Arnold Kling  

AARP rent-seeking

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Trade Policy... Financial Crime...

I have not been following the prescription drug benefit bill closely enough to be able to provide a sound economic analysis. According to the Washington Post, I am not alone.


This is an extremely expensive, 1,100-page bill that will have a profound effect on the nation's fiscal and physical health. And although it was not finished until yesterday afternoon -- after several months of a largely secret conference -- last night House leaders were planning to bring it up for a vote today or tomorrow. If they do, most members will have no real idea of what they are voting for or against.

Both the Post and the Wall Street Journal editorially oppose the bill, with the Journal saying,

seniors with low drug expenses will be net losers under the GOP bill once they pay their premiums and deductible. Yet they will be pressured to sign up by stiff late enrollment penalties. Worse, many seniors will have their gold-plated private retiree coverage canceled, and end up with the inferior government benefit.

The legislation received a boost when it was endorsed by the American Association of Retired Persons. Paul Krugman thinks that this was motivated by rent-seeking.

Over the years AARP has become much more than an advocacy and service organization for older Americans. It receives more than $150 million each year in commissions on insurance, mutual funds and prescription drugs sold to its members.

And this Medicare bill is very friendly to insurance and drug companies.


My concern is that one of the policy alternatives that I would like to see on the table for Social Security and Medicare is raising the retirement age for people now aged 50 and younger. However, if the AARP earns income from retirees, then they would regard any reduction in the size of the retired population as a threat.

For Discussion. Is it reasonable to conjecture that the number of pages in the legislation and the amount of rent-seeking involved in its design are positively correlated?


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COMMENTS (10 to date)
Kyle Markley writes:

Yes it's reasonable to conjecture that the length correlates with rent-seeking. I think it's outrageous that any piece of legislation needs to be a thousand pages long in the first place, and even more outrageous that anyone would dare vote in favor of a bill they haven't had time to properly read. This is a looming disaster.

Steve writes:

How's about we stop forcing kids (and their employers) to pay for their parents' Viagra and Prozac and start creating jobs that pay real money?

The baby boomers are the wealthiest generation ever to retire. Why the hell should I have to pay for their drugs? We need a HARD CORE means test, not the BS that is included in this thing.

Lawrance George Lux writes:

A study in the 1970s accurately conjectured that Congressmen, Senators, and Legislators read less than Ten percent of the legislation on which they vote. Congressional aides produce summaries of less than a paragraph, on which Votes are cast. Most often, these Aides have read only a fraction of the legislation themselves.

There is huge Rent-seeking in all legisation. I think it was Jefferson who warned of Congress writing books as legislation. This is how County musuems get funded in Defense bills, and Business writeoffs get introduced into Health bills. I would guess there is a provision in the Proscription bill somewhere, stating senior Social Security administrators should get a raise. It is known Drug companies want blanket immunity from liability for poorly-tested drugs sent to the market.

I had better quit, before Someone begins to think I write legislative bills. lgl

Chris writes:

We need a law...any law that can't be completely displayed on a single powerpoint slide is too complicated and automatically defeated.

Boonton writes:

Laws that can be powerpoint slides? It's never going to happen. I suppose the lawyers, though, would like to be able to read economics without having to know higher math....so there's a small measure of revenge.

b-psycho writes:

I bet if someone were to write a gag bill that long revoking like 3 different bill of rights amendments at once, it'd pass.

Oh wait, it did, Patriot Act...:^(

Mcwop writes:

The size of spending legislation correlates better with the potential size of added federal debt, and in this case future payroll tax increases.

Adding a new entitlement might be good politics in triangulating against the Democrats, but this is nothing but an expensive entitlement that will snowball.

Randall Parker writes:

Legislators need artificial intelligence software for analysing legislation.

Larry Willmore writes:

"[I]f the AARP earns income from retirees, then they would regard any reduction in the size of the retired population as a threat."

Arnold, the AARP is no longer an association of retired persons: it is a association of adults over the age of 50, large numbers of whom are still working.

Victor writes:

AARP *never was* an "association" of retired
persons. It is, and always was, a privately-
held business set up to earn commissions selling
insurance (and other things) to older Americans.
An AARP "membership" is like a Costco membership...
just a sweet-sounding word for "Modern Maturity
magazine subscriber."

It still astonishes me that the media reports on
AARP as if it were the IEEE or AAAS or NRA. (Yes,
those membership organizations also lobby and
also take commissions on services sold to their
members/magazine-subscribers. But at least they
are membership organizations.)

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