BATON ROUGE, La. — Shirley Bowman noticed the smell after 8 a.m. on June 14, 2012, her 61st birthday. In Baton Rouge, where the petrochemical industry dominates the landscape, foul odors resembling burnt rubber or propane are perennial. But this odor, caustic and potent, seemed especially foul — “like some sort of chemical,” she recalls.

Bowman found her daughter crying over a migraine. Her neighbors experienced headaches, dizziness, nausea. One family reported a toddler son coughing up phlegm; another, an elderly father collapsing on the floor. She soon suspected the cause: A leak of “steam-cracked” naphtha, a liquid mixture of volatile petrochemicals, occurring at the ExxonMobil Baton Rouge petrochemical complex a half mile away.

Four hours earlier, Exxon operators detected an odor in the East area tank field and discovered a “bleeder” valve on Tank 801 dripping naphtha into a sewer. The leaky valve dumped 411 barrels into the underground system, company records filed with the state show. The liquid traveled a mile before pouring into a separator pit, vaporizing along the way, and releasing tens of thousands of pounds of benzene and other toxic chemicals into the air.

What happened that day in Baton Rouge is one thread of a larger story about the often toxic, sometimes invisible releases emanating from oil refineries, chemical plants and other industrial facilities along the chemical corridor of Louisiana and Texas. Those unplanned emissions — known in regulatory parlance as “upsets” — are occurring more often than industry admits or government knows, according to more than 50 interviews with regulators, activists, plant representatives, workers and residents, and an analysis of tens of thousands of records by the Center for Public Integrity.

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For many communities, these upsets have evolved into an unseen menace: They disrupt lives, yet the companies are rarely punished. In Texas, where activists have clamored for relief, state officials say enforcement efforts helped reduce the number of incidents by 6 percent; Louisiana officials cite an even steeper decrease, 41 percent since 2008.

Yet those numbers tell only part of the story. The mass of pollution emitted in Texas, the nation’s refinery hub, hit a five-year peak in 2011, the Center found -- so even as the number of reported events dipped, the amount of pollution increased. And, experts say upset releases are consistently underreported.

This hidden pollution can produce harm. Over the last five years, records show, upset events have yielded almost 4 million pounds of toxic air pollutants in Texas alone — the 189 chemicals deemed so harmful to health Congress sought to bring emissions under control two decades ago. That’s 2 percent of all upset emissions.

“These are a major public health threat,” acknowledges Larry Soward, a former commissioner at the Texas Commission on Environmental Quality, who served on its board from 2003 to 2009.

“Upsets” occur when equipment breaks down or production units are shut off, restarted and repaired; or, as regulations state, when there’s an “unavoidable” accident.

Under law, plant managers must notify officials when accidental releases exceed certain hazardous air thresholds, known in regulations as “reportable quantities.” In Baton Rouge, Exxon did this. Yet the figures it reported kept escalating.

At 5:10 a.m. that day, Exxon supervisors told the state the benzene leak would likely exceed the 10 pound reportable quantity. Within hours, they classified it “level 2,” barricading areas and monitoring the air. According to a call log, company officials found benzene levels “so high” bordering a rail yard, they advised the railroad “not to let anyone go through that area.” By 12:30 p.m., the company was testing 400 workers for exposure to the cancer-causing chemical.

The following day, Exxon reported that benzene emissions totaled 1,364 pounds during the leak’s first three hours. By June 20, it increased the number to 28,688 pounds. In its final report filed 60 days later, Exxon revealed the benzene total was actually 31,022 pounds. State regulators later deemed the leak “preventable,” issuing an enforcement order contending that Exxon “failed to provide notification of a change in the nature and rate of the discharge.”

The company, saying it accurately reported the release, is appealing the state’s order. While plant supervisors acknowledge the “large” leak, they say it didn’t threaten residents. Tests along the fence line showed “no community impact,” their records state; air sampling by state regulators back up the company.

“It was a large number. We regret that number,” says Derek Reese, Exxon Baton Rouge’s environmental manager. “But we believe we did an appropriate response to mitigate the impact.”

That’s little consolation to residents, like Bowman. “Everything seems to stop at that magical gate,” she says, motioning to Exxon’s South Gate adjoining her neighborhood. “But if you live here, you know. Chemicals are let out on you.”

Upsets plague plants, communities
The hazards extend far beyond Baton Rouge. In Texas and Louisiana, the vast number of plastics, power and gas plants provide an on-the-ground case study of a national problem.

Data collected by the Texas Commission on Environmental Quality, TCEQ, offer a rare window into this pollution peril; the state agency requires companies to report events online within 24 hours, as well as annual totals.

From 2007-11, just over 2,400 of the largest facilities across Texas spewed almost 180 million pounds of upset emissions, contamination on top of the 14.8 billion pounds of routine air emissions in that time. Nearly half the facilities experienced at least one event in that period, pumping out sulfur dioxide and other smog-inducing pollutants. The greatest concentration came in 2011: 58.1 million pounds.

The 20 biggest offenders — oil refineries and natural-gas plants in Kermit, Beaumont, Corpus Christi and beyond — account for more than half of all such emissions in Texas.

“It’s a lot of stuff,” says Neil Carman, a former state air pollution inspector who investigated upset events. Carman now heads the air program for the Sierra Club’s Lone Star chapter, which has filed several citizen lawsuits targeting illegal emissions.

Industry portrays the discharges as an inevitable — and overwhelmingly harmless — byproduct of manufacturing. Regulators have encouraged this casual attitude, some experts say.

For decades, critics say, the U.S. Environmental Protection Agency and state regulatory agencies have effectively ignored the emissions. Officials don’t count upset events in facility permits and compliance records, notes Kelly Haragan of the environmental law clinic at the University of Texas-Austin, because they “aren’t supposed to happen.” In August 2004, Haragan penned a 215-page report showing how easily facilities could get away with releasing more pollution than allowed by the federal Clean Air Act.

At times, she says, “It’s like having a whole other plant no one is even acknowledging.”

These incidents skirt normal pollution controls, instead venting into the atmosphere through flares and leaks. Plants can have scores of events a year, giving off a constant cloud of invisible pollution.

“A big dose of toxins are coming out of these facilities,” says Soward, the former TCEQ official, who now works for Air Alliance Houston, “and into fence line communities.”

