Fronting for a phony front group.
The health insurance industry took advantage of Washington’s infamous revolving door last week when it named former Rep. Allyson Schwartz of Pennsylvania, perceived by many to be a liberal Democrat, as the face of its latest K Street-operated front group.
Schwartz, a former five-term member of Congress who made an unsuccessful bid for Pennsylvania governor last year, announced in an email blast Tuesday that she had found work again, not back home but back inside the Beltway. “Today I will begin as President and CEO of the Better Medicare Alliance,” she told her “friends and supporters.”
The Better Medicare Alliance is a so-called 501(c)(3) nonprofit that appears to have been created with funding from insurance companies by APCO Worldwide, a Washington influence firm with a long history of running front groups for its clients. I worked with APCO on several projects during my years at Cigna.
The Better Medicare Alliance’s raison d’etre is to widen the federal spigot of taxpayer dollars already gushing into the bank accounts of insurance companies that operate Medicare Advantage plans, those privately run alternatives to traditional Medicare. Enrollment is concentrated in a small number of companies, among the biggest of which are for-profit insurers UnitedHealth Group, Humana and Aetna.
As the Center for Public Integrity has reported extensively over the past year, the federal government for years has overpaid Medicare Advantage insurers, which has enabled the companies to better reward their shareholders. Insurance firms have also used the overpayments to add benefits not covered by traditional Medicare, like hearing aids, and to offer lower copayments.
Insurers that participate in the Medicare Advantage program devote big chunks of their advertising and sales budgets to lure seniors away from the traditional Medicare program, which costs taxpayers less. For many seniors, the marketing is irresistible. Enrollment in Medicare Advantage plans jumped 10 percent between 2013 and 2014. Thirty percent of Medicare’s 54 million beneficiaries are now in a Medicare Advantage plan.
Insurers insist that Medicare Advantage plans represent a good value for seniors and the country. They say, for example, that because of the managed care techniques they use, they are better able to coordinate care for seniors with chronic conditions.
A downside rarely mentioned is that many doctors and health care facilities, including nursing homes, refuse to participate in Medicare Advantage provider networks. Other providers that might want to participate are often excluded. My own mother didn’t fully appreciate the consequences of her Medicare Advantage plan’s limited network until recently. She decided to switch back to traditional Medicare so she could go to a nursing home of her choice with high quality ratings.
“The purpose of the Better Medicare Alliance is to bring together a national coalition of health plans, providers, advocates and beneficiaries to support and strengthen Medicare Advantage,” wrote Schwartz. Despite being a favorite of Emily’s List and other liberal groups, Schwartz received a third of the $16 million she raised in campaign contributions during her career from people and companies in health care and insurance and from “lawyers and lobbyists,” according to OpenSecrets.org.
Having worked with numerous front groups in the past, I’m betting that the real purpose of the Better Medicare Alliance is to strengthen the profits of health insurers, many of whom contributed to her various campaigns, by making sure that proposed cuts to Medicare Advantage plans never get implemented.
Even though the Better Medicare Alliance lists several nonprofit organizations as allies on its website (and gives them equal billing to Aetna, Humana and UnitedHealth Group), I recognized many of them—the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Retail Federation and the Healthcare Leadership Council—as groups ever ready to aid and abet the insurance industry.
As an industry executive, I worked with every one of them during the various campaigns we waged whenever a proposed law or regulation surfaced somewhere that might have hurt profits. Know this, though: while those organizations were willing to lend their names to give our front groups the appearance of being genuine coalitions, they expected us to kick in most if not all of the money to cover the front groups’ expenses.
So how can I be so sure the Better Medicare Alliance is a front group, aside from the mention of the usual suspects as allies? There are these other tell-tale signs: no listing of a physical address or phone number on its website; no mention of employees other than Schwartz; no board of directors (I wanted to know who actually hired Schwartz and who she answers to); no apparent way to reach anyone there other than through a generic email address. (The questions I submitted to the group last Wednesday have still not been answered.)
I did finally find the name of a real person, someone I had worked with often during my days in the industry, not on the group’s website but on its press releases. He’s Bill Pierce. Senior Director of, you guessed it, APCO Worldwide.
Wendell is a senior analyst at The Center for Public Integrity where this first appeared on 4/27/2015.