on April 19, 2014 by admin in Insurance Industry, Comments (0)

More Weak Claims on Cotton’s Insurance Ties

Another liberal group is attacking Republican Rep. Tom Cotton in Arkansas by saying Cotton has experience in the insurance industry and is attempting to undermine Medicare. Cotton’s insurance experience is limited to consulting work for a federal agency.

Last week, we fact-checked an ad from Senate Majority PAC that claimed Cotton, who’s running for Senate in Arkansas, “got paid handsomely working for insurance companies.” Now, Patriot Majority USA, a 501(c)(4) that is allied with Senate Majority PAC, is airing an ad that says Cotton once “bragged about his insurance industry experience” on his website “but now it’s been removed.” Cotton’s Senate campaign website has never claimed he had insurance industry experience. His Facebook page mentions consulting work that was done for a federal agency, not insurance companies.

Last week’s Senate Majority PAC ad made the old claim that Cotton wants to “end Medicare’s guarantee,” costing seniors “$6,000 more a year.” The new ad from Patriot Majority claims Cotton backed a plan that could “cost seniors up to 1,700 more a year.” The plan Cotton supported would take away discounts and increased coverage of prescription drugs. But the claim pertains to a small percentage of seniors on Part D prescription drug plans.

Still Nothing to Insurance Industry Claim

The ad makes an issue of Cotton’s so-called ties to the insurance industry, claiming that Cotton once “bragged about his insurance industry experience” on his website, “but now it’s been removed.”

This is a new twist on the Senate Majority PAC ad’s claim that, “Before Congress, Cotton got paid handsomely working for insurance companies and corporate interests.” As the Washington Post‘s Glenn Kessler, aka the FactChecker, noted via Twitter, that ad, titled “Connect the Dots,” won the “fact checker trifecta” with FactCheck.org, PolitiFact and Kessler all pointing out that there was no evidence that Cotton did work for insurers. His only established connection to the industry involved consulting work for the Federal Housing Administration.

The thin piece of evidence for the Senate Majority PAC’s claim came from Cotton’s Facebook “about” page. Here’s a screen grab of what it says:

FB

As our reporting uncovered, that insurance experience amounted to consulting work done on behalf of the Federal Housing Administration to help its Office of Multifamily Housing Programs better manage its backlog. Any money that McKinsey — where Cotton was a consultant — made from the FHA project would have ultimately come from the federal government, not from private insurance companies. And so, we concluded, the insinuation that Cotton’s time at McKinsey gave him ties to the insurance industry — that are now influencing his views on Medicare — was simply misplaced.

There’s nothing new in the latest ad from Patriot Majority to back up the claim about Cotton’s ties to the insurance industry. However, the ad says that a reference to insurance industry experience was once proudly displayed on Cotton’s website, “but now it’s been removed.”

Patriot Majority notes that Cotton’s biography on his congressional campaign website on May 25, 2012, (retrieved via the Internet Archive Wayback Machine) used the identical language as is found on Cotton’s Facebook page now. Cotton’s biography on his current Senate campaign website, however, does not. Here’s a screen grab of the pertinent section of the biography on the Senate campaign website:

CottonAbout

In other words, there’s no list of Cotton’s “industry experience.” So, did Cotton’s campaign remove the “insurance” reference on the campaign Web page? We also went to the Internet Archive Wayback Machine and could not find that the language was ever used on Cotton’s Senate campaign website. The biography on the Senate campaign website is shorter than the one on the House campaign website from two years ago (220 words compared with 372). Also left off from the congressional campaign website was the fact that Cotton enjoys running marathons. Was that also suspiciously “removed”?

The ad says Cotton wants us to “forget” that he once “bragged about his insurance industry experience” on his website. If that’s the case, Cotton isn’t doing a very good job. That same descriptive paragraph mentioning “insurance” remains on his Facebook page.

The Medicare Meme

In what has become another theme of the Arkansas Senate race, the Patriot Majority ad criticizes Cotton for supporting the House GOP budget proposed by Rep. Paul Ryan. Specifically, it attacks Cotton for what Ryan’s plan would do to Medicare. The ad says: “Cotton pushed a plan that would undermine Medicare’s guarantee. And could cost seniors up to 1,700 more a year.”

