HH: Pleased to welcome now to the Hugh Hewitt Show David Certner. He’s the legislative policy director for the American Association of Retired Persons. David, welcome, thanks for spending some time with me.
DC: Thanks for having me here.
HH: Give us a little background. How long have you been with AARP?
DC: Oh, almost 25 years now.
HH: And before that?
DC: Well, I’ve been a longtime AARP’er.
HH: Okay, but were you on the Hill, I mean?
DC: Very briefly.
HH: Okay, who did you work with?
DC: Nonpartisan, so I’d rather not way.
HH: Well, was it like the Congressional Budget Office or something?
DC: No, it was just serving as a junior staffer at the time.
HH: Okay, so which member? Come on, David.
DC: No, no, I can’t tell you, because I’ve been nonpartisan for so long.
HH: Well, I can tell you I worked for Richard Nixon when I was 22. That doesn’t make we part of Watergate. You don’t want to tell us who you worked for?
DC: No, I never tell anybody.
HH: All right. Hey, let’s focus on Medicare. What will the impact of Obamacare be on Medicare?
DC: Well, of course, we don’t have the details of what this is going to look like yet, but I’ll tell you some of the things that we’re looking for to come out of this debate. One, we want to make sure there are no cuts to Medicare benefits. That’s obviously a key priority for us.
HH: If there are, will AARP oppose it?
DC: If there are cuts to Medicare benefits and services, then we will not support the bill. We think we can have savings in Medicare, and we are hopeful that there are smart savings that will help save the Medicare program money, as well as save people money out of their pockets in paying for things like co-payments and premiums as well.
HH: Well, let’s focus on the savings. I’ve done a little bit of research here, and there are a number of proposals out there to “get savings” out of Medicare. President Obama in June said he wants $313 billion over ten years out of Medicare. Where’s that going to come from?
DC: Well, there’s probably three big places at least in some of the proposals on the House side. Those are the ones that are most fleshed out so far that they would come from. One place would be to reduce some of the extra subsidies we’re giving to insurance companies. That would save probably close to $150 billion dollars.
HH: What’s that mean?
DC: Well, right now, the insurance companies provide an alternative to traditional Medicare, private insurance options in Medicare, that people can choose from which we think is a good idea. Unfortunately, what we’ve done over the last few years is we’ve been paying insurance companies even more money to provide these private options. We think there should be a level playing field. Right now, they get about 14% more for Medicare beneficiaries than the traditional program. So we’re going to ratchet back those extra subsidies.
HH: And so what happens to the person who owns the Medicare Advantage policy then? They have to pay more.
DC: Well, this is really going to be a decision that the insurance companies will have to make. Obviously, we’re reducing the subsidies to the insurance companies, putting them more on a par with Medicare, so the insurance companies that are better run, more efficient, providing high quality, we’re sure will still be able to compete. Those that are not necessarily offering as good care, they may have to change what they’re doing.
HH: But it almost certainly will result in price increases for Medicare Advantage, right?
DC: I would suspect that some of these companies that are not as competitive are going to have to make some decisions about the kinds of benefit packages they’re offering, or what the premiums they’re charging, yes.
HH: So they’re either going to have to charge higher or cut some of their benefits.
DC: For some of those companies, that’s probably the case.
HH: So some senior citizens listening right now just heard the legislative director of AARP say their cost of their insurance is going to go up or their benefits are going to be reduced.
DC: This is going to be an insurance company decision.
HH: But it’s going to happen, right? I mean, that’s inevitable. You take $150 billion dollars out of the insurance companies, subsidy or whatever you call it, and senior citizens are going to be paying more in premiums or less in benefits, right?
DC: Well, for some, and I want to be clear about this, because for the sum of the seniors who are in Medicare Advantage or these private insurance plans that are not necessarily as good quality or not necessarily as competitive, may be facing a situation where their insurance companies may be changing their benefit packages. However, because we’re reducing the cost of the Medicare Advantage plans, all the other Medicare beneficiaries who are now paying higher premiums to subsidize these benefits will actually see their premiums be a little bit lower.
HH: But right now, I want to focus on the fact, though, that AARP is supporting a proposal that will resort in some seniors paying more and getting less.
DC: Well, it’s insurance companies getting less.