The health effects are harder to measure; little research exists on the threat to residents. But recently, Dr. Mark D’Andrea, an oncologist at the University of Texas Cancer Center, began tracking 4,000 residents exposed to the poster child of all upsets — the “40-day Release” at the BP refinery, in Texas City, which belched 514,795 pounds of benzene and 20 other pollutants throughout the spring of 2010. Earlier this year, D’Andrea unveiled preliminary data showing the residents have “significantly higher” white-blood cell and platelet counts than their Houston counterparts. The data suggests BP’s release may have increased their risk of developing such cancers as leukemia, the doctor says.

In a statement, BP says it does “not believe any negative health impacts resulted from” its 40-day release. “To our knowledge, the University Cancer Centers’ pilot study does not support a claim for any plaintiff alleging injury from that flaring and has no relevance to those claims,” the company wrote, referring to pending litigation filed by 47,830 residents and workers against BP alleging health ailments caused by the release. D’Andrea has not been hired as an expert witness for either side in the case, but has testified in pre-trial discovery.

‘An invisible poison’
In Baytown, Texas, about 250 miles from Baton Rouge, ExxonMobil operates the nation’s largest petrochemical complex, replete with an oil refinery and two chemical plants. The mass of stacks, tanks and pipes spans 3,400 acres on Houston’s ship channel, looming over blue-collar neighborhoods nestled in its shadow. In Harris County, a manufacturer’s Mecca, Exxon’s refinery tops all 155 upset emitters, spitting out 3.8 million pounds’ worth from 2007 to 2011. 

Here, residents describe fiery flares that have rattled windows, belched black smoke and cast a sooty substance on the ground. At times, they’ve unleashed a thunderous boom, “like an Air Force fighter jet,” says Shae Cotter, who lived across a highway from the complex. He remembers the sound jolting him from sleep at 3 a.m. Occasionally, he videotaped flares aglow like celestial globes, flames ballooning toward his home.

Read the full report by The Center for Public Integrity

The Exxon complex ranks among the state’s biggest upset emitters involving carcinogens and noxious gases. Top chemicals include hydrochloric acid, 1,3-butadiene and benzene, toxins that can trigger skin irritations, respiratory problems, neurological disorders and gastro-intestinal diseases.

In a statement, ExxonMobil Baytown says it has worked with regulators to “greatly” reduce emissions. “We are proud of the overall reductions we have made,” the company wrote. Since 2000, Exxon notes, it has decreased total emissions at the Baytown complex by more than 50 percent. The company declined to provide similar statistics for the facility’s upset emissions. “ExxonMobil is committed to continuously improving the environmental performance of our Baytown Complex,” the company said.

Since December, the Baytown facility has set off a wave of upset emissions. One, triggered by a tripped compressor in the refinery’s Booster Station Four, pumped out 114,000 pounds of sulfur dioxide in 18 hours. It was the 20^th upset recorded there by company reports.

“Exxon is emitting all of these day after day,” says resident Marilyn Kingman. “Anybody who lives in the Baytown area is suffering.”

Smells drive some homeowners inside. Stuart Halpryn, whose house sits a quarter mile from Exxon, says he tried to adapt to the odors, along with the runny noses and allergy-like symptoms that he believes the odors caused. That changed in February 2009, when he says a valve leak at the refinery sickened his family. His four children suffered from such severe indigestion, he says, they missed school for a week. Later, he learned from reading Exxon’s report the leak had unleashed 17,432 pounds of six different toxic chemicals.

“Nobody really understands what’s being dumped on them,” says Halpryn, who moved his family to Kentucky in June. “It’s an invisible kind of poison that’s being rained down.”

The Center for Public Integrity is a nonprofit, independent investigative news outlet. For more of its stories on this topic go to publicintegrity.org. 

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Gun groups, defense contractors, oil companies and the world’s largest social network increased their spending on lobbying last quarter, bucking an overall downward trend, newly filed congressional disclosures show.

As debate over gun control raged in the Senate, the National Rifle Association, the National Shooting Sports Foundation and Mayors Against Illegal Guns each spent more on federal-level lobbying during the year’s first three months than in any other quarter.

Raytheon, United Technologies and General Dynamics also fired up their lobbying machines from January to March, easily surpassing their spending from the same period one year ago as budget sequestration forced them to face deep cuts to their bottom lines.

Northrop Grumman, at $5.8 million, posted its third-biggest lobbying quarter in company history.

And Facebook’s $2.45 million in first-quarter lobbying expenses obliterated its previous quarterly record — $1.4 million during the final three months of 2012 — as it pressed lawmakers and governmental agencies on a variety of issues, from online advertising and privacy concerns to taxation and supporting visas and permanent residency for highly skilled foreign workers.

But those are exceptions.

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About three-fifths of the nation’s 100 top lobbying organizations spent less on lobbying during the year’s first quarter than the first quarter of 2012, a Center for Public Integrity analysis of congressional disclosure reports and Center for Responsive Politics data indicates.

A slight majority of them also spent less on lobbying from January through March than they did from October through December — a period on Capitol Hill marked by an election, then  a congressional recess-induced lull interrupted by a flurry of fiscal cliff activity at the end of the year.

The U.S. Chamber of Commerce this quarter retained its perennial perch atop the list of top lobbying spenders, although its collective first-quarter output ($16.8 million, when including affiliates) is dramatically down from recent quarters.

The Chamber spent nearly $26.4 million during last year’s first quarter. During the final quarter of last year, it spent more than $40.6 million, in large part because it ranks among a small group of lobbies that opt to disclose state- and grassroots-level lobbying (and sometimes political organizing) costs alongside federally focused efforts.

Attribute the recent drop-off to 2013 not being an election year, Chamber spokeswoman Blair Latoff Holmes said, noting that the nation’s largest trade group still spent heavily on its policy agenda to “generate stronger, more robust economic growth and create jobs.”

That, according to its disclosures, included lobbying on implementation of the Dodd-Frank Wall Street reform law as well as the oversight capabilities of the newly created Consumer Financial Protection Bureau.

Google’s lobbying expenditures have been on a torrid pace of late, as the omnipresent Internet company jumped from $1.5 million during the first quarter of 2011 to $5.4 million during the first quarter of 2012. But it throttled back this past quarter, spending less than $3.4 million on a range of topics that include federal regulation of online advertising and consumer privacy.

