AARP Hearing Center
August 28, 2012
The Honorable Wally Herger
The Honorable Dave Reichert
Committee on Ways and Means
United States House of Representatives
Washington, DC 20515
Dear Chairman Herger and Representative Reichert:
I have served for six years as a member of the all-volunteer AARP Board of Directors. In 2012, I became the volunteer president of AARP. It is in that capacity that I would like to respond to your letter of June 25, 2012 that seeks further clarification concerning AARP’s endorsement of the Affordable Care Act (ACA). Your letter indicates that you believe there to be inconsistencies between AARP’s public statements on the one hand and correspondence with White House senior staff and what you refer to as “AARP’s political activities” on the other. AARP strongly disagrees with this characterization and your implication that AARP supported the ACA for partisan political purposes or for financial gain. Through this letter we will explain:
1. How AARP sets policy generally;
2. AARP’s long history of studying healthcare issues and the need for comprehensive reform;
3. Why, specifically, AARP endorsed the ACA;
4. How AARP advocated for key provisions of the ACA that substantially benefit Americans 50+, including closing the “doughnut hole” in Medicare Part D, increasing coverage of preventive care and expanding coverage for those ages 50-64;
5. That AARP did not support health care reform for financial reasons; and
6. Consequently, why AARP’s public statements are fully in line and consistent with its actions.
1. AARP’S Policy Development Process
AARP is a nonprofit, nonpartisan organization committed to helping people 50+ have independence, choice and control in ways that are affordable and beneficial to them and society as a whole. We carry out this commitment in many different ways – including through our public policy and advocacy work, through our outreach and volunteer programs, in our publications and educational materials, and by providing access to member benefits that offer value and socially responsible features.
AARP has a standard process by which it determines which policies or legislative provisions we will support. AARP’s National Policy Council is tasked with studying issues and developing policy recommendations to be presented to the AARP Board of Directors. The Council is comprised of twenty-five volunteer leaders from around the country who have a record of public policy experience and interest on issues such as health care, economic security and consumer protection. Members are selected by a special committee of current Council members and Board members.
The Council carefully studies issues and often invites outside experts from a variety of backgrounds and perspectives to present their positions. For many issues, the process may also include surveying AARP members and other older Americans to help determine which issues are important to them.
The positions developed by the National Policy Council are then sent to AARP’s Board of Directors for consideration and approval and, if approved, ultimately codified in the AARP Policy Book. At least every two years, the National Policy Council reviews all policies in the Policy Book and brings any recommended changes to the Board of Directors.
2. AARP’S Long Focus On Health Care Reform
Since its inception, AARP has advocated for improvements to health care for older Americans. In 1958 – even before Medicare existed – we worked to persuade private health insurers to provide coverage options for older persons. With Medicare’s enactment in 1965, AARP became its champion and we have been working to protect and strengthen Medicare ever since.
In the early 1990s, at the direction of the AARP Board, we developed our own health reform proposal called “Health Care America.” We promoted that proposal and participated in the many White House health reform task forces to help build a plan that could gain majority support. In the wake of the unsuccessful effort to enact comprehensive health care reform legislation in 1993-94, AARP turned our attention to the states and achieved many successes with improvements at the state level, including expansion of home and community based services for people with long term care needs.
Over the years, AARP has been at the center of key legislative initiatives to strengthen and improve Medicare and other federal health programs, including major initiatives such as the
Balanced Budget Act of 1997 and the Medicare Prescription Drug, Improvement and Modernization Act. In 2003, we worked closely with the Bush Administration and Congress to enact what eventually became known as Medicare Part D – a program that includes prescription drug coverage in Medicare. Along the way, we engaged in health reform campaigns to bring health coverage to the broader population – including people who were not yet eligible for Medicare.
In 2006, after the first successful roll out and implementation of Medicare Part D, we began to revisit the potential for broader health care reform. Health care cost increases were gaining greater public attention and the impact of health costs on individuals and the economy was a topic of concern for large and small businesses as well as consumers and workers. We realized that any solution to the problem would need to be embraced by key stakeholders from divergent perspectives, and we began to look for like-minded collaborators.
Divided We Fail
Our search for collaborators led us to the Business Roundtable, a group of the most powerful Fortune 500 corporations, and the National Federation of Independent Business, the largest representative of American small business. We also sought out the Service Employees International Union, the country’s fastest growing union, which represents a range of workers, including health care workers. The four groups came together to lead an effort called “Divided We Fail” (DWF).
DWF negotiated a set of principles that each of the groups subscribed to, and we worked together to demonstrate that divergent groups had much in common when it came to the need to establish lifetime health and financial security for all Americans. DWF enlisted more than 160 supporting organizations, covering a broad range of stakeholders. DWF convened events, sent joint letters to Congress and the President, testified before Congress, and actively promoted the need for change – particularly reform of health care. The collaboration was highly visible and successful in establishing that these diverse and important interests agreed on the need for change, and as we headed into the 2008 election, all emphasized the importance of reforming the health care system.
Throughout the DWF campaign, it was always acknowledged that the individual groups might eventually part ways on the specifics of solutions. The hope was that agreement on the need for solutions would propel the conversation on health care reform to a critical point where action would be taken. DWF proved successful in making the case for the need for health care reform and moving the process forward.
Health Action Now
The stage was set for a robust discussion of the need for health care reform following the 2008 Presidential campaign. Consistent with our advocacy history and Board-approved policies, AARP kicked off our organization-wide Health Action Now campaign in the spring of 2009 to enact comprehensive health care reform.
