Response to ways and means republicans herger, reichert

AARP continued to look at the insurance needs of 50-64 year-old Americans over the next few years.  Their access to coverage was not improving.  A 2009 update of the regular AARP report on

the subject showed that the number of 50-64 year-old Americans without coverage had increased slightly to 7.1 percent (attached as Exhibit 2).  In addition, the update noted that up to 28%

of applications from 50-64 year-olds to purchase coverage on the individual market were being rejected by the insurer, further confirming the need for reforms. AARP also believed that

removing barriers to obtaining Medicaid coverage would increase the availability of coverage for 50-64 year-old Americans.  In a September 2008 study, _Millions of Americans Can’t Get

Medicaid:  What Can Be Done?, _AARP determined that, second only to those in their 20’s, Americans in their 50’s and 60’s represented the largest segment of uninsured low-income adults

(attached as Exhibit 3). AARP did not ask members specifically about expanding Medicaid coverage, but 55% of members stated in the 2007 survey that “Government should see that everyone has

minimum health benefits” when asked what the government’s role should be and given four options.  Likewise, 70% of members said “government’s role in health care” should be either “expanded

greatly” or “expanded somewhat.”  In 2009, 75% of members told AARP that they would either “strongly favor” or “somewhat favor”  “helping low income people purchase their health insurance

with government assistance.” Limits on age rating, prohibitions on coverage exclusions for preexisting conditions, assistance in purchasing coverage, and expanding Medicaid were the keys to

ensuring affordable coverage for 50-64 Americans.  But the Affordable Care Act included other provisions designed to increase access to health insurance, including the “individual mandate”,

which has the potential to greatly increase affordable access to coverage for 50-64 Americans.  AARP had been studying the issue of an “individual mandate” for several years.  Recognizing

that such a mandate could become part of any reform legislation at either the national or state level, the National Policy Council set out to define the parameters in which a mandate would

be acceptable.  The 2007 National Policy Book spelled out the conditions that must be met before AARP could support any legislation that included a provision requiring individuals to

purchase insurance (relevant section attached as Exhibit 4).  Principal among them was that any requirement for individuals to purchase insurance be coupled with appropriate subsidies for

low and middle income consumers – an outcome similar to the “individual mandate” in the ACA.   AARP also confirmed that a policy requiring individuals to obtain insurance did not conflict

with our members’ views.  In December 2007, the National Policy Council conducted a broad survey of AARP members and non-members on a variety of issues including health care. The survey

results would help guide the Council’s work in establishing AARP’s policy positions. The survey included an explicit question about requiring individuals to buy insurance and providing

public subsidies to do so.  In response, 67% of members and 61% of non-members stated that they either “strongly agree” or “somewhat agree” with the following statement: It should be made

mandatory that every person buys health insurance. People with higher incomes who do not have coverage should be required to buy coverage or accept it from their employer, and the government

would help to pay for coverage for those moderate and low-income families so long as it is affordable to them. AARP also surveyed its members again and found broad support for an

“individual mandate” and the related subsidies.  In an April 2009 survey, 63% of members stated that they either “strongly favor” or “somewhat favor” the following health insurance reform

proposal: If you currently have health insurance, you could choose to keep it.  If you do not have health insurance through your employer, you would be required to buy a health insurance

policy from an insurance company or from a public program similar to Medicare. For those who could not afford to buy insurance, the government would help you pay some of the cost through a

special fund set up for that purpose.  Some of the money in this fund would be provided by a tax on employers who do not provide health insurance for their employees. Insurance companies

would no longer be able to exclude people who have a history of illness.  By mid-2009, AARP had empirical evidence that millions of 50-64 year-olds needed access to affordable health

insurance coverage and that solutions such as limiting age rating, prohibiting preexisting condition exclusions, providing subsidies to those needing help purchasing coverage, and expanding

Medicaid would dramatically improve access.  We ultimately believed provisions in the ACA intended to accomplish these goals were a significant improvement over current law and warranted our

support.    _2.    CLOSING THE MEDICARE PART D COVERAGE GAP OR “DOUGHNUT HOLE”_ Likewise, AARP based its support for closing the “doughnut hole” on both policy research and member feedback.