Among the dozens of other prominent lobbies that spent less during the first quarter than they did during the same period last year: AT&T ($7.1 million to $4.3 million), General Electric ($5.7 million to $5.2 million), the American Hospital Association ($4.5 million to $3.8 million), Verizon Communications ($4.6 million to $3.7 million), Dow Chemical ($3.3 million to $2.7 million), drug maker Pfizer ($3.6 million to $2.9 million) and the American Bankers Association ($2.7 million to $1.6 million).

While many defense contractors experienced lobbying growth early this year, Boeing and Lockheed Martin experienced slight spending declines during the first quarter compared to the same period last year.

Of those that spent more, the National Association of Realtors ($6.1 million to $8.5 million) led all others in overall first quarter spending. But like the U.S. Chamber of Commerce, the Realtors association reports its lobbying activity broadly, and their first quarter spending was significantly down from the final three months of 2012, when it burned through nearly $15.5 million.

Many oil-related companies and associations reported first-quarter lobbying spikes, including ExxonMobil ($4.2 million to $4.8 million), Koch Industries ($2.3 million to $2.6 million), Chevron ($3.2 million to $3.7 million), the American Petroleum Institute ($1.8 million to $2.1 million) and Occidental Petroleum ($1.6 million to $2.1 million).

The American Medical Association, CTIA-The Wireless Association, AARP, Altria, America’s Health Insurance Plans and the National Association of Manufacturers also recorded mild to moderate increases.

While not among the nation’s biggest lobbying spenders, the National Rifle Association spent $810,000 during the first three months of the year to lobby the federal government — the most ever during a first quarter.

Senate Republicans, aided by a few Democrats, have so far blocked passage of all major gun control legislation championed by President Barack Obama and most Democrats.

Meanwhile, Mayors Against Illegal Guns spent a quarter-million dollars from January through March — five times what it typically does.

The organization, led by New York City Mayor Michael Bloomberg and Boston Mayor Tom Menino, had never spent more than $60,000 during a single quarter to lobby the federal government.

The Center for Public Integrity is a nonprofit, non-partisan investigative news organization in Washington, D.C. For more of its stories on this to go publicintegrity.org.

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Senior Obama administration officials have agreed that the number of nuclear warheads the U.S. military deploys could be cut by at least a third without harming national security, according to sources involved in the deliberations.

They said the officials’ consensus agreement, not yet announced, opens the door to billions of dollars in military savings that might ease the federal deficit. It might also improve prospects for a new arms deal with Russia before the president leaves office, the sources said, but is likely to draw fire from conservatives, if previous debate on the issue is any guide.

The results of the internal review are reflected in a draft of a classified decision directive prepared for Obama’s signature that guides how U.S. nuclear weapons should be targeted against potential foes, according to four sources with direct knowledge of it. The sources, who requested anonymity because they were not authorized to talk to a reporter about the review, described the president as fully on board, but said he has not signed the document.

The document directs the first detailed Pentagon revisions in U.S. targeting since 2009, when the military’s nuclear war planners last took account of a substantial shrinkage -- roughly by half from 2000 to 2008 -- in the total number of nuclear weapons in the U.S. arsenal. It makes clear that an even smaller nuclear force can still meet all defense requirements.

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Although the document offers various options for Obama, his top advisers reached their consensus position last year, after a review that included the State Department, the Defense Department, the National Security Council, the intelligence community, the U.S. Strategic Command, the Joint Chiefs of Staff and the office of Vice President Joseph Biden, according to the sources.

Several said the results were not disclosed at the time partly because of political concerns that any resulting controversy might rob Obama of popular votes in the November election. Some Republican lawmakers have said they oppose cutting the U.S. arsenal out of concern that it could diminish America’s standing in the world.

The new policy directive, which would formally implement a revised nuclear policy Obama adopted in 2010, endorses the use of a smaller U.S. arsenal to deter attacks or protect American interests by targeting fewer, but more important, military or political sites in Russia, China and several other countries. This can be accomplished by 1,000-1,100 warheads, the sources said, instead of the 1,550 allowed under an existing arms treaty.

The 2010 policy called for reducing the role of nuclear weapons, arguing that they are “poorly suited to address the challenges posed by suicidal terrorists and unfriendly regimes seeking nuclear weapons.” But many critics have charged that not much of the policy has been implemented. Obama himself even joked in a video message to the Jan. 26 annual dinner of Washington’s exclusive Alfalfa Club, that he could not recall why he won his 2009 Nobel Peace Prize [the Oslo committee attributed it partly to his stimulation of “disarmament and arms control negotiations”].

With the election behind him and a new national security team selected, Obama is finally prepared to send this new guidance to the Joint Chiefs of Staff and to open a new dialogue with Russia about corresponding reductions in deployed weapons beyond those called for in a 2011 treaty, according to two senior U.S. officials involved in the deliberations.

“It is all done,” said one. “We did so much work on it that there is no interest in going back and taking another look at it.” The second official said completion of the new directive would become public in coming weeks, when Obama may mention the issue in his State of the Union address on Feb. 12, or in another speech specifically dedicated to the subject, similar to the April 2009 Prague address in which he promised to “take concrete steps towards a world without nuclear weapons.”

Arms talks now being explored
While the draft directive opens the door to scrapping a substantial portion of the U.S. arsenal, it does not order those reductions immediately or suggest they be undertaken unilaterally, the officials said. Instead, the administration’s ambition is to negotiate an addendum of sorts to its 2010 New Start treaty with Russia, in the form of a legally binding agreement or an informal understanding. Officials said the latter path could be chosen if gaining the assent of two-thirds of the Senate to a treaty is not possible.

Preliminary discussions about this ambition occurred in Munich on Feb. 2 between Vice President Joe Biden and Russian Foreign Minister Sergei Lavrov, and additional talks are slated in Moscow this month with acting undersecretary of state Rose Gottemoeller and White House national security adviser Thomas Donilon. Obama “believes that there’s room to explore the potential for continued reductions, and that, of course, the best way to do so is in a discussion with Russia,” deputy national security adviser Ben Rhodes said on Jan. 31.

White House spokesman Tommy Vietor declined comment on Feb. 6 on the draft directive.

