March 26, 2015

By Timothy P. Carney

A major player in health insurance is resisting a bipartisan Medicare bill that would hurt the company’s bottom line. That’s to be expected. Here’s the odd part: The insurance giant is AARP.

AARP, formerly the American Association of Retired Persons, is most famous for its $16-a-year membership card that gets you discounts everywhere from the movie theater to the pharmacy. In Washington, AARP is known as the powerful seniors lobby — the organization has reported just under $200 million in lobbying expenses over the past 10 years.

But as AARP flexes its muscle on the current Medicare bill, it’s worth recounting AARP’s less public but more lucrative side: its insurance business. AARP officials insist that their lobbying agenda is solely in the interest of seniors, and not at all tied to its insurance business. Indeed, they point to past legislative fights where AARP opposed policies that could have helped its insurance business.

AARP boasts 38 million members, but that’s not where the group’s bread is buttered. Membership dues make up less than 20 percent of the group’s revenues. About half of the money AARP pulls in, according to its tax filings, is through “royalties” it gains by allowing its name and logo to be used in marketing other companies’ products. AARP’s royalties revenue was more than $650 million in 2009.

The biggest chunk of this royalty income comes from Medicare products, most importantly the so-called Medigap insurance plans. AARP Medigap insurance, a United Healthcare product, covers the costs that Medicare doesn’t cover, such as co-pays and deductibles. By buying a Medigap plan, a senior citizen can eliminate all out-of-pocket health-care expenses. This is called “first-dollar coverage.”


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Did Santorum ‘invent’ health savings accounts? March 25, 2015

By Michelle Ye Hee Lee

“I know Al Gore invented the Internet, but I invented health savings accounts, believe it or not. I was the first member of Congress back in 1992 to introduce health savings accounts in the United States Congress.”

– Rick Santorum (R), speech at Iowa Agriculture Summit, March 7, 2015 

Santorum was among several Republican presidential hopefuls touting their record at the Iowa Agriculture Summit. Each spoke in a question-and-answer format with host Bruce Rastetter about a range of issues affecting the farming industry in Iowa, including the renewable fuel standard, genetically modified organisms and solar energy.

When asked about his stance on Obamacare, Santorum said he believes in consumer-based health care options, such as health savings accounts, that provide flexibility and “not have all your money and power go to Washington.”

Did Santorum “invent” health savings accounts? Was he the first member of Congress to introduce legislation to create them?

The Facts

In January 1992, Santorum introduced H.R. 4130, the Health Care Savings Plan Act of 1992. The legislation proposed an amendment to the Internal Revenue Code, which would allow individuals and families to set up medical savings accounts to make tax-free deposits that later could be used to buy medical services.

Under the plan, Americans could be self-insured for small medical expenditures while using third-party insurance options for more expensive medical procedures. The idea was to give people an option similar to individual retirement accounts, and encourage people to shop around for cheaper health care since they would pay for much of the costs out of their own pockets.

Santorum held a news conference announcing the bill on Feb. 5, 1992, with a coalition of House Republicans co-sponsoring the bill. The chief sponsors were Santorum and John Kasich of Ohio (now the state’s governor and potential 2016 opponent). Former House minority whip Newt Gingrich of Georgia, Richard Zimmer (N.J.), Dan Burton (Ind.) and Tom Delay (Texas) were among lawmakers unveiling the proposal that day. The bill was, indeed, the first proposal for medical savings accounts (MSAs) — precursor to the current health savings accounts (HSAs) — and it laid the groundwork for lawmakers to introduce alternative proposals for such accounts in 1992 and thereafter.


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Health Overhaul Leads to Shorter Work Hours March 25, 2015

By Rachel Feintzeig

The Affordable Care Act, signed by President Obama five years ago this week, sparked a host of changes. For some workers, the law’s legacy amounts to fewer hours of paid work.

