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Insurers praised parts of Democratic health law but gave mostly to Republicans

  • The Center for Public Integrity
  • Published Thursday, Oct. 4, 2012, at 5:37 p.m.

— The health insurance industry presented itself as an ally of President Barack Obama’s health care law while at the same time making hefty contributions to members of Congress who are trying to get rid of it, according to contribution records.

Between January 2007 and August 2012, the political action committees of the 11 largest health insurance companies and their primary trade group gave $10.2 million to federal politicians. Nearly two-thirds of the total went to Republicans who oppose the law or support its repeal, according to the Center for Public Integrity’s analysis of Federal Election Commission filings.

The 11 top companies, according to the Fortune 500 list, controlled 35 percent of the industry in 2011, according to data from the National Association of Insurance Commissioners. The top industry trade group is America’s Health Insurance Plans.

Much of the money rolled in as health insurance industry leaders showed support for the Democrats’ reform efforts.

“We are ready to be accountable to these (new) rules,” Karen Ignagni, AHIP’s president and chief executive officer told the Senate Finance Committee in May 2009, roughly a year before Obama’s landmark legislation was signed into law. And a month after Obama’s Affordable Care Act became law in March 2010, Ignagni said her organization was “strongly committed” to its “successful implementation.”

Likewise, Ron Williams, then chairman and chief executive officer of Aetna, the country’s fifth-largest health insurance company, also spoke favorably about the bill – at first.

“I believe that President Obama and this Congress have charted a course of change,” Williams said in a June 2009 statement. “I want to make clear that we too are committed to expanding access, controlling costs and improving the quality and value of care people receive.”

But Williams, who left Aetna in April 2011, this past June penned a Wall Street Journal op-ed calling for health care reform at the state level and criticizing the federal law’s mandate.

House Majority Leader Eric Cantor, R-Va., ranks as the top recipient of political action committee money from the top insurers since 2007, according to the center’s analysis. Cantor, a tea party favorite and one of the law’s most vocal critics, has received about $258,000 from AHIP and the top industry PACs.

In January 2011, Cantor introduced the Repealing the Job-Killing Health Care Law Act, the first of 33 repeal efforts that have reached the House floor.

That same year, Aetna, Humana, UnitedHealth Group and WellPoint – which together control 28 percent of the health insurance market – maxed out to Cantor, giving $10,000 apiece to his campaign committee. That doesn’t include additional sums that went into the congressman’s leadership PAC.

Behind Cantor, Rep. David Camp, R-Mich., ranks second in health insurance industry contributions. The chairman of the House Ways and Means Committee has pulled in more than $234,000 from these PACs since 2007. Last year, Camp sponsored a bill that would cut $11.6 billion in funding for the law.

Rep. Paul Ryan of Wisconsin, now the Republican nominee for vice president, also is among the top recipients ($187,000). Just this year, Ryan, who leads the House Budget Committee, has sponsored two major budget plans that have called for the law’s repeal.

Other top recipients of health insurance PAC money during this period include House Speaker John Boehner ($209,500), Republican House Whip Kevin McCarthy of California ($149,700), Sen. Orrin Hatch, R-Utah, who is the ranking GOP member of the Senate Finance Committee ($151,500), and Senate Finance Committee Chairman Max Baucus, D-Mont. ($142,400).

So if the health insurance industry was in favor of key parts of the law, why support members of Congress bent on killing it?

Part of the reason is that the legislation’s centerpiece, the requirement that almost everyone sign up for health insurance or pay a penalty, is expected to benefit the health insurance industry. Many Democrats supported the provision; many Republicans oppose it.

At the time the reform law passed, the Democratic Party controlled the White House and both houses of Congress. By supporting the law, the industry was able to stay in the game on a very complex piece of legislation.

AHIP and WellPoint – the industry’s top PAC contributor – did not reply to the center’s telephone or email inquiries requesting comment. Representatives from Aetna, Amerigroup, Cigna and Humana declined to comment for this story.

There were plenty of provisions the industry did not like and would like to see repealed. For example, under the new law, insurance companies must spend at least 80 cents of every premium dollar on medical care for individual and small business policyholders, and 85 cents for large groups. That’s a provision the industry would like to see repealed.

Insurers must send policyholders or their employers rebate checks if the ratio drops below those levels.

In recent statements, AHIP claims the provision, known as the “medical loss ratio requirement,” could inhibit innovation and drive up administrative costs because of new reporting requirements.

Indeed, AHIP has lobbied extensively for a new bill that would allow insurance companies to include broker compensation as a medical care cost in the ratio. Carmen Balber, who monitors health policy at the nonprofit Consumer Watchdog, said the bill “would effectively gut the medical loss ratio requirement.”

This legislation, sponsored by Rep. Mike Rogers, R-Mich., was forwarded to the House Energy and Commerce Committee on Sept. 11. Rogers ranks 19th on the center’s list of top health insurance beneficiaries, receiving $90,500 over the nearly six-year period. AHIP supports Rogers’ bill, as do several trade associations representing brokers and agents, claiming broker salaries commissions are not necessarily administrative costs, but rather a “human resource” expense.

But to Balber, such a shift in premium calculation would negate the cost-cutting benefits of the medical loss ratio provision – which she considers the law’s strongest consumer protection.

Since the Democrats’ Affordable Care Act was signed into law, the political environment has changed dramatically.

Democrats no longer hold a filibuster-proof majority in the Senate, the House is controlled by Republicans and the president is in a tight race for re-election.

Despite his party’s unified attack on the health care law, Republican presidential nominee Mitt Romney, whose own health insurance reforms in Massachusetts were in part a model for Obama’s plan, has recently hinted at willingness to compromise on some of its politically popular elements.

“Well, I’m not getting rid of all of health care reform,” Romney said in a Sept.9 interview with David Gregory on NBC’s “Meet the Press.”

While the individual mandate is widely viewed as unpopular, the opposite is true for many provisions, such as the prohibition on companies refusing to cover patients with pre-existing conditions, the closing of the Medicare Part D prescription drug “doughnut hole” and the option for young adults to stay on their parent’s plan until age 26. According to Bob Laszewski, an insurance industry consultant, a Romney administration would not be able to secure enough votes in the Senate to repeal the law, even if it wanted to.

A more realistic legislative outcome is that congressional Republicans would attempt to defund the law through budget reconciliation rules – a scenario that likely would hurt insurance company balance sheets, he said.

GOP defunding efforts would leave insurance companies subject to the law’s politically popular insurance regulations – like covering patients with pre-existing conditions – but without government subsidies that are provided in some parts of the plan.

“If Romney wins, I think you’re going to see the insurance industry very concerned about Republicans trying to choke health care reform,” Laszewski said.

Andrea Fuller, Lydia Mulvaney and Michael Beckel of The Center for Public Integrity contributed to this report.

The Center for Public Integrity is a non-profit, independent investigative news outlet. For more of its stories on this topic go to www.publicintegrity.org/politics/consider-source.

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