The Daily Caller has learned that the Department of Health and Human Services (HHS) rate review rules, which it finalized on Thursday, exempt “Medigap” policy providers, like the American Association of Retired Persons (AARP), from oversight when such providers increase payment rates for their supplemental insurance plans.
Insurance providers who aren’t exempt from Obamacare’s rate review rules are required to publicly release and explain some health care payment rate increases.
The AARP is the nation’s biggest seller of Medigap policies, or supplemental healthcare plans that add onto what Medicare won’t cover for seniors. The senior citizens interest group advocated for Obamacare to include an attack on Medigap policies’ biggest competitor, Medicare Advantage.
Though the White House and HHS dismiss allegations of political favoritism when it comes to who’s getting exceptions from the new health care regulations – such as in the recent uproar over the disproportionate number of Obamacare waivers that went to companies in House Minority Leader Nancy Pelosi’s district — Obamacare critics say the mere appearance of the administration helping friends is disturbing.
The appearance of favoritism exists with the new AARP exemptions, too. Senate Majority Leader Harry Reid and Sens. John Kerry, Massachusetts Democrat, and Max Baucus, Montana Democrat, wrote to HHS Secretary Kathleen Sebelius last October asking her not to do what HHS just finalized today – that is exempt Medigap policies from rate increase oversight.*
“While Medicare Advantage premiums are declining, we are hearing disturbing stories from beneficiaries across the country about excessive premium increases for Medigap supplemental insurance policies,” Reid, Baucus and Kerry wrote to Sebelius on Oct. 6.
“For example, some beneficiaries enrolled in the United of Omaha Life Insurance Company will see their Medigap premiums increase by approximately 40 percent between 2010 and 2011,” the letter read. “An increase of this magnitude raises serious concerns about premium-setting practices and rate review procedures in place for Medigap policies.”
Instead of listening to three top Senate Democrats, the Obama administration decided to go ahead anyway with the Medigap exceptions from rate increase reviews.
The AARP was a driving force behind getting Obamacare through Congress, contributing a large sum to the $121 million advertising campaign pushing it, and spending millions more lobbying for it on Capitol Hill.
The senior citizen advocacy organization stands to make huge profits from Medicare Advantage cuts and from the exemptions it will benefit from when it comes to the Medigap plans sold under what AARP CEO A. Barry Rand calls the AARP’s “for-profit side.”
The AARP’s support of Obamacare during the debate over the legislation raised lots of eyebrows nationwide, as President Obama called for $313 billion in cuts to Medicare to push the plan through. Seniors weren’t happy about it, and many ripped AARP representatives at town hall meetings nationwide.
Now, though, it’s clear that the AARP is set to make millions, if not billions, of extra dollars in Medigap plan sales moving forward because they’ve effectively knocked out their biggest competitor, Medicare Advantage, through Obamacare.
UPDATE 2:43 p.m.: AARP spokesman Jim Dau responds to TheDC’s story:
“AARP supported the health care law’s provisions to review insurance premium increases, just as we supported the law itself. And we agree with Senators Reid, Kerry and Baucus that more consumer protections are needed in the Medigap market, which was not addressed in the law. It’s why we’ve endorsed Sen. Kerry’s bill to ensure people in Medicare can’t be denied a Medigap policy because of their health history.
“But this story’s mischaracterization of the senators’ letter and the new rules is inexcusable. In fact, the senators acknowledged that Medigap rates are regulated at the state level and encouraged Secretary Sebelius to work with governors and state insurance commissioners to build new consumer protections. Nowhere do the senators ask the Secretary to include Medigap in the regulations issued this week because they know states regulate rates for these insurance policies, not the federal government.
“To be clear, AARP is a non-partisan, non-profit organization with a membership. While there are insurance products that carry the AARP name, they are underwritten by insurers such as Delta Dental, UnitedHealth Group, and Aetna and others—not AARP. We work to ensure those products meet our standards and provide value to our members.
“We would applaud members of Congress from either side of the aisle who put forward legislation to strengthen consumer protections in the Medigap market, just as we welcomed Sen. Kerry’s common sense legislation.”
*This sentence has been corrected.