The law’s requirement that larger employers provide affordable insurance to workers putting in 30-plus hour weeks has led some companies to cap the number of hours employees can log. A new survey out Tuesday from the Society for Human Resource Management finds that 14% of employers have cut back on hours for part-time employees, and an additional 6% plan to do so.  The survey, which included more than 740 human resources professionals, found that a small subset of companies were considering reducing hours for full-time employees too.

Firms are playing around with how they classify and schedule workers, but the strategy comes with risk. James Napoli, a partner with Seyfarth Shaw LLP who helps employers comply with the ACA, says he’s seen an uptick in audits focused on compliance with the health care law by the Department of Labor and the Internal Revenue Service. The audits, which began about three years ago, are starting to become broader, more frequent and more serious, he said.


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Unpacking The Burr-Hatch-Upton Plan March 24, 2015

By Joseph Antos and James C. Capretta

Anticipating the upcoming Supreme Court decision on King v. Burwell, which could halt health insurance subsidies available through the federal exchange, Republican Senators Richard Burr and Orrin Hatch joined with Representative Fred Upton to propose a comprehensive replacement for the Affordable Care Act (ACA). The Patient Choice, Affordability, Responsibility, and Empowerment Act, or Patient CARE Act, is modeled on a proposal of the same name offered last year by Senators Burr, Hatch, and Tom Coburn, who has retired from the Senate. The Burr-Hatch-Upton plan, like its predecessor, adopts consumer-based reforms of the insurance market, modernizes the Medicaid program, and makes other changes intended to lower cost and increase choices.

In an earlier post, we described in detail the provisions of the Burr-Coburn-Hatch bill. In this post, we discuss how the Burr-Hatch-Upton plan differs from the earlier proposal. We also discuss the impact of the new proposal on health insurance coverage, premiums, and the federal budget based on a new analysis from the Center for Health and Economy (H&E), a non-partisan think tank focused on producing informative analyses of trends in U.S. health care policy and reform ideas. We conclude by commenting on the direction Republicans are likely to take in reforming the health system in the aftermath of a Supreme Court decision in the King v. Burwell case.

Major Provisions Of The Burr-Hatch-Upton Plan

The new version of the Patient CARE Act retains the major provisions of last year’s proposal. The plan would repeal the Affordable Care Act and put in its place a series of insurance market reforms intended to widen the range of health plan choices available to consumers. The ACA’s Medicare provisions would not be repealed in the Burr-Hatch-Upton proposal, although the authors make it clear they would pursue alternative Medicare reforms in separate legislation.

Insurance Market Reforms.  As with the previous proposal, the Patient CARE Act repeals the ACA’s individual mandate and replaces it with a framework under which no one can be denied coverage or charged higher premiums because of a pre-existing condition as long as they remain continuously enrolled in a health plan. Insurance regulation would be returned to the states, with the presumption that insurers will allow dependents age 26 and younger to enroll in their parent’s coverage. In addition, insurers would be permitted to charge their oldest enrollees no more the five times the premiums assessed to their youngest enrollees, replacing the ACA’s 3:1 rule. States would be free to establish their own insurance regulations that could differ from the federal rules.


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Obamacare: Five Years of Failure March 24, 2015

Independent Women’s Forum

WASHINGTON, D.C. – Today marks the 5-year anniversary of the Patient Protection and Affordable Care Act, better known as ObamaCare. The last five years have proven that a one-size-fits-all, top-down government healthcare system doesn’t work. Coinciding with the date President Obama signed ObamaCare into law, Independent Women’s Forum released a series of memes highlighting the devastating consequences of this failed law.

“ObamaCare has proven in its first five years that central planning does not work, especially not for health care. Americans are fed up with the continuously rising costs and diminished choice they face in health care and insurance as a result of too much government interference. Maybe millions have gained coverage, but millions have lost coverage too. And those who have gained coverage too often have gained coverage in name only, but still have difficulty finding doctors and accessing the care they need.  On net, Americans are worse off as ObamaCare continues to take its toll on the economy, on the doctor-patient relationship, and on our freedoms.”- Hadley Heath