HH: But bottom line, David, come on, people are listening, they understand the bottom line here, and they might be willing to do that. It might be necessary. That’s what Congresswoman Betsy Markey said in Colorado, Medicare benefits are going to get cut.
DC: Well, I think it’s important to understand that right now, taxpayers and all other Medicare beneficiaries are paying for these extra subsidies. So the few, the very small minority of people who are in the Medicare Advantage plans, and some of the ones that are less competitive, they may see some changes in their benefit packages. But the bulk of Medicare beneficiaries will actually be better off by reducing these subsidies.
HH: How many people are in Medicare Advantage?
DC: Roughly 20% of the Medicare population is in a Medicare Advantage plan.
HH: So 20% of Americans over the age of 65 are going to be impacted by these, what did you call, changes to their benefit plans?
DC: Well, I would say that 20% are in the class that could be potentially impacted. I suspect that there’ll be a smaller percentage of those who may actually be impacted.
HH: So that’s millions and millions of senior citizens who are going to have their benefits diminished or their insurance payments increased?
DC: I would say potentially, there are a few million people. On the other hand, 80% are likely to see their premiums now be lower because they’re not providing these extra subsidies. And of course, all taxpayers will be getting a benefit out of this, because they’ll also pay for some of these subsidies. And of course, I want to add a third point, which is we want to put Medicare on a more financially stable ground, so in places where we can save Medicare money are also important for the entire Medicare system.
HH: Now everything I’ve read does not tell me anywhere that Medicare premiums are going down for people. Now I have not read that anywhere. Is that part of a plan, Medicare premiums are going to go down?
DC: Well, as you know, Medicare premiums goes up with the cost of health care. So the more we can reduce the cost of health care, whether it’s reducing the subsidies to Medicare Advantage plans or other health care costs, we’ll keep premiums as low as possible.
HH: But right now, I mean, I have not seen a single projection from any source that says Medicare premiums are going to go down. Do you guys have a study that says Medicare premiums are going to go down after Obamacare?
DC: Well, we know health care costs keep going up, so at this point in time, we, part of the deal here is we’re trying to hold down health care costs as best as possible.
HH: Yeah, but when we’ve got at least 20% in a class of people that we know their premiums are going to go up. I thought you said, maybe I misunderstood you, but some people will have their Medicare premiums go down. And I thought to myself well, that’s not true.
DC: Well, I want to be clear. What we’re trying to do is hold down the increases in premiums. Premiums, as you know, go up every year.
HH: So they are going to go up?
DC: Well, premiums pretty much every year go up for people who pay for health care benefits. The problem is that premiums have been going up at a tremendously fast pace. For Medicare beneficiaries, they’ve basically seen their premiums double over the last seven or eight years. We want to make sure we can slow down those premium increases, and by saving money in Medicare, we can slow down those premium increases so they’re not rising as fast. We don’t want to see double digit increases in premiums every year.
HH: But premiums aren’t going to be cut, but the Medicare Advantage people are going to have their premiums go up. So there is no one who is going to be better off in terms of the premiums they pay at the end of this, if Obamacare passes?
DC: No, I think by holding someone’s premiums down, they will be better off.
HH: No, come on, that’s semantics, David. Everyone’s, the bottom line, everyone’s going to be paying more money if this thing passes, some less than they might have been paying otherwise, but they’re all going to be paying more.
DC: Well no, I think if you have to compare it to what’s going on currently, under current law, people are paying a lot more every year. And hopefully, with these changes…
HH: You know, David, that’s Beltway stuff. Right now, Granny and Grandpa are listening, and they’re paying $100 a month, or $300 a month, and next year, they’re going to pay $100 or $300 plus X, and it’s going to be more. Now you’re saying it’s not going to be as much as it would be, but they’re still going to be paying more.
DC: Right, because we don’t want them to continue to see their premiums double. We want to make sure that premiums are going up at an affordable pace. We need premiums to be fair so people can afford them, not to keep going up at these tremendous rates.
HH: But you can’t guarantee that they’re not going to go up at these tremendous rates.
