Insurers Pursuing Billions in Medicare Profits Make Big Contributions to Candidates Backing Ryan Budget

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Public Campaign Action Fund and Health Care for America Now
October 10, 2012

(Download the report)

During the height of debate over the Affordable Care Act, America’s Health Insurance Plans (AHIP) publicly appeared to be negotiating with Democrats and the Obama administration while its members were secretly funneling more than $100 million to the U.S. Chamber of Commerce to oppose the legislation.

When Republicans won back the House Majority in 2010, insurance interests again took center stage when the House twice passed Rep. Paul Ryan’s (R-Wis.) budget plan that would turn Medicare into a voucher program that would deliver billions in new profits to health insurers while devastating a critically important program for America’s seniors.

A new analysis by Public Campaign Action Fund (PCAF) and Health Care for America Now (HCAN) shows that the same insurance interests that would benefit from a voucher program are filling the campaign coffers of Medicare privatization supporters, raising questions about whether these members of Congress are really working for their constituents or big insurance donors.

How Insurance Companies Benefit from the Ryan Plan

A voucher program designed by Ryan and embraced by Republican presidential candidate Mitt Romney would be a boon to insurance interests by moving millions of seniors who join Medicare after 2022 into private plans partially funded by government vouchers.

Vouchercare would give insurers vast flows of new revenue and increase health insurance company profits by $16 billion to $26 billion in 2030. Here’s how Harvard economist David Cutler described it:

According to the CBO, people aged 65 in 2023 (the first year of the voucher) are expected to account for 4 percent of the $1.23 trillion in Medicare spending anticipated in that year … An estimated $31 billion in Medicare funds would be newly available to private plans in 2023. The GAO has estimated that insurers earn profits of between 4.1 percent and 6.6 percent on revenue. Thus, the newly available private insurer revenues would generate private profits of $1.3 [billion]–$2.1 billion in 2023. These profits would quickly mount. By 2030, new profits for private insurers would be as high as $16 [billion] to $26 billion.

The year 2030 may sound far off, but health insurance companies and Wall Street investors would see an immediate payoff if backers of Medicare privatization were to win big in November. A Romney-Ryan victory coupled with a Republican takeover of the Senate would boost health insurance company stock prices by 10 to 20 percent, according to Citigroup analyst Carl McDonald. Based on share prices on Aug. 18, the day McDonald published his report, a GOP sweep in Washington would quickly jack up the total market value of the 10 largest health insurers by $12 billion to $25 billion. Here’s how McDonald sees it:

We’ve argued that in the scenario where Mitt Romney wins the presidential election and Republicans take the Senate, the managed care group rises 10-20%, as the market factors in the likelihood that health reform implementation is delayed, scaled back, or that pieces are removed entirely, pushing up earnings forecasts in 2014 and beyond. We think the argument for how much the stocks could move is strengthened by the selection of Paul Ryan as the Republican vice president candidate, given Ryan’s widely publicized proposal to essentially privatize the federal Medicare program. Ryan has talked about changing the reimbursement methodology for Medicare Advantage plans, which creates some uncertainty, but that negative would be more than offset by a major increase in Medicare revenue if the bulk of the seniors in the country were ultimately moved into a private plan.

Industry Influence

Rep. Paul Ryan’s insurance industry ties are well known. Right after his selection as Romney’s running mate, Bloomberg News reported, “Insurance employees and their families have given $815,328 to Ryan’s election efforts over his career, more than any other industry.” These donations include those made to his leadership committee as well as his campaign account.

At the top of the ticket, Governor Mitt Romney has raised nearly $2.7 million from the industry compared to $1.5 million for President Barack Obama.

But Ryan isn’t the only House member raking in industry campaign cash. The supporters of his budget plan are the top recipients of the insurers’ largesse, according to Public Campaign Action Fund analysis of data from the Center for Responsive Politics.

The analysis below includes donations from the political action committees (PACs) and employees of insurance companies and health maintenance organizations (HMOs) to the members’ campaign committees. Leadership PACs are not included but would drive these numbers higher.

  • Current U.S. House Members who voted for Ryan’s budget plan to turn Medicare into a voucher program have received nearly twice as much insurance industry campaign cash this cycle as those who voted against the bill. Supporters of the bill have received at least $14 million this cycle from the industry while opponents received $7.4 million.
  • On average, individual supporters of the plan received 53 percent more money in the 2012 cycle than opponents – $60,472 to $39,435.
  • More broadly, supporters of Ryan’s plan have received $49.7 million in contributions from insurance interests during their time in Congress, nearly $12 million more than opponents, who have received $38 million.
  • Eight of the top 10 recipients of insurance industry money this cycle are Ryan plan supporters – including every member of House Republican leadership.
  • House Majority Leader Eric Cantor (R-Va.) is the top recipient of industry cash this cycle in the House, bringing in $463,000 from the industry for the 2012 election and nearly $1.7 million over his career.
  • Members of the leadership team – Speaker John Boehner (R-Ohio), Majority Leader Cantor, Majority Whip Kevin McCarthy (R-Calif.) and Conference Chair Jeb Hensarling (R-Texas) – have received a combined $1.4 million in contributions in 2012 and $5 million over their careers.