The New Start treaty limits each side to deploying no more than 1,550 strategic nuclear weapons by 2018, but uses a counting rule that pretends strategic bombers carry only a single warhead, instead of up to 20. So the actual arsenals after the treaty takes effect are likely to be closer to 1,900, a number that Obama’s advisers now think is too high.

New Start also imposes no limits on nuclear weapons in each country that are held in storage or considered of “tactical” or short-range use -- a number estimated by independent experts as roughly 2,700 in the United States and 2,680 in Russia. Under the new deal envisioned by the administration, Russia and the United States would agree not only to cut deployed warhead levels below 1,550 to around 1,000 to 1,100 but also -- for the first time -- begin to constrain the size of these additional categories.

Several officials said that as a result, the total number of nuclear warheads could shrink to less than 3,500 and perhaps as low as 2,500, or a bit more than half the present U.S. arsenal, without harming security or requiring a major reconfiguration of existing missiles or bombers.

A much steeper reduction, to around 500 total warheads, was debated within the administration last year, but rejected, the officials said. Known as the “deterrence only” plan, it would have aimed U.S. warheads at a narrower range of targets related to the enemy’s economic capacity and no longer emphasized striking the enemy’s leadership and weaponry in the first wave of an attack.

Nuclear weapons experts have long considered the latter “warfighting” goal destabilizing because it arouses fears among all the combatants of a decapitating, preemptive strike that could obstruct a significant retaliation, but it has been a salient feature of the U.S. nuclear policy for half a century. China, in contrast, has adopted a “deterrence-only” strategy, keeping only a minimal arsenal of missiles aimed partly at targets in or near large cities.

Some officials at the State Department, the NSC staff, and Biden’s staff urged consideration of the smaller arsenal and new targeting policy, officials said. But “a small brake” was applied by the Joint Chiefs of Staff chairman, Army Gen. Martin E. Dempsey, who worried that making such a major policy change was too risky at a moment of upheaval in conventional military strategy, and would create too much uncertainty among allies.

Obama, who followed the deliberations intermittently, “decided we did not need to do deterrence-only targeting now,” but did not rule it out, one of the sources with knowledge of the discussions said.

Air Force Lt. Gen. James Kowalski, who as head of the Global Strike Command oversees the operations of bombers and land-based missiles capable of carrying more than a thousand nuclear warheads to foreign targets, said at a breakfast with reporters on Feb. 6 that if asked, “can you go below 1500” treaty-accountable weapons, his response is, “Yeah, I think there is some headroom in there.” But he warned that shrinking the force to well below 1,000 would require “major structural changes in how we do this business.”

Additional cuts would save billions of dollars
The financial savings from even the modest reduction now being contemplated could be substantial, according to officials and independent experts. Already, to comply with New Start, the Pentagon has been pulling warheads from land-based missiles and making plans to decommission some of the missiles themselves; it is also planning to reduce the number of missile tubes aboard its Trident submarines.

By pushing the arsenal size even lower, it could close perhaps two of its three land-based missile wings and cut at least two of the 12 new strategic submarines it now plans to build – saving $6 billion to $8 billion for each one. Eliminating a single wing of 150 missiles would save roughly $360 million a year, or $3 billion over a decade, according to Tom Collina, research director at the Arms Control Association, a nonprofit research group in Washington. Modernization of the land-based missiles might also be deferred, bringing additional savings.

Russia, meanwhile, has been  phasing out three older missile types that loomed large during Cold War tensions – the SS-18, the SS-19, and the SS-25 – and is replacing them with a more modern missile, the SS-27, in three forms. It is also planning to build a costly, larger missile, capable of carrying multiple warheads. Pentagon officials are not alarmed by that possibility, but say that a new arms deal could give Russia reason to scale back its own spending.

“The Russian Federation … would not be able to achieve a militarily significant advantage by any plausible expansion of its strategic nuclear forces, even in a cheating or breakout scenario” because it cannot destroy U.S. missile-carrying submarines at sea, the Defense Department said in a May 2012 classified report to Congress, partially declassified and released last month to the Federation of American Scientists (FAS).

Related: Hagel's nuclear abolition endorsement spurs GOP questions on deterrence

Three participants in the targeting policy review said Russia nonetheless remains the sole U.S. target that still requires potential use of a large number of nuclear warheads to achieve damage that military planners deem adequate, even though Obama famously said last September at the Democratic National Convention that “you don't call Russia our number one enemy — not al-Qaeda, Russia — (laughter) — unless you're still stuck in a Cold War mind warp.”

U.S. nuclear targets include China, North Korea, and Iran, officials have said. But the list of predictable enemies has been steadily shrinking: Iraq was once on the list – as recently as 1997, the Defense Department studied radioactive fallout distribution patterns from a potential U.S. attack there – but it now poses no threats, and Syria – another perennial listee – is in the midst of imploding and unable even to muster a response to Israel’s recent bombing of an arms factory in its capital.

Russian arms reductions taken to date make U.S. targeting revisions feasible now, according to Hans Kristensen, a nuclear arms expert at FAS. A decade ago, the U.S. military was targeting 660 Russian missile silos with multiple warheads, he said; now, the number of such silos is less than half that, and in a decade, it is unlikely to exceed 230. Several officials also pointed out that Russia currently fields a smaller and weaker conventional military force than it once did, also allowing U.S. targeting to be scaled back.

Obama’s new appointees are on board
Key members of Obama’s new national security team are on board with the reduction strategy.

“There's talk of going down to a lower number,” Secretary of State John F. Kerry said during his confirmation hearing on Jan. 24. “I think, personally, it's possible to get there if you have commensurate levels of -- of inspections, verification, guarantees about the capacity of your nuclear stockpile program, et cetera.”

Secretary of Defense nominee Chuck Hagel drew fire from Republicans at his Jan. 31 confirmation hearing for signing a report last summer that said current stockpiles “vastly exceed what is needed to satisfy reasonable requirements of deterrence” and that nuclear weapons are arguably “more a part of the problem than any solution.”  An appropriately modernized force, the Global Zero report said, would consist of just 900 total strategic weapons on each side, not 5000, and get rid of land-based missiles subject to accidental or unauthorized launch.