DC: Well, I think that’s what part of the effort is this year in trying to get a handle on health care costs. For us, it’s a very big deal. As you know, it is for the Medicare population. I mean, I can tell you that the average Medicare beneficiary pays about 30% of their income on health care costs. So holding down health care costs, and by this, I just don’t mean premiums. We’re talking about co-payments and other out-of-pocket costs. We need to hold down those health care costs across the board so that people’s health care costs don’t continue to go up by double digits every year.
HH: Again, I am un-persuaded yet that that’s going to be accomplished by Obamacare, but let’s move to the second area of Medicare savings. You’ve already said they’re going to save money by raising the cost of Medicare Advantage. What’s the second area of savings?
DC: Well, one of the second big areas is that they’re limiting the amount of increased growth in what they’re paying some of the providers. So for example, hospitals this year, at least early on, announced an agreement that they had with the administration that they were going to hold down some of their cost increases over the next ten years. And I believe that saved from hospitals on up roughly $150 billion dollars over the ten year period, too. These are changes that the hospitals agreed to, and said that they could accomplish over the next ten years as well. Again, hospitals would be getting an increase every year. They would just be getting a smaller increase than they would otherwise.
HH: So what’s that mean for a Medicare patient?
DC: Well hopefully, it doesn’t mean much in terms of care, except that hopefully, hospitals will become more efficient, and actually, this will improve care. That is the hope.
HH: Yeah, but it might mean lower reimbursements to doctors. Is that true?
DC: No, this is separate. We’re just talking about hospitals now. Now actually for doctors, this bill, at least the ones that are pending, are actually going to increase the amount of money going to doctors. So…
HH: But I mean, if you cut back $150 billion dollars over ten years in payments to hospitals, hospitals have to make economies to make that change. Do they not adjust their relationship with doctors as a result of that, not the Medicare payment, but just their relationship with doctors?
DC: Well, there are many things that hospitals can do to improve efficiency, and let me give you one example that we have actually been pushing and working on, and trying to get included in some of these bills. We find that about one out of every four people who leave the hospital ends up getting readmitted within thirty days. And one of the reasons for that is there’s not enough good follow up care when someone leaves the hospital. So by putting in place better follow up care arrangements, we can both reduce the amount of people who have to re-enter the hospital unnecessarily, and save money so we can both increase care and reduce costs.
HH: Will there be arbitrary restrictions on readmission within thirty days?
HH: And so there’s absolutely no way that people are going to have to prove that they have to be readmitted?
HH: All right. What’s the third area of Medicare reimbursement, or Medicare cuts that are coming?
DC: Well, one of the other big areas of changes is at least, and again, there are multiple bills out there, so there are several proposals on the table. But one of them is to basically get larger rebates from the drug insurance industry for payments to low income Medicare beneficiaries for their drug prices.
HH: And so how much is that worth?
DC: I think that was worth roughly, and some of these things have not been scored individually, but maybe roughly in the order of about $50 billion dollars over ten years.
HH: And now the Senate Finance Committee when they met in July said they’ve got to find $35 billion dollars in savings from an independent commission empowered to recommend changes in Medicare annually. What does AARP think about that?
DC: I’m not sure I’m familiar with that. I think you may be referring to the Medicare payment advisory commission, which currently advises Congress on basically how much to reimburse some of the providers in the health care field, and then Congress can accept or reject some of their recommendations. So there’s been some discussions about how to put forward some of those recommendations to find more savings in Medicare.
HH: And the President has endorsed that. But the AP story I’m reading reads, “A bipartisan group of Senators agreed tentatively Tuesday, July 29th, to squeeze an additional $35 billion out of Medicare over the next decade, and larger sums in the years beyond. Under the plan, an independent commission would be empowered to recommend changes in Medicare annually to take effect automatically, unless Congress enacted an alternative.” What do you think about that?
DC: Right, this is referring to, I think, the Medicare Payment Advisory Commission, which right now, as I said, is advisory. So this commission, which is generally a bipartisan commission, does good work in advising Congress on changes that they should make to find savings in Medicare. Right now, basically, Congress has the choice to accept or reject the changes. Some of us way we need to give this commission more power, more authority to make these changes, and implement them more automatically, therefore we can find more savings. Quite frankly, we are comfortable with recommendations to help save money in Medicare as long as they’re done in a targeted way with enough study behind it, that we know that we’re not harming care, but we can actually find savings.