A full table of insurance and HMO contributions received by members supporting the Ryan plan is available below.

An army of industry lobbyists backs up all of these donations. Since 2011, insurance interests and HMOs have spent a combined $344 million lobbying Congress and federal agencies.

***

The Federal Election Commission estimates that $6 billion will be spent on the 2012 election, making it the most expensive in history. Much of that money is being spent by wealthy special interests that want to see their preferred candidates elected in order to pass legislation beneficial to them or block bills they don't like. Insurance executives and their companies are a prime example, and they are also likely spending millions more on secret donations to groups like the US Chamber of Commerce.

When the insurance industry buys its preferred policies at the expense of everyday people, it highlights the problem with our current campaign finance system, in which elected officials have to make voting decisions based not on just what's best for their constituents, but what's best for their campaign bank accounts. And everyday Americans pay the price.

Insurance Industry and HMO Contributions to U.S. House Members Who Supported the Ryan Plan
(Click the headings to sort by column)

Name Party/State 2012 Total Career Total
Boehner, John R-OH $408,100 $1,906,560
Cantor, Eric R-VA $463,550 $1,687,049
Camp, Dave R-MI $371,849 $1,380,492
Tiberi, Pat R-OH $298,850 $1,258,433
Bachus, Spencer R-AL $241,460 $1,146,060
Ryan, Paul R-WI $209,643 $1,056,946
Royce, Ed R-CA $197,340 $981,545
Hensarling, Jeb R-TX $275,647 $757,470
Gerlach, Jim R-PA $164,928 $710,324
Biggert, Judy R-IL $233,250 $689,651
Sessions, Pete R-TX $114,500 $688,063
Herger, Wally R-CA $51,500 $671,610
Rogers, Mike R-MI $154,790 $657,587
Roskam, Peter R-IL $261,400 $656,638
Garrett, Scott R-NJ $149,972 $639,161
Stivers, Steve R-OH $223,285 $631,547
McCarthy, Kevin R-CA $287,227 $605,734
Boustany, Charles R-LA $261,500 $594,765
Price, Tom R-GA $214,750 $591,321
Terry, Lee R-NE $81,076 $575,534
Chabot, Steve R-OH $27,250 $575,341
Upton, Fred R-MI $171,200 $505,005
Capito, Shelley R-WV $81,800 $497,840
Barton, Joe R-TX $22,400 $488,544
Paulsen, Erik R-MN $195,680 $476,903
Shimkus, John R-IL $88,010 $444,977
Kline, John R-MN $120,050 $434,300
Dreier, David R-CA $4,750 $417,292
Brady, Kevin R-TX $112,050 $406,500
Neugebauer, Randy R-TX $118,200 $392,071
Burton, Dan R-IN $9,000 $379,941
Campbell, John R-CA $89,250 $373,150
Bilbray, Brian R-CA $47,350 $368,354
Latham, Tom R-IA $114,400 $367,457
Buchanan, Vern R-FL $129,200 $359,330
Walden, Greg R-OR $115,995 $358,835
Bass, Charlie R-NH $70,250 $358,725
Kingston, Jack R-GA $14,500 $355,017
Nunes, Devin R-CA $68,000 $354,850
Bachmann, Michele R-MN $46,151 $346,431
Schock, Aaron R-IL $145,946 $345,905
Smith, Lamar R-TX $80,513 $341,736
Manzullo, Donald R-IL $33,350 $330,826
Gingrey, Phil R-GA $75,250 $330,820
Whitfield, Ed R-KY $42,250 $330,759
Fitzpatrick, Michael R-PA $96,000 $328,090
Lewis, Jerry R-CA $2,000 $327,879
Hayworth, Nan R-NY $190,856 $324,706
McHenry, Patrick R-NC $68,250 $317,514
Blackburn, Marsha R-TN $88,500 $305,961
Sensenbrenner, James R-WI $10,000 $297,648