Sen. Jeff Sessions (R-Ala.) told Hagel that cuts of that magnitude would “create instability, rather than confidence and stability; create uncertainty in the world among our allies and our potential adversaries.” He said the current U.S. arsenal projects “an image of solidity and -- and steadfastness” to citizens around the globe.

Hagel responded at the hearing that the report simply provided illustrative scenarios, not recommendations. But he affirmed the report’s conclusion that “we have to look at” the value and cost of continuing to keep land-based missiles and made no promise to build all 12 new missile-carrying submarines sought by the Navy.

The United States is not the only nuclear weapons state considering a retrenchment. A senior British treasury official told the London Guardian several weeks ago that given fiscal pressures in London, the country needs a wide debate “over the approach we take to nuclear deterrence” and should consider scaling back either its purchase or deployment of costly new nuclear missile-carrying submarines. Michael Portillo, the defense minister under Conservative Prime Minister John Major in the 1990s, told the Financial Times last month that Britain maintained its arsenal “partly for industrial and employment reasons, and mainly for prestige.” He called it “a tremendous waste of money.”

UN Secretary General Ban Ki-Moon is among those urging a major shift. In a speech last month in California, he called for all nuclear-armed states to “reconsider their national nuclear posture,” and said the United States and Russia had a special obligation to undertake deeper cuts. “Nuclear disarmament is off-track,” he said. “Delay comes with a high price tag. The longer we procrastinate, the greater the risk that these weapons will be used, will proliferate or be acquired by terrorists.”

Some senior U.S.  officials are skeptical that Russian president Vladimir Putin would agree to a new treaty, because his government claims to depend more heavily than Americans on nuclear arms for security; others worry that Republican opposition in the Senate may obstruct ratification of any new treaty.  But there remains high interest, officials said, in at least exploring a new joint, lower limit.

The Center for Public Integrity is a non-profit, independent investigative news outlet. For more of its stories on this topic go to publicintegrity.org.

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By Joe Eaton
Center for Public Integrity

Like a growing number of disabled Americans on Medicaid, Keith Foreman, a 57-year-old in Metropolis, Ill., qualified for a personal caregiver to help him with daily activities like dressing, shaving, and preparing meals.

Foreman, who prosecutors say suffers from a spinal injury, hired his girlfriend, Sheila McDonald, for the job. In 2011, McDonald received almost $5,000 from Medicaid for six months of care she provided to Foreman.

These personal care services, which are available in all 50 states, are designed to help the sick, elderly, and disabled remain in their homes — and out of expensive nursing facilities.

But Foreman was not living at home. During the days marked on McDonald’s timesheets, Foreman was housed in the Massac County jail in Illinois, serving time for forging a stolen debit card signature at a local liquor store.

Like Foreman and McDonald, who both pleaded guilty to charges of making false statements, unscrupulous beneficiaries and home health workers are increasingly targeting personal care services programs for illegal money-making schemes, according to a new federal report. Investigators say lax requirements for both caregivers and patients, along with poor state and federal oversight, has made the rapidly growing programs a lucrative target for fraud.  And this isn’t the first time they’ve issued such a warning.

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Report faults federal oversight of state programs
A Health and Human Services Office of the Inspector General (OIG) report scheduled to be released Thursday faults the Centers for Medicaid and Medicare Services (CMS) for inadequate oversight of personal care services programs, whose costs are shared by states and the federal government, as is the norm for Medicaid.  The report, which brings together six years of OIG investigations and 23 reports on the topic, describes a program hindered by poor claims documentation, insufficient monitoring of claims data for fraud and waste, and a crazy-quilt of varied requirements for personal care workers in different states.

“Historically, CMS has left a lot of the responsibility for overseeing waste, fraud and abuse to the states,” said Christi Grimm, special assistant to the principal deputy inspector general. “As a result, we have 301 different sets of requirements for caregivers across the states.” 

Although some states mandate criminal background checks and licensing for home health workers, Grimm said others lack even the most basic requirements, including age minimums,

which has led to cases in which juveniles escape prosecution for fraud and abuse. Worker requirements are set by counties in a number of states, she added, which has led to a hodge-podge of rules that are difficult to enforce, and nearly impossible to monitor.

“We are asking CMS to step up to the plate,” Grimm said, and use its authority to regulate and monitor the state programs.

The report includes six previous OIG recommendations to CMS and state agencies which have gone unimplemented. In a 2008 report that found five states may have paid up to $11 million in error for personal care services during one quarter of 2005, OIG recommended that the CMS work with states to stop payments for personal care when patients were receiving care in institutions, not at home. The agency agreed with the recommendation, but according to the OIG, the work has not been completed.

In addition to asking the agency to address previous recommendations, the report offers four new goals for CMS to improve oversight and monitoring of state plans, including standardizing rules for personal care workers to set minimum age and education levels, and require criminal background checks.

The report, however, seems unlikely to spur the agency to follow the OIG’s specific suggestions..  In a written response, CMS — part of the Department of Health and Human Services — explicitly concurred with only one of  the OIG recommendations: that it should provide states with claims data to help root out cases in which beneficiaries are simultaneously receiving both institutional care and home health services.  In response to the recommendation on establishing federal guidelines for personal care workers, CMS pointed out there is a shortage of care attendants.

 “Personal care services are an important part of keeping people in their homes and out of nursing homes, which lowers costs and improves the quality of life of the patient,” said CMS spokesman Brian Cook. “We are working to protect personal care from fraud and abuse by promoting stronger training programs for workers who provide personal care, working with states on background check programs for these workers, and developing new data methods to analyze claims for potential fraud and abuse."

Grimm called the CMS response to the report unacceptable. “It’s not uncommon for CMS … to identify things on the horizon, or things they hope to do, but not necessarily commit to doing something,” Grimm said, adding that CMS’s efforts so far simply have not worked. “[CMS] has the authority to do what we are asking. It has not done it yet. And it hasn’t committed to doing it after reading our report.”

A wealth of opportunities
According to investigators, most fraud schemes in personal care services involve billing for care that was not provided or was not allowed. Self-directed programs, which allow beneficiaries to hire and manage their helpers, may be particularly vulnerable, but some prosecutions have also involved home health care agencies.