HH: Does AARP endorse, though, the idea of them having the authority to make cuts unless reversed by Congress. It’s sort of a legislative veto, might not be Constitutional, might be Constitutional.
DC: Right, no we have not. We believe that some of these decisions, particularly as they deal with benefits and reimbursements, really aren’t decisions that Congress should make, and should not just be simply sent off to a commission.
HH: So AARP opposes the idea of expanding this commission’s authority?
DC: Well, there’s been no details on this commission, but generally speaking, we have not endorsed anything yet.
HH: But would you oppose it if they want to put this commission on steroids?
DC: We might, depending on how it’s done, yes.
HH: All right, now the Obama administration, back in the budget submission in March, proposed a federal budget for diagnostic imaging that required preauthorization for Medicare imaging. That’s rationing. You guys oppose that?
DC: Well, not completely familiar with the provision. I think we’re talking about getting prior authorizations for certain practices. We are firmly against any kind of rationing of care. I just want to make that very clear. If there is rationing of care in this bill, we will oppose it.
HH: But preauthorization is in fact rationing.
DC: Well, preauthorization just means you have to get preauthorization, because right now, we know that there are a number of tests that are being done unnecessarily. We’re not talking about care being denies to someone. We are very often talking about tests being run on someone that shouldn’t be run, and that is not rationing of care. That is basically charging people for tests that shouldn’t be done on them…
HH: David, that’s…if I want to have an MRI and I have to get preauthorized, and someone says no, you can’t have it, I’ve been rationed.
DC: Well, you’ve only been rationed if you should be getting the MRI in the first place.
HH: Well no, I’ve been rationed. You might say it’s a good bit of rationing, but if I want to get an MRI and the government says no, that’s rationing.
DC: Well, I think that’s the way insurance right now works. You just can’t go in and get an MRI for anything you want. There has to be a medical reason for it.
HH: That’s correct, but Medicare doesn’t work that way. If a doctor orders a senior citizen to get an MRI, there is no preauthorization. The doctor gets to have it ordered up and done.
DC: Well again, we agree with you that there should be nothing that interferes with the treatments that the doctor is giving to a patient.
HH: So are you opposing the Obama administration’s demand for preauthorization of Medicare diagnostic imaging tests?
DC: Again, I want to defer on that one, because I don’t know about exactly what they’ve proposed there, and we have not commented on that one specifically. I don’t mean to sound evasive, but I’m just not as familiar enough with that, and I don’t believe we have taken a specific position on that particular issue. But I can tell you, we are firmly against any kind of rationing.
HH: Well okay, I don’t know how you can take $400 billion dollars out of a system and not end up cutting benefits. I just don’t know how you can do it. And when preauthorization means rationing, I think AARP is not really coming to grips with the reality of this, which is it is rationing, and seniors believe it’s rationing.
DC: Well, I really do want to be careful here, because we know, and anyone who’s been involved in the health care system, knows how inefficient the health care system is, how much waste there is in our health care system, and quite frankly, there is some outright fraud in our health care system. We think those areas are what need to be attacked. If we attack those smartly, we can save money in Medicare. I think everybody believes that we can reduce the inefficiency and waste in our health care system, including in Medicare to help save money. And we really need to do those things, both to A) help the Medicare program and save Medicare money, and B) to help all the individuals who are paying higher premiums and higher co-payments for those additional costs as well. And it’s critical that we do these things to hold down health care costs.
HH: David Certner, though, there isn’t a lick of tort reform in this bill. The most important aspect to hold down medical costs in the United States would be tort reform. Why is AARP supporting a bill without any tort reform in it?
DC: Well, there actually is in some proposals on trying to move away from our current system, which is a little bit more hit and miss in our legal system. In fact, some people get bigger awards than perhaps they should, and some people don’t get…
HH: David, there is nothing in this bill. There is no tort reform in this bill. Nothing.
DC: No, I disagree with you. One of the proposals in this bill is to give the states some flexibility to put together alternative mechanisms to basically deal with patients who have been injured.
HH: That’s, David, that’s a joke. Nobody has said there’s tort reform in this bill. Are you really here as a representative of AARP saying there’s serious tort reform in this bill?
