Medicare's Hidden Bonanza

[Guest guest]

http://www.motherjones.com/cgi-bin/print_article.pl?url=http://www.motherjones.c\

om/news/outfront/2004/03/02_401.html

 

Medicare's Hidden Bonanza

After millions in campaign contributions, an insurance magnate's 10-year

lobbying campaign finally pays off.

Michael Scherer

March/April 2004 Issue

For conservative leaders, the best part of the Medicare bill President Bush

signed in December had absolutely nothing to do with Medicare. Rather, the

provision that House Speaker Dennis Hastert calls " the most important piece in

the bill " and former Speaker Newt Gingrich considers " the single most important

change in health care policy in 60 years " is a little-noticed tax rebate set to

cost the Treasury $6.4 billion over the next decade. The measure allows

Americans to open tax-free " health savings accounts, " which can be used to pay

medical bills—in effect removing their owners from the shared risk that has been

the core of the health-insurance system since World War II.

 

 

 

 

Conservatives claim health savings accounts will encourage people to more

closely monitor their health care spending and bring down medical costs. Critics

call the accounts a tax shelter that will benefit the wealthy and draw young,

healthy workers out of health care plans, potentially doubling the cost of

insurance for everyone else. But no matter who is right about the long-term

impact, there is little doubt about the biggest short-term winner. He is J.

Patrick Rooney, a major Republican campaign donor from Indiana who has done more

than anyone else to make health savings accounts a reality. Rooney is the

chairman emeritus of the Indianapolis-based Golden Rule Insurance Co., which has

been selling health savings accounts through a now-expired pilot program that

Rooney helped convince Congress to approve in 1996. Just days before the new

Medicare bill passed, UnitedHealth Group, the largest insurer in America, paid

$500 million in cash for Rooney's family-owned company—a move that

analysts said was directly tied to the Medicare bill's provisions broadening

the market for health savings accounts.

 

 

 

 

Rarely has a basic federal program been so tied to one man or one company. In

their 10-year campaign to promote health savings accounts, Rooney's family,

companies, and employees have given $3.6 million to political candidates and

committees, with 90 percent going to Republicans. Rooney and his companies gave

another $2.2 million to Republican organizations, including $121,000 to help pay

for President Bush's Florida recount battle, and nearly $1.9 million for a group

called the Republican Leadership Coalition, which ran attack ads against Al Gore

during the 2000 campaign. Rooney also registered himself as a lobbyist and spent

close to $2.2 million working the halls of Congress and the White House.

 

 

 

 

For conservatives, a key selling point of health savings accounts is the

potential effect on the future of health care: In making their case to

lawmakers, Rooney's allies cited polls showing that two-thirds of Americans

support government-run, universal health care. By giving a large segment of the

population the option to withdraw from the health-insurance system, they argued,

health savings accounts could serve as a poison pill preventing another

" Hillarycare " debate. " It's going to be real hard to socialize the system if

everybody has their own account, " explains John Goodman, head of the

conservative National Center for Policy Analysis.

 

 

 

 

In the meantime, the Golden Rule division of UnitedHealth has gotten a jump

start on the competition, having rolled out new health savings accounts within

weeks of the bill's passage. By then, UnitedHealth's stock had already jumped 9

percent. " We know this market exceptionally well, " Golden Rule's top lobbyist,

Brian McManus, boasted. " We pioneered it. "

 

 

 

 

 

Finance Tax Center - File online. File on time.