In January, for example, the owner of a Minnesota home health care company outside Minneapolis was sentenced to two years in prison for cheating Medicaid out of more than $650,000 in charges for personal care services. In March, the owner of Families First Home Health Care in Sparta, N.C., pleaded guilty to fraud and money laundering stemming from a scheme in which she billed Medicaid for personal care services she did not perform and split the proceeds with plan members.

“Fraud goes where the money is,” said Barbara Zelner, executive director of the National Association of Medicaid Fraud Units, which represents state law enforcement agencies that investigate Medicaid fraud.  After nursing homes, Zelner said, home health represents one of the larger slices of state Medicaid budgets.

Personal care services programs have grown quickly since a 1999 Supreme Court decision held that unjustified segregation of the disabled is a civil rights violation. The ruling led to increased spending for home health services; in 2011, Medicaid paid more than $12 billion for personal care services, up 35 percent since 2005, according to the OIG. Investigators say program fraud has kept pace. In 2010, state Medicaid fraud units investigated more than 1,000 cases involving personal care services, more than any other type of Medicaid service.

Not everyone agrees with the OIG’s views on personal care services.  In 2011, an OIG review of Medicaid claims for personal care services in New Jersey found that 40 percent should have been denied. Sherl Brand, president of the Home Care Association of New Jersey, which advocates for home health care providers, questions the OIG’s work, saying the agency often draw broad conclusions from examinations of a limited number of claims. “It is almost a bit ridiculous because of the extrapolation they do,” Brand said.

New Jersey home health workers face criminal background checks and certification and licensure requirements, Brand said. Personal care services programs save money, she said, in addition to helping disabled people live better lives. When New Jersey was faced with budget cuts, Brand said the association determined the average weekly cost for personal care services was $242 dollars a week, only slightly higher than the cost of a single day in a nursing home.

But as funding for the programs increase, fraud follows. Kirk Ogrosky, a former top federal health care fraud prosecutor who is now a partner at the Washington law firm Arnold & Porter, said home health has long been a hotbed of fraud, both in Medicaid and in Medicare. The fraud, he said, is not hard to uncover. Ogrosky recalled that after an extensive analysis of Medicare claims, he sent agents out to interview questionable beneficiaries. When the agents knocked on the doors, they often learned the person they were looking for was at work, Ogrosky recalled.  “That’s utterly preposterous,” he said, “since home health requires that you are homebound.”

In other cases, Ogrosky said, agents found that home health care agencies were filing claims for beneficiaries who did not live at the homes indicated on the claims. “One of my favorite stories is about a homeless guy we found,” Ogrosky said. “He didn’t even have a home to be homebound to.”

The Center for Public Integrity is a non-profit independent investigative news outlet. For more of its stories visit publicintegrity.org.

By Paul Abowd
The Center for Public Integrity

Voters haven’t had a clue who is behind American Tradition Partnership — the Colorado group pushing to rewrite Montana’s campaign finance laws — and that’s just the way the secretive nonprofit wants it.

A 2010 fundraising pitch to its donors promised that “no politician, no bureaucrat, and no radical environmentalist will ever know you helped,” and “the only thing we plan on reporting is our success to contributors like you.”

“Montana has very strict limits on contributions to candidates,” reads the document, obtained by The Center for Public Integrity. “but there is no limit to how much you give to this program.”

As for the state’s ban on corporate money in elections?

“Corporate contributions are completely legal,” the pitch assures potential funders. “This is one of the rare programs you will find where that’s the case.”

“You can get some traction with that pitch,” says Dennis Unsworth, who led the state’s investigation of the group in 2010 that unearthed the document. “If you can offer to influence the elections outside the law, that’s a great calling card.”

For three election cycles, ATP has plastered the state with mailers attacking "radical environmental groups" and moderate Republicans.

While ATP’s funders are still mostly a mystery, the Center for Public Integrity has identified what records indicate is the secretive organization’s founding donor — an anti-union owner of Colorado’s largest furniture chain — and discovered a long list of affiliations with national tea party groups funded by the conservative billionaire Koch brothers.

This election, ATP has vowed to keep Attorney General Steve Bullock out of the governor’s mansion. In October, voters received a brazen multi-page newspaper-style flier placing the Democratic candidate in a photo lineup with three registered sex offenders.

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But the group hit the national spotlight thanks to three landmark court battles with Bullock and the state of Montana.

The U.S. Supreme Court in the Citizens United decision invalidated a federal ban on corporate spending similar to what 24 states had on their books, but Montana held fast to its law. ATP sued to overturn it, losing to Bullock in the state’s high court. But in June, the nonprofit prevailed on appeal to the nation’s highest court.

ATP is pushing past its Citizens United challenge with two more suits to eliminate Montana’s low contribution limits and disclosure rules, setting up a potential challenge to contribution limits nationwide.

Tea party ties
One of ATP’s founders is former Montana Congressman Ron Marlenee, who served from 1977 until the state dropped from two House seats to one in 1992. Marlenee used his D.C. Rolodex to raise money for the fledgling pro-energy group, which registered in Colorado in 2008.

Marlenee rallied a tea party crowd in Bozeman in 2010, appearing on stage with a half-burned American flag, which he said he wrestled away from a “liberal Marxist” protester.

ATP has joined tea party lobbying efforts, signing at least two letters to Congress in the last year urging an end to tax credits for renewable resource industries. The letters were signed by Koch-funded groups including Americans for Prosperity and tea party boosters FreedomWorks, Club for Growth and Art Pope’s John Locke Foundation.

In its 2008 application for tax-exempt status as a 501(c)(4) “social welfare” organization, ATP listed its “primary donor” as Jacob Jabs, Colorado’s largest furniture retailer and a donor to Republican candidates and causes. Jabs pledged a $300,000 contribution to get ATP on its feet, according to IRS records obtained by the Center for Public Integrity.

Jabs, through a spokesman, on Monday said he did not make a donation and has "never heard of" ATP or the group's previous incarnation.

"He did not commit to the funds indicated by Athena Dalton in the filing so clearly he did not give them funds," wrote Charlie Shaulis, director of communications for American Furniture Warehouse, Jabs' company, in an email to I-News Network in Colorado.

Dalton wrote a letter to the IRS asking the agency to speed up the process for awarding it nonprofit status. The letter states that the approval was needed quickly, otherwise Jabs would not make a contribution. The agency gave it the thumbs up four days later.