  A 2009 AARP report found that millions of Americans would be responsible for up to $3,000 in prescription drug costs before additional coverage kicked in (attached as Exhibit 5).  By 2016,

that hole was expected to reach $6,000.  AARP had found compelling evidence that the lack of coverage in the doughnut hole caused seniors to forego medication, resulting in adverse health

effects and expensive hospital stays.  When AARP asked its members if they were worried about the high cost of prescription drugs, the answer was a resounding yes.  The December 2007 survey

revealed that 82 percent of members were “very much worried” or “somewhat worried” about the price of prescription drugs.  An April 2009 survey similarly showed concern by more than

two-thirds of the respondents.  Once again, AARP had clear evidence that closing the doughnut hole would greatly benefit the health and economic well-being of millions of members and older

Americans. _3.    CREATING A MEDICARE TRANSITION BENEFIT TO HELP PEOPLE RETURN SAFELY TO THEIR HOMES AFTER A HOSPITAL STAY AND PREVENT COSTLY HOSPITAL READMISSIONS_ Perhaps no issue had been

more carefully studied at AARP in the years preceding the 2009-10 health care reform debate than creating a Medicare transition benefit.  In March 2009, AARP released _Beyond 50: Chronic

Care; A Call to Action for Health Reform_ (attached as Exhibit 6).  This comprehensive research report included original data analysis, six focus groups, and two national opinion surveys of

people with chronic conditions and their caregivers. The report cost over $400,000 to prepare and took over 18 months to complete. The report focused on ways to improve care coordination for

people with chronic conditions. One of the strongest conclusions was the need for, and the effectiveness of, transitional care coordination after hospital discharge. The report authors

specifically recommended the creation of a new Medicare benefit that would provide transitional care for beneficiaries at high risk of rough transitions and costly re-hospitalization.   _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_ Almost all health care experts agree that serving aging Americans in their homes instead of more expensive institutions is the wave of the future.  Research of older

Americans also has consistently shown that the overwhelming majority of people would prefer to age in their homes and avoid nursing homes (see March 2008 _Healthy at Home _report attached as

Exhibit 7). Moreover, the cost savings are real.  In 2008, AARP released a state-by-state review of efforts to transition long term care beneficiaries away from institutions (attached as

Exhibit 8).  Sadly, despite grants and other efforts by Center for Medicare & Medicaid Services beginning as early as 2001 to encourage states to save money and provide services in the

home, many states were not making progress.  A follow-up report in March 2009 from AARP, _Taking the Long View: Investing in Medicaid HCBS is Cost-Effective_, looked at several case studies

in states already implementing a shift from institutional care and found that both their residents and the state budgets were being rewarded (attached as Exhibit 9).  But more help from the

federal government was needed.  And relevant provisions of the ACA provided some of that help.  _5.    CREATING A PATHWAY FOR THE APPROVAL OF GENERIC VERSIONS OF BIOLOGIC DRUGS TO REDUCE THE

PRICE OF THESE COSTLY TREATMENTS_ In 2008, AARP released _Strategies to Increase Generic Utilization and Associated Savings_, a comprehensive report on ways to lower drug costs through the

increased use of generics (attached as Exhibit 10).  The report found that use of biologic drugs is on the rise but that the FDA lacked the ability to approve generic versions of these often

very high cost biologics.  AARP highlighted this problem in a May 2009 fact sheet that concisely laid out the high costs of biologic drugs (attached as Exhibit 11). AARP’s April 2009 member

survey asked specifically about legislation to allow generic versions of biologic drugs on the market. Not surprisingly, 62% strongly favored and another 23% somewhat favored “the

government devoting resources toward approving generic versions” of biologics.  While there is a small upfront cost to establish a pathway for approval of generic biologics, the long-term

savings for individuals, as well as Medicare, Medicaid and other health insurers, would be substantial.  The ACA included a pathway for the approval of generic biologics. _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_ By the summer of 2009, AARP had

consistently heard from members and other Americans 50+ that they were concerned about the high price of prescription drugs – including responses to both the 2007 and 2009 surveys described

above.  In the 2007 survey, 75% of members reported that they were either “very worried” or “somewhat worried” about “not being able to afford the health care services” they need.  In 2009,

65% of members reported the same concern. Programs such the Medicare Savings Program and LIS help low income seniors pay for needed health care and prescription drugs.  But poor coordination

between the two programs along with burdensome application processes meant many eligible seniors were not receiving the help they need.  Most importantly, both programs imposed low asset

tests.  In May 2007, AARP Board Member Joyce Payne testified before both the House Ways & Means Committee and the Energy & Commerce Committee (attached as Exhibits 12 & 13).  She

noted that an estimated 2.3 million low income seniors were denied help because they had retirement assets slightly above the eligibility limit.  Raising or removing the asset limit was a

simple and cost effective means to ensure millions of low income seniors could afford needed health care without punishing those who attempted to save for retirement.  Key elements of the