King, Pete R-NY $18,500 $296,911
Rogers, Mike R-AL $26,500 $290,475
Myrick, Sue R-NC $17,700 $290,471
Burgess, Michael R-TX $85,500 $288,450
LaTourette, Steven R-OH $17,000 $285,700
Graves, Sam R-MO $41,000 $282,398
LoBiondo, Frank R-NJ $25,500 $277,852
Stearns, Cliff R-FL $13,900 $276,021
Pence, Mike R-IN $7,650 $270,153
Guthrie, Brett R-KY $98,500 $254,350
Black, Diane R-TN $191,578 $251,128
Pearce, Steve R-NM $25,060 $250,350
Granger, Kay R-TX $26,200 $245,080
Jenkins, Lynn R-KS $105,028 $237,252
Meehan, Patrick R-PA $114,625 $235,465
Pitts, Joseph R-PA $120,189 $232,714
Mack, Connie R-FL $83,550 $232,166
Hall, Ralph R-TX $8,500 $229,900
Lance, Leonard R-NJ $65,440 $229,813
Mica, John R-FL $27,000 $226,060
Smith, Adrian R-NE $91,845 $225,246
Ros-Lehtinen, Ileana R-FL $14,950 $223,384
McMorris Rodgers, Cathy R-WA $54,250 $212,219
Dold, Bob R-IL $147,806 $211,906
Schweikert, David R-AZ $139,450 $211,827
Canseco, Quico R-TX $153,685 $210,335
Hastings, Doc R-WA $20,000 $208,194
Scalise, Steve R-LA $47,400 $206,275
Walberg, Timothy R-MI $63,950 $204,000
Scott, Tim R-SC $131,950 $203,725
Schmidt, Jean R-OH $26,000 $203,550
Hurt, Robert R-VA $99,156 $201,163
Cassidy, Bill R-LA $114,572 $200,247
Lucas, Frank R-OK $23,000 $197,975
Westmoreland, Lynn R-GA $52,685 $194,035
Berg, Rick R-ND $139,311 $191,711
Flake, Jeff R-AZ $117,050 $191,617
Bono Mack, Mary R-CA $40,800 $189,969
Diaz-Balart, Mario R-FL $4,500 $188,555
Luetkemeyer, Blaine R-MO $83,485 $187,660
Bilirakis, Gus R-FL $27,200 $185,797
McKeon, Buck R-CA $46,750 $185,050
Goodlatte, Bob R-VA $29,000 $184,236
Cole, Tom R-OK $25,500 $183,600
Alexander, Rodney R-LA $24,000 $183,275
Fincher, Stephen R-TN $114,250 $182,095
Marchant, Kenny R-TX $59,712 $179,382
Dent, Charles R-PA $24,463 $179,037
Heck, Joe R-NV $107,700 $175,430
Miller, Gary R-CA $27,000 $174,068
Lungren, Daniel R-CA $42,750 $170,350
Wilson, Joe R-SC $43,750 $169,700
Fortenberry, Jeffrey R-NE $24,650 $168,737
Aderholt, Robert R-AL $19,250 $166,583
Renacci, Jim R-OH $105,685 $163,385
Coble, Howard R-NC $12,000 $163,368
Calvert, Ken R-CA $13,550 $161,930
Yoder, Kevin R-KS $80,000 $160,290
Akin, Todd R-MO $45,000 $160,100
Duffy, Sean R-WI $99,812 $153,562
Guinta, Frank R-NH $88,825 $152,025
Issa, Darrell R-CA $40,300 $148,756
Bonner, Jo R-AL $27,000 $147,525
Ross, Dennis R-FL $52,250 $145,900
Sullivan, John R-OK $31,750 $142,600
West, Allen R-FL $68,090 $142,340
Webster, Daniel R-FL $65,400 $140,886
Petri, Tom R-WI $11,500 $137,970
Duncan, Jimmy R-TN $7,250 $137,776
Gallegly, Elton R-CA $2,700 $136,846
Kinzinger, Adam R-IL $77,100 $130,500
Noem, Kristi R-SD $96,800 $128,505
McClintock, Tom R-CA $11,650 $127,722
Shuster, Bill R-PA $13,500 $125,767
Crenshaw, Ander R-FL $13,200 $125,100
Jordan, Jim R-OH $33,232 $123,663
Rokita, Todd R-IN $72,815 $123,340
Culberson, John R-TX $15,750 $123,050
Gardner, Cory R-CO $69,500 $120,780
Fleming, John R-LA $41,782 $120,464
Runyan, Jon R-NJ $78,850 $120,250
Grimm, Michael R-NY $99,506 $119,606
Posey, Bill R-FL $43,250 $118,323
Frelinghuysen, Rodney R-NJ $5,250 $116,900
Reed, Tom R-NY $87,005 $112,455
King, Steve R-IA $49,350 $111,185
Young, Don R-AK $1,250 $110,250
Huizenga, Bill R-MI $84,665 $109,415
Miller, Candice R-MI $7,400 $107,051