DC: What I’m saying is they’re giving the states the flexibility to try different systems that may work better than the current system.
HH: But David Certner, come on, there is no tort reform. Even the President has admitted that, and in fact, Harry Reid said we can’t put tort reform in here, it will not get through. Nobody believes there’s tort reform in this bill.
DC: I’m just telling you what’s in the bill. There is authority given to states to have some flexibility to test different and better systems than what we have today.
HH: Do you think that’s adequate tort reform given the scale of the problem we have facing us with medical costs running away as a result of lawyer-imposed costs?
DC: No, these are minor demonstration projects to help get us moving in a better direction. Your comment was that there was nothing on this.
HH: And I just think that’s a joke. I think that’s silly, and I don’t think it’s effective, and I don’t call it tort reform. But I’m wondering, why is AARP supporting a bill that doesn’t have serious tort reform in it?
DC: Well, we would be happy to have additional levels of tort reform added to this bill. We think there are other ways in our legal system that could both help patients who have been injured, and also help improve the systems both with doctors and hospitals to prevent some of these bad practices in the first place.
HH: All right, let’s turn to the public plan before…I don’t want to run out of time before we get there.
HH: AARP supports the public plan, right?
DC: The public plan is not one of AARP’s key objectives in this. Our key objective for, again, this is primarily for the pre-65 population, the pre-Medicare population, our objective is to get to affordable health coverage, particularly for our members age 50-64. Whether or not we have a public plan really depends for us on what it does and what it accomplishes, and if it gets to the end goal of a affordable health care plan.
HH: Now…but the public plan will result in a lot of employers dumping their insurance, and people ending up in the public plan who don’t want to be there. Why does AARP support that?
DC: Well again, we have not supported a specific public plan. Public plans can be done in many different fashions. I mean, I want to just give you an example. We talked about it earlier. We have a Medicare program which is a public plan, of course, that also has private options. So our older population is very familiar with a system that has both public and private options, and has opportunity to choose between those two options. So those kinds of systems have worked for our Medicare population. If done right, it could probably work for a pre-65 population as well.
HH: But won’t a public plan inevitably result in lots and lots of employers dropping their insurance for their employees, and those employees being forced to go into a public plan?
DC: If done the wrong way, that is one potential outcome.
HH: I mean, I don’t know, how could it not be that way? If you put a public plan out there, and it’s subsidized, as it’s going to be inevitably subsidized by virtue of a lot of things, employers, in fact, the Lewin Group estimated up to 119 million employees will get dumped into a public plan.
DC: Well, that was certainly one estimate based on a certain set of assumptions. The Congressional Budget Office, which we’ve been talking about most of their scoring today, and what we’ve talked about, has actually estimated that the employer system would actually increase under this system. So it really depends on what kind of a public system you put together. We don’t think it’s essentially to a health care reform plan, but depending upon what it accomplishes, and if it can do for example what it has done in Medicare, then we would certainly be open to considering it. But it’s not a main objective for AARP in this health care reform bill.
HH: Let me play a little bit from the President, something he’s fond of saying.
BHO: Here’s the guarantee that I’ve made. If you have insurance that you like, then you will be able to keep that insurance. If you’ve got a doctor that you like, you will be able to keep your doctor.
HH: Is that true?
DC: Again, I think the objective is to make sure that if you have insurance that you like today, you can keep it. That is certainly one objective for AARP.
HH: But that’s….let’s play it again, let’s listen so you can hear it. This is the president of the United States making a guarantee, David Certner.
BHO: Here’s the guarantee that I’ve made. If you have insurance that you like, then you will be able to keep that insurance. If you’ve got a doctor that you like, you will be able to keep your doctor.
HH: Now is that true?
DC: Again, I think we’re talking about the difference between a Medicare population and a, say, a pre-Medicare population. For Medicare, as far as we can tell, there’s nothing that is going to change the current system today in terms of the insurance you can, the hospitals you can go to, the doctors you can go to, and so that should be true for the Medicare population. For the pre-Medicare population, you know, the system is still evolving and in flux, so it’s really hard to answer that question specifically. We don’t even know, for example, if we have a public option, and what that option looks like, what the subsidies might be if we have such an option. So if we have a level playing field, and employers certainly prefer to provide the insurance on their own, then most employers will continue to provide insurance that people who are happy with can keep.