Association’s six priority areas, as well as other improvements in the delivery of health care, were included in the legislative vehicles entering the final stages of the ACA debate.  For

that reason, the AARP Board of Directors voted unanimously on October 21, 2009, to put AARP’s advocacy muscle behind comprehensive health care reform.  Recognizing the fluid legislative

situation in Congress, the Board empowered AARP to support legislation containing provisions the Board deemed necessary for true reform.  Ultimately, the final version of the Affordable Care

Act and the companion Health Care and Education Affordability Reconciliation Act met the Board’s high standard for support. B.   RESEARCH SHOWED THAT MEMBERS AND OTHERS SUPPORTED THESE

POLICIES. In November 2009, after the House of Representatives passed its health care bill, AARP commissioned a poll to test our members’ views of the law and its key components.  Despite

months of intense public debate, the survey found strong support for key elements of the law, including: * Requiring insurance companies to cover routine checkups and preventive care with no

extra charge (77% support) * Preventing insurance companies from denying coverage based on preexisting conditions (75% support) * Stopping insurance companies from charging much higher

premiums because of age (68% support) * Closing the “doughnut hole” (69% support) * Providing a voluntary long-term care program (66% support) *  Requiring individuals to buy insurance and

providing subsidies (68% support) Throughout the course of the debate, we continued to monitor public polling on health care reform.  External polling of voters 50supported many of our

internal findings.  For example, a Kaiser Family Foundation poll conducted in 2010 showed strong support among people 50-64 and 65+ for key components of health reform, including: * Creating

a health insurance exchange or marketplace where small businesses and people who don’t get coverage through their jobs can compare prices and benefits. o   age 50-64: 78% extremely/very

important o   age 65+: 66% extremely/very important * Reforming the way health care works, for example, so that insurance companies can’t deny coverage for preexisting conditions, and can’t

cap the benefits people get over a lifetime. o   age 50-64: 76% extremely/very important o   age 65+: 73% extremely/very important * Helping to close the Medicare “doughnut hole” so seniors

would no longer have a period where they are responsible for paying the full cost of their medications. o   age 50-64: 72% extremely/very important o   age 65+: 62% extremely/very important

4.    AARP FOUGHT FOR COMPREHENSIVE HEALTH CARE REFORM When health care reform moved forward in 2009, AARP knew that it had to be actively engaged in the debate to ensure that policies to

benefit those age 50 and over were part of the final legislation.  As a result, AARP aggressively engaged in advocacy activities with both the legislative and the executive branches, and

worked closely with other like-minded groups and associations.  As we have on other issues throughout our history, AARP utilized an internally-developed, comprehensive strategy, with

frequently updated day-to-day tactics, to work toward passage of health care reform that addressed the key priorities of AARP members and all older Americans. Of course, AARP’s greatest

strength as an advocacy organization is our millions of grassroots activists who dedicate their time and energy to vital causes affecting 50+ Americans.  Over the course of the 2009-2010

legislative debate on health care reform, over 1.3 million AARP grassroots activists took a total of nearly three million actions in support of reform, including telephone calls, petitions,

emails, text messages, faxes and letters to congressional offices.   In addition, AARP’s staff participated in many meetings with Members of Congress of both parties, congressional staff,

and administration staff.  Our employees explained AARP’s policies and views on multifaceted and complex legislation and made certain that AARP’s six core policy goals were included in the

final health care reform legislation. 5.    AARP DID NOT SUPPORT HEATH CARE REFORM FOR FINANCIAL GAIN Your letter refers to the misleading assertion from the report _Behind the Veil_ that

AARP stands to reap a “financial windfall of at least $1 billion over the next ten years” from the enactment of the ACA.  Unfortunately, the _Behind the Veil_ report is based on numerous

erroneous assumptions. To reach the $1 billion figure, the report relies on a number of assumptions related to mass migration of enrollees from Medicare Advantage (MA) to Medigap plans.  The

report assumes: 1) that United Healthcare will maintain a Medigap market share of 34% for the next 10 years; 2) that at least 50% of seniors leaving MA will enroll in Medigap; 3) that

seniors leaving MA will enroll in more expensive Medigap plans instead of plans that provide less coverage and charge lower premiums; and 4) that Medigap premiums will increase at nearly 5%

annually.  All of these assumptions are impossible to predict with any precision.