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A Democratic attack ad tries to connect the dots, and earns 4 Pinocchios

An ad from the pro-Democratic Senate Majority PAC targets Rep. Tom Cotton (R-Ark.) as a politician who would end Medicare promises and give billions to insurance companies. We put that ad to the Truth Teller test. (Video: Julie Percha/The Washington Post)

“Before Congress, Cotton got paid handsomely working for insurance companies”

–voice over for new Senate Majority PAC ad attacking Rep. Tom Cotton (R-Ark.), who is challenging Sen. Mark Pryor (D)

This attack ad attempts to connect the dots: Rep. Tom Cotton made a fortune working for insurance companies, the story goes, and so he would happily do their bidding as Republicans dismantle Medicare. The ad even helpfully provides an image of connected dots.

The problem is that these dots are as phony as a three-dollar bill. Let’s take a look, going through each of the key statements.  This analysis expands on the Truth Teller treatment that the ad gets above, so be sure to watch the video as well.

“Before Congress, Cotton got paid handsomely working for insurance companies”

The core of the ad is that Cotton worked for insurance companies. Without that factoid, the ad would not hold together.

The ad cites a Politico article and Cotton’s financial disclosure report but neither mention anything about employment in the insurance industry.

As evidence, Ty Matsdorf of Senate Majority PAC pointed to a Facebook biography of Cotton. Most of the bio focuses on Cotton’s military service, but it notes that he worked as a management consultant for McKinsey and Company. “As a businessman, Tom has advised some of America’s most respected companies on business strategy, operations, finance, and marketing,” the bio says. “His industry experience includes agribusiness, health care, oil and gas, food processing, insurance, and aerospace.”

Okay, so he didn’t work in insurance. He was just a management consultant, which means he was part of a team that was hired to offer advice on efficiency and business practices, flitting from one industry to another.

But there is even less to the story. David Ray, a Cotton spokesman, says that Cotton never actually worked for an insurance company as even a consultant. Instead, Ray says the “insurance” in the bio refers to an assignment working for the Federal Housing Authority, in the office of multifamily housing programs, to improve its service in providing insurance to lenders who finance apartment buildings.  In other words, he worked on an assignment to make the government more efficient. (The successful effort is described on page 10 of this McKinsey report.)

Ray provided a statement from Priam Dutta, Cotton’s boss at McKinsey: “Tom and I were colleagues at McKinsey. I was his team leader on a project in which we served the Federal Housing Authority, which represented his only insurance industry experience. He did not work for any insurance companies.”

(Note: Dutta contributed $1,000 to Cotton’s congressional campaign in 2011.)

Interestingly, the state of Arkansas, which has a Democratic governor, last year paid at least $54 million to McKinsey, suggesting that its services are valued in the state.

As for Cotton’s pay, the financial disclosure report shows he earned $85,000 from McKinsey in 2011. We will leave it to readers to decide if that means he was paid “handsomely.”

“Now Cotton wants to end Medicare’s guarantee, giving billions in profits to insurance companies…”

As we have noted before, Senate Majority PAC seems stuck in a time warp on this talking point, referring back to an older version of the House Republican plan to transform the health-care system for the elderly by offering beneficiaries help in buying private insurance, known as “premium support.”

The plan, authored by Rep. Paul Ryan (R-Wis.), was substantially changed in 2012 to include an option for seniors to keep the traditional fee-for-service Medicare plan if they preferred. So the “guarantee” is now there. (Claiming a federal program has a “guarantee” is a bit odd because a future Congress can change the terms of any government program.)

Would the GOP plan give “billions in profits” to insurance companies? The ad cites as its source a 2012 article in The New Republic, which in turn was based on an analysis by an Obama campaign adviser. We won’t get into the weeds of this debate, except to note that the author states “for the record” that it would be an “over-simplification” to claim that the GOP Medicare plan “would take your money and give to the insurance companies for their profits.”

“…while costing seniors $6,000 more a year”

This is another talking point long past its due date. The $6,000 claim is based on a 2011 analysis by the left-leaning Center on Budget and Policy Priorities, using data from the Congressional Budget Office, regarding Ryan’s original plan. The report said that in 2022, when the premium support system was expected to go into effect, a beneficiary’s out-of-pocket expenses would double, from $6,000 to $12,000.

But when Ryan’s plan changed, so did the numbers, in part because Ryan allowed Medicare spending to grow slightly faster than the nation’s economy (+0.5 percent), the same growth rate as President Obama’s budget. (The first version had capped growth at the rate of inflation.)

The premium support payment would be based on the cost of the second least-expensive private plan or traditional Medicare, whichever is lower. Any difference in costs would need to be made up by the beneficiary. But Medicare benefits of at least one plan supposedly would be covered by the premium-support payment.

Besides, Cotton wasn’t even in Congress in 2011, making is especially odd that the ad would cite estimates concerning the 2011 plan.

The CBO did not do the same sort of extensive analysis of the revised Ryan plan, so there are no numbers as definitive as the original estimate of a $6,000 gap. CBO did say  “beneficiaries might face higher costs,” and other analyses have suggested any increase would be much lower than the earlier $6,000 estimate.

Such estimates are highly speculative. Even if enacted—unlikely as long as Democrats control the presidency or at least one house of Congress—the Republican plan would not go into effect for at least 10 years. So readers should simply ignore such hard-and-fast claims of specific cost increases.

The Pinocchio Test

None of the allegations made about Cotton or his policies are factually correct. In straining to somehow tie Cotton to insurance companies, Senate Majority PAC has managed to turn a job that Democrats might celebrate (developing a better functioning government program!) into a negative. The Medicare claims are so stale—and so repeatedly discredited—we can assume that polling indicates that the language is effective in moving voters, despite its falsity.

Four Pinocchios

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An ad from the pro-Democratic Senate Majority PAC targets Rep. Tom Cotton (R-Ark.) as a politician who would end Medicare promises and give billions to insurance companies. We put that ad to the Truth Teller test. (Video: Julie Percha/The Washington Post)