The amount of the gift would be double Jabs’ total federal campaign contributions since 1997, which have gone exclusively to Republican candidates and party organizations, according to FEC records. 

Jabs also poured money into a failed “right to work” ballot initiative in Colorado, becoming a television spokesman for the 2008 anti-union effort.

ATP shares resources and a D.C. mailing address with an affiliated 501(c)(3) educational nonprofit called the American Tradition Institute, which works in tandem with a network of Koch-funded think tanks  to oppose wind energy and dispute the reality of climate change. It has launched lawsuits against state mandates for renewable energy usage and targeted climate scientists in academia.

The libertarian Koch brothers, Charles and David, have become better known in recent years with the rise of the tea party. They are principal owners of Koch Industries Inc., the second-largest privately owned company in the U.S., with major investments in the energy industry. 

ATI has accepted donations from the Atlas Economic Research Foundation, a free-market think tank underwritten by Exxon Mobil and Koch foundation money, according to a report by the Institute for Southern Studies.

Its director of litigation Chris Horner is also a fellow at the Competitive Enterprise Institute, a free-market think tank that has taken a half-million dollars from Koch foundations since 1998, according to the report.

‘We won’t be shut up, or shut down’
In 2008, American Tradition Partnership flooded the state with mailers attacking ten state legislators, but reported only $12,000 in spending for the entire election.

An investigation by the state’s Commission on Political Practices concluded that the group had broken state law requiring outside spending groups to register as political action committees and disclose all donors and spending.

Commissioner Unsworth concluded in October 2010 that ATP had registered a “sham organization” called the Coalition for Energy and Environment and vastly under-reported its activity. The PAC’s reported spending, said the state, would have barely covered the cost of postage for the raft of glossy, full-color mailers ATP sent out.

ATP filed forms with the IRS the same year, reporting more than $600,000 in spending.

ATP maintains that its spending on mailers, most targeting moderate Republicans running for state legislative seats, is “educational” and therefore falls outside the state’s definition of “express advocacy” that would require it to disclose its funders and its spending on the mailers.

ATP did not face penalties and did not disband. Instead, it changed its name from Western Tradition Partnership and sued to strike down Montana’s disclosure laws.

The case is set for trial in March 2013.

“We won’t be shut up or shut down,” ATP said in a press release in June.

ATP’s years-long court battles have pushed the group into the public spotlight, threatening the secrecy of its donors. The group has vigorously resisted discovery proceedings in court, missing several deadlines to produce evidence requested by the state.

Lawyers in Bullock’s office filed a motion to compel ATP to present evidence, including bank records, or drop their lawsuit. It has not complied. According to a court filing, ATP’s lawyer Jim Brown emailed the state’s lawyers in late August, explaining, “I have a difficult client."

Nonetheless, the state has won access to bank records for the organization. If a judge makes them public, they could offer voters a glimpse at the group’s funders.

‘I was the screen’
The group rarely communicates with the press and it hires unknowing lawyers to sign campaign finance reports and its 2008 nonprofit incorporation documents in Colorado.

Scott Shires has been sued and fined for his election activities, but the Colorado political consultant says his reputation really took a hit after he signed ATP’s forms. When Montana released the results of its 2010 investigation, Shires’ name began showing up in the press, and he says he cut ties to the organization.

“The operatives writing these stupid ads and mailings don’t want to be identified,” said Shires. “I was the screen that allowed them to hide — plausible deniability is something a lot of these groups are interested in.”

Shires listed himself as “President” of ATP when he signed the group’s request for exempt status with the IRS in 2008.

He is widely known for registering hundreds of political committees in Colorado, mostly Republican groups. The work involves some risk. He pleaded guilty to filing false tax returns for a client in 2008, a misdemeanor charge. He was also caught up in a scandal that linked former U.S. Rep. and 2008 Senate candidate Bob Schaffer with the beneficiary of a questionable congressional earmark.

As of May 2012, an IRS filing still listed Shires as the group’s president, and he remains one of the few names publicly associated with the group.

ATP Executive Director Donald Ferguson did not return numerous calls for comment.

‘Not really sure who is in charge’
The left-leaning Montana Conservation Voters claims ATP was unfazed by the 2010 investigation and is “right back to doing the same thing,” according to the group’s board member Ben Graybill, who filed the original complaint.

This year, ATP has registered a PAC in the state. It sent mailers prior to the June primary election, but has reported zero spending to the state.

Its filings are signed by Montana attorney Chris Gallus, who was “surprised” to receive a call from the Center regarding ATP. He claims no leadership role in the organization, and said he’s “not really sure who is in charge.”

Gallus said he has not been contacted by ATP since being hired to sign their PAC reports, and does not anticipate filing any spending reports on their behalf. “Until that changes, my involvement is the same as the date I signed their forms.”

The organization sent out a questionnaire to candidates in early October, asking about their stance on land development and environmental regulations in resource-rich Montana.

“Will you oppose legislation which would categorically limit development of any specific energy resource?” reads one. “Will you oppose legislation that would rescind, reduce or shorten the tax holiday on oil & gas wells?” reads another.

Candidates who don’t respond, or don’t respond with answers favorable to ATP’s interests, are often targeted by a direct mail campaign similar to those launched at Bullock.

Its adversary, the Montana conservation group, endorses candidates for the state legislature who align with its mission to “protect clean water, public health, and our incredible outdoor heritage.” Its mid-October mailers praise Bullock for leading “the fight against corporate control of our elections.”

Unlike ATP, the group reports its direct and independent spending to the state and lists its donors.

“They’re scofflaws,” said Theresa Keaveny, executive director of the Montana conservation group.

Keaveny says ATP is not only in violation of Montana law, but also IRS rules for 501c(4) groups, which dictate ATP must not spend a majority of its funds on political activity.

According to its 2008 application for exempt status, obtained by the Center, ATP promised not to “spend any money attempting to influence” elections. It also promised not to “directly or indirectly participate or intervene on behalf of or in opposition to a candidate for public office.”

It would, however spend “70 percent” of its time and resources to “educate citizens” about “land and resource development issues.”

Jabs did not return a request to comment for this story.

Governor’s race a toss up

Bullock, a Democrat, is running against Republican Rick Hill. It’s expected to be a close race despite Montana’s majority-Republican voting population.

