The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Archive for January 14th, 2010

Corrupt AARP Health Care Deal Puts Seniors at Risk

Posted by iusbvision on January 14, 2010

Previous coverage of this story HERE.

House Conference Chair Mike Pence:

Speaker Pelosi recently called insurance companies “immoral villains,” and Sen. Jay Rockefeller derided their tactics as “rapacious,” yet the majority has simultaneously relied on an organization that has received billions of dollars in windfall profits from those same insurers as an “independent” source to support their government takeover of health care-AARP.  The Democrat majority has even relied on AARP’s support for legislation (S. 1776) that would increase the federal debt by nearly $250 billion to fund physician reimbursements, even though the bill would raise seniors’ Medicare premiums by over $60 billion.  AARP opposed unpaid-for legislation as recently as December for that very same reason.  An analysis of Democrats’ rhetoric and actions provides evidence why AARP may have changed its position-in exchange for its support of a government takeover of health care, AARP has received special considerations regarding several provisions in health “reform” legislation that could benefit the organization quite handsomely:

  • While the AARP website claims that the organization supports “guaranteeing that all individuals and groups wishing to purchase or renew coverage can do so regardless of age or pre-existing conditions,” a review of the New York State Insurance Commissioner’s website finds that AARP-branded Medigap coverage imposes a six-month waiting period for individuals with pre-existing conditions. Yet Section 111 of H.R. 3200 would exempt Medigap policies from new limits on pre-existing condition restrictions-thus allowing AARP to continue to deny Medigap claims of individuals with serious health conditions.
  • The health “reform” bill approved by the Senate Finance Committee would eliminate the tax deductibility for all insurance company executive salaries over $500,000. However, as drafted by the Committee, the legislation would exempt AARP from this requirement, even though fully 38 percent of its $1.1 billion in 2008 revenue came directly from “royalty fees” paid by United Healthcare-more than AARP received in membership dues, grant revenue, and private contributions combined. But for Chairman Baucus’ exemption, AARP salaries would in fact be subject to the penalties in the Finance bill-in 2008, then-CEO William Novelli received total compensation of $1,005,830-more than 78 times the average annual Social Security benefit of $12,738.
  • Speaker Pelosi has recently discussed the imposition of a new “windfall profits” tax on insurance companies as a potential addition to the House’s health “reform” bill. However, she has made no comments indicating that she would apply a similar tax to AARP-even though the organization by its own admission has received nearly $3.4 billion in profits from selling health insurance and other similar products. Thus it is entirely possible that Democrats could exempt AARP from the insurance windfall profits tax, in the same way that Chairman Baucus created a loophole to allow AARP to continue paying its CEO more than $1 million per year without penalty.
  • White House senior advisor David Axelrod recently offered Administration support for price control provisions included in H.R. 3200 that would require insurance companies to pay out a minimum percentage of their premiums in medical claims. However, while H.R. 3200 would place strict price controls on Medicare Advantage plans-requiring them to pay out 85 percent of premium revenues in medical claims-Medigap policies face a far less strict 65 percent requirement. In other words, under the Democrat bill, seniors could pay as much as 20 cents more out of every premium dollar to fund “kickbacks” to AARP-sponsored Medigap plans.
  • A Bloomberg news analysis published in December highlighted what one observer called AARP’s “dirty little secret”-overcharging its senior members, many of whom who felt betrayed after paying hundreds of dollars above market price for AARP-branded coverage. One noted that “AARP has great buying power, and people should be able to get the best deal….This is unconscionable, what AARP has allowed to happen.” Another disillusioned senior wrote to the organization’s leadership asking whether AARP had a “‘special relationship’ with [insurance carriers] by which it receives commissions, incentives, rebates, or dare I say ‘kickbacks?'”
  • In November, news sources reported that AARP suspended the sale of “limited-benefit” health insurance policies, largely as a result of pressure from Republicans in Congress concerned that the organization was selling policies advertised as a “smart option for the health care insurance you need,” even though the policies would only pay up to $10,000 for surgery costs. However, the fate of the more than 1 million policy-holders who purchased limited-benefit coverage from AARP remains unclear-and the organization has made no public offers to return the “royalty fees” on the “bare bones” policies it sold under questionable pretenses.