In Ryan’s premium-support plan, seniors would choose either traditional Medicare or a private insurance plan purchased with a subsidy sent to the insurer. Critics say that the plan would “undermine” traditional Medicare. That’s debatable. Supporters of the plan say risk-adjustment measures would guard against the situation opponents predict: traditional Medicare becoming too expensive, because it was filled with older and sicker beneficiaries. We’ve explained the policy debate before.

As for the “up to” $1,700 claim, viewers would have to pay attention to the on-screen graphic to see that it’s referring to prescription drugs. The announcer doesn’t say that, but text on the screen reads: “Costing seniors up to $1,700 more on prescriptions.” As we’ve said before, the Ryan plan would increase costs for some — but not all — seniors because it repeals a provision of the Affordable Care Act that lowered prescription drug costs for some seniors. The Republican House budget would do away with the ACA provision that slowly closes the so-called “doughnut hole” in Medicare Part D prescription drug coverage.

But not all seniors reach the “doughnut hole” gap in coverage; in fact, most do not. Here’s how the gap works: Medicare covers prescription drug costs, minus a deductible and co-pays, until total costs reach $2,850 for the year for a beneficiary, in 2014. A beneficiary would then have to pay the full drug costs out of pocket until total out-of-pocket expenses reach $4,550. At that point, a senior’s drug costs are again covered, minus a 5 percent co-pay. The full cost of this gap in coverage for a beneficiary would be $1,700, the figure the ad uses.

The ACA now offers discounts on drugs purchased in that gap and slowly closes the doughnut hole until it’s gone in 2020. At that point, drug costs that previously fell in the gap would be covered, but seniors would have a 25 percent co-pay.

Seniors could face some higher costs under the ACA provision, too. The nonpartisan Congressional Budget Office has said that “the premiums paid by beneficiaries will increase slightly” under the ACA because drug manufacturers would increase prices slightly to compensate for the discounts they must provide. CBO still said that seniors who reach the gap in drug coverage “will probably pay less for their drugs overall.”

And by 2020 that gap in drug coverage could be wider than $1,700, if the ACA provision were to be repealed. The Department of Health and Human Services estimated in a 2012 report that beneficiaries who reached the doughnut hole would save an average of $1,734 in 2020 and $1,969 in 2022 due to the closing of that coverage gap.

Whatever the true figure is, only the seniors who completely spanned that gap stand to gain the most under the ACA, and lose the most under the Ryan plan.

As of 2013, 35.7 million seniors had Part D drug plans. How many seniors does the doughnut hole affect? A spokesperson at the Centers for Medicare Medicaid Services told us 4.3 million beneficiaries received discounts while in the coverage gap in 2013. So they’d pay something more under the Ryan plan.

How many would have completely surpassed the doughnut hole? According to a March 2014 MedPAC report to Congress (see pages 365-366), only 8.4 percent of enrollees in 2011 — slightly more than 2.6 million seniors — completely surpassed the gap, reaching what’s called the “catastrophic phase,” where coverage kicks in again. Most of those, however, received a low-income subsidy that “effectively eliminates the coverage gap,” MedPAC says. Slightly more than 500,000 did not receive the low-income subsidy and faced the full brunt of the coverage gap. That’s less than 2 percent of all those on Part D plans, using 2011 numbers.

Those figures may well be higher today simply due to more beneficiaries being on Part D plans. It’s also possible that some seniors have avoided the coverage gap in the past by reducing or changing their medications, so more could potentially benefit from the ACA — or pay more under the Ryan plan — than these numbers indicate. The nonpartisan Kaiser Family Foundation’s research has revealed that those who hit the gap reduce their prescription drug use, likely because they want to save money. The AARP provides a “doughnut hole calculator” on its website that helps seniors figure out if they’ll hit the gap and provides a list of alternative, cheaper medications that they could possibly get to reduce their spending.

Repealing the closing of the doughnut hole would raise drug costs for some seniors. The Obama administration’s most recent estimate is that 7.9 million seniors, and those with disabilities, had saved $9.9 billion on prescription drugs since the law’s enactment. For 2013, the average drug discount per beneficiary was $911. In Arkansas, 35,535 beneficiaries saved an average of $737 for the year, according to the administration’s figures.

Beneficiaries should save more as the gap is closed, and those savings would disappear under the Ryan plan. But those savings, and Patriot Majority’s claim, would affect only a small percentage of seniors.

– Robert Farley and Lori Robertson

Article source: http://www.factcheck.org/2014/04/more-weak-claims-on-cottons-insurance-ties/

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