HH: But you just said most employers will continue. A) I disagree with that, but B) most isn’t all, and the President guaranteed all. So I guess you’re agreeing with me the President was not telling the truth there.
DC: Well again, we don’t have any bills in the Senate to even comment on this one yet, so as I said earlier, if this is not done right, if it’s not done with a level playing field, then you could have some shifting of employees out of their health care plans. We don’t think that’s the way to go. We want to make sure that it’s actually done right, so that people who do have insurance that they like can keep it. That would certainly be our objective.
HH: So you do believe that some shifting could occur? Because I was reading the AARP bulletin from August 14th, and it implies that in fact that’s not a threat, that it’s not really a threat at all.
DC: We believe that the way they are constructing it thus far, it is certainly not a major threat, that most people who have insurance will be able to keep what they have. And I think it’s important, you know, we’re talking about well, maybe some will shift, but I think it’s really important to keep in mind that what we’re seeing going on right now is that many employers are getting out of the health care system altogether, or shifting people out of the health care system now, because health care is becoming unaffordable to employers. So it’s not as if we’re not seeing this shift going on right now. We think we need to reform the health care system, because employers are also demanding reform, because health care is not just expensive for individuals, it’s not just expensive for the federal government, but both large and small employers are having a great deal of difficulty getting health care for their employees.
HH: Well, we all know that. I mean, that’s like a hundred years old news, David. What people don’t know is whether or not this current bill is going to reduce the services they’re allowed to have, raise their costs, cause their doctors to drop them, have their employers lose their private insurance. And all those…and cost a fortune, I mean, just cost a fortune. And they’re wondering why AARP is behind such a profoundly destructive set of proposals. And it sounds to me like you guys are just hoping it doesn’t turn out that bad.
DC: Well, let’s get the record straight. We have not, as you probably know, we have not endorsed any specific piece of legislation.
HH: The President says you have.
DC: Excuse me?
HH: The President has said on many occasions you’re behind this effort.
DC: Uh, no, they’ve acknowledged that while we have been strongly supporting of trying to reform our health care system, we have not endorsed his bill or any of the bills pending in Congress.
HH: Haven’t you teamed up with Big PhRMA to send money to a front group that’s putting the ads out there in favor of health care reform?
DC: We are involved in a number of efforts supportive of health care reform. And we have been for many years.
HH: But I mean in recent months, have you spent millions of dollars on behalf of ads pushing Congress to act?
DC: We have been advertising just this past month asking Congress to act on health care reform.
HH: How much has AARP spent on that?
DC: Our advertising spend?
DC: We have spent probably several million dollars.
HH: Well, several million could be six or it could be sixty. How much?
DC: Well, no, under ten.
HH: Under ten. Well, it’s still a lot. Is it more than five?
DC: It’s within the five to ten million dollar range in terms of advertising. We’re doing more than just advertising, though. We’re doing a lot of work, and quite frankly again, this is not something that we just started in January. This was something that we were doing in the run up to the last election, working with both at the time, Senator Obama and Senator McCain, to try to make health care reform a top priority.
HH: Are you part of the AARP negotiating team, Mr. Certner?
DC: I’m part of our legislative advocacy staff here, yes.
HH: Have you met with David Axelrod on this stuff?
DC: No, I have not.
HH: Has anyone from AARP met with David Axelrod?
DC: I do not believe so.
HH: Because Axelrod’s old firm is getting some of the millions that AARP is putting into this effort. Are you aware of that?
DC: I don’t believe that is true.
HH: Oh, it’s absolutely true. It’s absolutely…if it were, would that bother you?
DC: It’s not true. We’re not giving millions of dollars to any firm that Axelrod is involved in.
HH: No, there’s a coalition of groups, including Big PhRMA and AARP, it’s been reported by Politico.com, that has put lots of money into a joint group, and that joint group has paid a lot to David Axelrod’s former firm. It’s in Politico. I mean, they’re not like a right wing nut group.
DC: Well, let me just say, we are, as I mentioned, doing a fair amount of advertising that we are spending money on. But that is on our own. There is no coalition that we’re involved in that we’re contributing millions of dollars.