Posted in 2012, Chuck Norton, Corporatism, Health Law, Obama and Congress Post Inaugration | 2 Comments »

California Treasurer to Legislature: “STOP IT JUST STOP IT!!” There is no more money!

Posted by iusbvision on January 14, 2010

Ayn Rand said that the left will spend until they run out of other peoples money.

Posted in 2012, Chuck Norton, Economics 101, Government Gone Wild | Leave a Comment »

FACT CHECK: Health Insurance Profits Not So Fat

Posted by iusbvision on January 14, 2010

WASHINGTON (AP) –

Quick quiz: What do these enterprises have in common? Farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo? Answer: They’re all more profitable than the health insurance industry. In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making “immoral” and “obscene” returns while “the bodies pile up.”

Ledgers tell a different reality. Health insurance profit margins typically run about 6 percent, give or take a point or two. That’s anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.

Profits barely exceeded 2 percent of revenues in the latest annual measure. This partly explains why the credit ratings of some of the largest insurers were downgraded to negative from stable heading into this year, as investors were warned of a stagnant if not shrinking market for private plans.

Insurers are an expedient target for leaders who want a government-run plan in the marketplace. Such a public option would force private insurers to trim profits and restrain premiums to compete, the argument goes. This would “keep insurance companies honest,” says President Barack Obama.

The debate is loaded with intimations that insurers are less than straight, when they are not flatly accused of malfeasance.

But in pillorying insurers over profits, the critics are on shaky ground. A look at some claims, and the numbers:

THE CLAIMS

_”I’m very pleased that (Democratic leaders) will be talking, too, about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years.” House Speaker Nancy Pelosi, D-Calif., who also welcomed the attention being drawn to insurers'”obscene profits.”

_”Keeping the status quo may be what the insurance industry wants their premiums have more than doubled in the last decade and their profits have skyrocketed.” Maryland Rep. Chris Van Hollen, member of the Democratic leadership.

_”Health insurance companies are willing to let the bodies pile up as long as their profits are safe.” A MoveOn.org ad.

THE NUMBERS:

Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. As is typical, other health sectors did much better – drugs and medical products and services were both in the top 10.

The railroads brought in a 12.6 percent profit margin. Leading the list: network and other communications equipment, at 20.4 percent.

HealthSpring, the best performer in the health insurance industry, posted 5.4 percent. That’s a less profitable margin than was achieved by the makers of Tupperware, Clorox bleach and Molson and Coors beers.

The star among the health insurance companies did, however, nose out Jack in the Box restaurants, which only achieved a 4 percent margin.

UnitedHealth Group, reporting third quarter results last week, saw fortunes improve. It managed a 5 percent profit margin on an 8 percent growth in revenue.

Van Hollen is right that premiums have more than doubled in a decade, according to a Kaiser Family Foundation study that found a 131 percent increase.

But were the Bush years golden ones for health insurers?

Not judging by profit margins, profit growth or returns to shareholders. The industry’s overall profits grew only 8.8 percent from 2003 to 2008, and its margins year to year, from 2005 forward, never cracked 8 percent.

The latest annual profit margins of a selection of products, services and industries: Tupperware Brands, 7.5 percent; Yahoo, 5.9 percent; Hershey, 6.1 percent; Clorox, 8.7 percent; Molson Coors Brewing, 8.1 percent; construction and farm machinery, 5 percent; Yum Brands (think KFC, Pizza Hut, Taco Bell), 8.5 percent.

Posted in 2012, Chuck Norton, Economics 101, Health Law, Obama and Congress Post Inaugration | Leave a Comment »

Dr. Friedrich Hayek: Democracy does not mean limited government and the dangers of an “Omnipotent Elected Assembly” that gives particular benefits to particular groups.

Posted by iusbvision on January 14, 2010

He predicted it.

Posted in 2012, Chuck Norton, Economics 101, Health Law, Obama and Congress Post Inaugration | Leave a Comment »

Vacation is over! More posts soon with lots of news updates…and wow do we mean lots….

Posted by iusbvision on January 14, 2010

Stay tuned…. :-)

Posted in Other Links | Leave a Comment »