Pompeo, Mike R-KS $53,000 $104,068
Harris, Andy R-MD $24,650 $102,400
Rigell, Scott R-VA $53,750 $101,050
McCaul, Michael R-TX $7,800 $97,951
Adams, Sandy R-FL $54,200 $96,600
Foxx, Virginia R-NC $23,250 $94,650
Forbes, Randy R-VA $28,250 $92,400
Poe, Ted R-TX $11,819 $92,329
Carter, John R-TX $10,509 $91,959
Gohmert, Louis R-TX $9,750 $91,150
Conaway, Michael R-TX $19,000 $91,000
Quayle, Ben R-AZ $52,950 $90,962
Walsh, Joe R-IL $79,450 $90,694
Olson, Pete R-TX $28,750 $90,150
Denham, Jeff R-CA $54,200 $89,400
Nunnelee, Alan R-MS $29,750 $86,900
Ribble, Reid R-WI $68,324 $86,074
Bucshon, Larry R-IN $48,000 $85,098
Latta, Robert R-OH $23,000 $84,750
Gibson, Chris R-NY $48,200 $84,000
Broun, Paul R-GA $26,234 $82,216
Thompson, Glenn R-PA $38,500 $82,060
Smith, Chris R-NJ $12,150 $81,100
Emerson, Jo R-MO $38,800 $80,830
Barletta, Lou R-PA $33,200 $80,750
Young, Bill R-FL $8,000 $79,700
Turner, Michael R-OH $15,250 $79,550
Austria, Steve R-OH $10,750 $78,350
Fleischmann, Chuck R-TN $49,750 $75,879
Rohrabacher, Dana R-CA $11,000 $75,850
Rooney, Thomas R-FL $13,750 $74,932
Wolf, Frank R-VA $1,550 $74,925
Hultgren, Randy R-IL $29,000 $72,050
Scott, Austin R-GA $53,750 $71,000
Flores, Bill R-TX $27,300 $70,400
Thornberry, Mac R-TX $8,450 $69,175
Simpson, Mike R-ID $12,500 $68,350
Rogers, Hal R-KY $15,400 $66,250
Griffin, Tim R-AR $34,800 $66,200
Herrera Beutler, Jaime R-WA $23,450 $65,950
Gibbs, Bob R-OH $32,500 $65,375
Franks, Trent R-AZ $8,000 $64,870
Long, Billy R-MO $26,750 $64,250
Mulvaney, Mick R-SC $30,400 $64,010
Schilling, Bobby R-IL $38,750 $63,700
Buerkle, Ann R-NY $55,300 $61,850
Kelly, Mike R-PA $31,500 $61,350
Marino, Thomas R-PA $29,750 $61,062
Johnson, Timothy R-IL $9,150 $59,800
Young, Todd R-IN $25,400 $57,850
Palazzo, Steven R-MS $24,500 $55,550
Johnson, Bill R-OH $43,750 $54,900
Coffman, Mike R-CO $30,350 $54,300
Gowdy, Trey R-SC $41,244 $53,194
Stutzman, Marlin R-IN $27,100 $52,800
Bishop, Rob R-UT $13,500 $52,300
Hanna, Richard R-NY $27,500 $52,250
Rivera, David R-FL $4,000 $49,900
Graves, Tom R-GA $20,500 $48,700
Nugent, Richard R-FL $25,250 $48,500
DesJarlais, Scott R-TN $22,200 $48,450
Duncan, Jeff R-SC $29,500 $47,750
Lankford, James R-OK $19,200 $47,600
Benishek, Dan R-MI $26,275 $47,412
Griffith, Morgan R-VA $35,500 $47,250
Hartzler, Vicky R-MO $24,200 $46,200
Johnson, Sam R-TX $87,500 $46,100
Roby, Martha R-AL $31,550 $45,700
Gosar, Paul R-AZ $17,500 $42,800
Harper, Gregg R-MS $6,700 $42,350
Bartlett, Roscoe R-MD $5,250 $41,250
Landry, Jeff R-LA $15,000 $40,100
Tipton, Scott R-CO $23,000 $40,050
Southerland, Steve R-FL $21,750 $37,553
Hunter, Duncan R-CA $14,250 $35,200
Ellmers, Renee R-NC $25,950 $34,500
Labrador, Raul R-ID $12,500 $32,868
Woodall, Rob R-GA $15,300 $32,550
Huelskamp, Tim R-KS $15,538 $29,702
Lamborn, Doug R-CO $7,000 $28,100
Crawford, Rick R-AR $9,750 $28,010
Amash, Justin R-MI $4,750 $24,950
Farenthold, Blake R-TX $15,000 $24,700
Chaffetz, Jason R-UT $7,500 $22,750
Cravaack, Chip R-MN $16,000 $22,000
Brooks, Mo R-AL $9,000 $19,700
Roe, Phil R-TN $1,625 $19,575
Miller, Jeff R-FL $6,750 $19,500
Wittman, Rob R-VA $4,000 $19,000
Womack, Steve R-AR $8,500 $16,200
Platts, Todd R-PA $0 $11,700
Lummis, Cynthia R-WY $2,000 $10,300
Murphy, Tim R-PA $63,000 $3,600