Throughout the Health Action Now campaign, the all-volunteer AARP Board was very involved in (and ultimately responsible for) setting AARP’s priorities for the initiative. At the outset of the campaign, the Board and staff reviewed key elements necessary for effective reform. The Board evaluated each of these elements, using criteria such as its impact on health care, the benefits to individuals age 50+ and the value of AARP’s advocacy in these areas.
Based on the extensive amount of information the Board considered, they initially set the following six areas as AARP priorities for reform:
1) Guaranteeing affordable coverage for Americans age 50-64;
2) Closing the Medicare Part D coverage gap or “doughnut hole”;
3) Creating a Medicare transition benefit to help people return safely to their homes after a hospital stay and prevent costly hospital readmissions;
4) Increasing federal funding and eligibility for home and community based services through Medicaid so older Americans can remain in their homes as they age and avoid more costly institutional care;
5) Creating a pathway for the approval of generic versions of biologic drugs to reduce the price of these costly treatments; and
6) Improving the Medicare Savings Programs and the Part D Low Income Subsidy (LIS) so more Americans can afford the health care and prescription drugs they need.
As we will discuss in detail below, AARP had long-standing policy around each of these six priorities. Such policy pre-dated the 2009-10 health care reform effort and represented AARP’s best thinking on how to most effectively and responsibly serve the health care needs of those fifty and older. Our assessment of those needs reflected close attention to problems with access and affordability that our members had related to us in a variety of forums over a period of many years.
A dominant theme of AARP’s health care reform work, dating back to Divided We Fail, was the unacceptable “cost of doing nothing” – the conviction that failure to act would simply guarantee continuation of the escalating cost of care. There was universal consensus across the ideological spectrum that anything as big and important as health care reform would require difficult decisions among every constituency. AARP was prepared to make these decisions, driven by facts and data, with a particular focus on the impact of any proposal on the lives of Americans 50+.
The Medicare Advantage program was a prime example. For nearly a decade, AARP had raised concerns with the excess payments to what eventually became the Medicare Advantage program. AARP firmly believed that private options within Medicare were an important component, but that Medicare Advantage plans – which are offered by private insurance companies that originally claimed they could provide better care at a lower cost – must compete on the basis of quality and efficiency, not excess taxpayer-funded subsidies. AARP’s support for saving Medicare money by reducing Medicare Advantage costs was fueled by reports that insurance companies that offered Medicare Advantage received an average of 14 percent more per person than traditional Medicare. These subsidies were paid both by higher premiums for those in traditional Medicare, and by taxpayers. By reducing the excess subsidies to Medicare Advantage, we believed Medicare could save over $100 billion that could be used to strengthen Medicare for everyone.
The Board, with input from staff and previously-set AARP policies, actively guided AARP advocacy throughout the campaign. In addition to assessing how various forms of health care legislation matched up against our criteria, the Board also considered the implications of again supporting a bill that might lack broad bipartisan support. Having been through such a scenario in 2003 with Medicare Part D legislation, this was not something AARP took lightly, recognizing it would once again open us up to the inaccurate criticism of partisanship. While AARP continued to call for bipartisan support throughout the health reform debate, we once again chose to act in response to the identified health care needs of people age 50 and over, despite the lack of bipartisanship, in order to successfully advance key priorities for older Americans.
It is important to keep in mind that had AARP made broad bipartisan backing a prerequisite for our support of important health care advancements, we would have not supported either Part D or the Affordable Care Act. While members of Congress and others may disagree with either or both of these decisions, our support of these two pieces of legislation represents a reliance on health care principles and the best interests of Americans 50+ —and a rejection of partisanship.
3. The Affordable Care Act: An Opportunity to Make Progress Toward AARP’s Key Policy Objectives
Contrary to the implication of your letter, AARP’s position on the ACA and the overall health reform package was driven exclusively by the wants and needs of older Americans. While there were certainly those age 50 and above, both members and non-members, who disagreed with our support of the overall legislative package, AARP had years of research indicating that the wants and needs of the 50+ population would best be served by the component parts of the ACA. As a social welfare organization, we serve the needs of all those in the 50+ population, not just members. In the years leading up to the 2009 health care reform effort, AARP’s Public Policy Institute performed numerous studies around what older Americans, including AARP members, needed from health care reform, resulting in the six policy goals set as priorities by the Board, identified above and discussed in detail below.
A. The ACA included the key policies that AARP determined would help 50+ Americans.
1. Guaranteeing affordable coverage for Americans age 50-64
AARP has long been concerned about uninsured 50-64 year-olds. AARP’s Public Policy Institute described the problem in regularly updated reports issued in 1998, 2002, 2005 and 2007. The most recent report, issued in May 2007, found that 7 million Americans age 50-64 lacked health insurance (attached as Exhibit 1). Contrary to popular belief, many uninsured were employed, but they could not obtain coverage from their employer. Purchasing insurance on the individual market was simply too expensive due to excessive age rating or altogether unavailable due to preexisting condition exclusions.
This research helped AARP identify the problem as well as some potential solutions. Ensuring access to affordable coverage for 50-64 year-olds required lowering costs by limiting age rating and prohibiting insurers from denying coverage due to preexisting conditions. In AARP’s 2007 Policy Book, the National Policy Council, with Board approval, called for regulation requiring insurers to use community rating instead of age rating and to limit coverage exclusions for preexisting health conditions. As the health care reform debate heated up, AARP surveyed its members to determine where they stood on key aspects of reform. In April 2009, 61 percent of AARP members told us that they “strongly favor” and another 23 percent said they “somewhat favor” “making insurance available to everyone regardless of their health history,” confirming our belief that our members and the 50+ both needed and wanted limits on these insurance practices.
[1] Your letter implies that because some AARP members called to express their displeasure with our decision to support comprehensive health care reform, Mr. Nelson’s statement is misleading. This is simply not true.