Thursday, January 6, 2011

Karl Rove’s Criticism of AARP Was a Cheap Shot and Uninformed

Readers of this blog know that I am willing to call AARP out when I think they deserve it. Witness my recent post criticizing their reaction to the chairs of the Deficit Commission and their preliminary report when AARP acted more like a narrow minded advocate than an enlightened organization that understands the inevitability of fundamental reform to the entitlements.

And, I have never been comfortable with their advocacy for both the Republican Part D program as well as the Democratic health care bill when a big share of their revenue comes from health insurance commissions.

But Rove’s recent column in the Wall Street Journal claiming the Obama administration was giving AARP a pass from the new health law’s regulations because the organization is a political ally is just an uninformed cheap shot.

Rove cites recent Obama administration regulations that exempt Medigap plans, a big seller for AARP, from rate review and other mandates such as the minimum loss ratio rules. Medigap plans were exempted because the entire Medigap industry argued they should be—and for good reason. Medigap premiums are only a fraction of the premium of traditional health insurance or Medicare Advantage plans—the same loss ratio rules simply wouldn’t work there. The benefit structure of Medigap plans is already highly regulated and it wouldn’t make sense to try to stretch the new law’s insurance rules to that market segment.

AARP didn’t get anything the rest of the Medigap industry did not get and for good reason.

Rove also points out that AARP is exempt from the cap on insurance industry pay that can be deducted for tax purposes and argues this is another pay-off to an Obama political ally. But AARP is not an insurance company and therefore was never going to come under this provision. AARP is an insurance agency and no insurance agency is subject to this limit.

Rove also argues that AARP gets a break from the Obama regulations because it doesn’t have to pay the new insurance company premium tax—again it is not an insurance company. None of the nation’s insurance agencies will pay the tax.

AARP’s insurance company partner, the real insurance company in the AARP senior product offering, will have to comply with all of the insurance company requirements such as tax caps on its executive pay.

There simply aren’t any special AARP exceptions.

I find it more than ironic that the same Karl Rove that drove the Medicare Part D benefit during his time in the Bush White House, that added $8 trillion to the long-term Medicare unfunded liability—because none of the new program's cost was paid for—and had AARP issue a pivotal last minute endorsement of that Republican initiative, would now criticize the senior group.

In 2003, I thought it inappropriate that AARP, part of it a giant senior insurance agency that had a great deal to gain by selling the new drug benefit, provided an endorsement most observers felt at the time put the Republican legislation over the top.

There are lots of things to be critical about in this new health care law and how it was passed.

I am troubled by AARP’s recent unwillingness to use its influence to educate its members on the necessity of entitlement reform and the sacrifices everyone will have to ultimately make. AARP should be a leader on this front—not just another self-serving special interest.

But I will also suggest that Karl Rove, or any of us, could provide a better service by getting the facts straight and minimizing the self-serving hypocrisy.


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