“We want citizens deciding elections, not corporations,” said Bullock in an October debate during which he touted his record as a campaign finance crusader.

While outside spending groups, including the Republican and Democratic governors associations, have swarmed the state with ads, the two candidates have had to abide by Montana’s low contribution limits — for most of the campaign.

In October, ATP made national news when a federal judge agreed with the organization and its high-profile campaign finance lawyer, James Bopp, and struck down contribution limits on individuals, PACs, and parties — including the $630 cap on individual giving to Bullock and Hill.

"The political establishment can no longer tell citizens to shut up because they've reached their speech limit," said ATP Montana Director Doug Lair in a press release.

Montana joined the ranks of 12 other states with no limits on contributions to candidates, but only temporarily. A week later, a federal appeals court stayed the lower court decision pending a full appeal, putting the state’s contribution limits back in force.

Bullock’s opponent took advantage of the six-day free-for-all between the ruling and the stay, accepting a $500,000 contribution from the state’s Republican Party. The gift dwarfed Montana’s $22,600 limit on party giving to candidates.

‘Who’s saying these crazy things’
A month before the vote, Montana residents woke up to a fake newspaper on their doorstep called “The Montana Statesman.”

The publication calls itself “the largest and most trusted news source” but is actually a series of ATP-funded attacks on Bullock. It leads with a giant headline that reads “Bullock Admits Failure.”

The “news” story claims that the attorney general has let “1 in 4 sex offenders go unregistered.” It includes four photos: three registered sex offenders and Bullock.

The group can continue to raise money on the promise that “no politician, no bureaucrat, and no radical environmentalist will ever know you helped make this program possible,” as its 2010 briefing to donors reads. “You can just sit back on election night and see what a difference you’ve made.”

Unsworth says his 2010 investigation did not stop ATP, and outside spending that has already flooded the state, is sure to intensify, particularly in light of the Citizens United decision. He calls the advertising a “mess of trash that lays at the feet of the public,” paid for by “funny money with no legal constraints.”

“We don’t know who’s saying these crazy things,” he added, “so the public has to suffer and our political system suffers as a result.”

The Center for Public Integrity is a non-profit independent investigative news outlet. For more of its stories on this topic go to http://www.publicintegrity.org/politics/consider-source.

Update (Oct . 22, 7:00 p.m. ET): This story was updated to reflect that Jabs, through a spokesman, denied making a contribution to ATP.

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The health insurance industry presented itself as a key ally of President Barack Obama’s health care law while at the same time making hefty contributions to members of Congress who are trying to get rid of it, according to contribution records.

Between January of 2007 and August of 2012, the political action committees of the 11 largest health insurance companies and their primary trade group gave $10.2 million to federal politicians, with nearly two-thirds of the total going to Republicans who oppose the law or support its repeal, according to the Center for Public Integrity’s analysis of Federal Election Commission filings.

The 11 top companies, according to the Fortune 500 list, controlled 35 percent of the industry in 2011, according to data from the National Association of Insurance Commissioners. The top industry trade group is America’s Health Insurance Plans.

Much of the money rolled in as health insurance industry leaders lauded the Democrats’ reform efforts.

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“We are ready to be accountable to these [new] rules,” Karen Ignagni, AHIP’s president and CEO told the Senate Finance Committee in May 2009, roughly almost a year before Obama’s landmark legislation was signed into law. And when a month after Obama’s Affordable Care Act became law in March 2010, Ignagni said her organization was “strongly committed” to [its] “successful implementation.”

Likewise, Ron Williams, then chairman and CEO of Aetna, the country’s fifth-largest health insurance company, also spoke favorably about the bill — at first.

“I believe that President Obama and this Congress have charted a course of change,” Williams said in a June 2009 statement. “I want to make clear that we too are committed to expanding access, controlling costs and improving the quality and value of care people receive.”

But Williams, who left Aetna in April 2011, has since changed his mind. This past June, Williams penned a Wall Street Journal op-ed calling for health care reform at the state level and criticizing the federal law’s mandate.

Cantor, Ryan among top beneficiaries
House Majority Leader Eric Cantor, R-Va., ranks as the top recipient of PAC money from the top insurers since 2007, according to the Center’s analysis. Cantor, a tea party favorite and one of the law’s most vocal critics, has received about $258,000 from AHIP and the top industry PACs.

In January 2011, Cantor introduced the “Repealing the Job-Killing Health Care Law Act,” the first of 33 repeal efforts that have reached the House floor.

That same year, Aetna, Humana, UnitedHealth Group and WellPoint — which together control 28 percent of the health insurance market — maxed out to Cantor, giving $10,000 apiece to his campaign committee. That doesn’t include additional sums that went into the congressman’s leadership PAC.

Behind Cantor, Rep. David Camp, R-Mich., ranks second in health insurance industry contributions. The chairman of the powerful House Ways and Means Committee has pulled in more than $234,000 from these PACs since 2007.

“The American people have told us they don’t want to be forced to buy health insurance that they don’t want and they can’t afford,” Camp declared in February 2010. A year later, Camp sponsored a bill that would cut $11.6 billion in funding for the law.

Rep. Paul Ryan, R-Wis., now the Republican nominee for vice president Mitt Romney’s running mate, is also among the top recipients of funds from health insurance companies and a leader in House’s efforts to repeal the health care law.

The dozen PACs studied by the Center donated $187,000 to Ryan between 2007 and 2012, placing the Wisconsin congressman fourth on the list. Just this year, Ryan, who chairs the influential House Budget Committee, has sponsored two major budget plans that have called for the law’s repeal.

Other top recipients of health insurance PAC money during this period include House Speaker John Boehner ($209,500), Republican House Whip Kevin McCarthy of California ($149,700), Sen. Orrin Hatch, R-Utah, who is the ranking GOP member of the Senate Finance Committee ($151,500), and Senate Finance Committee Chairman Max Baucus, D-Mont. ($142,400).

Why back the repeal?
So if the health insurance industry was in favor of key parts of the law, why is it supporting members of Congress who are so bent on killing it?

Part of the reason is that the legislation’s centerpiece, the requirement that almost everyone sign up for health insurance or pay a penalty, is expected to benefit the health insurance industry. Democrats supported the provision; Republicans despise it — despite its origins as a conservative idea.

More than a decade ago, an individual health insurance mandate was proposed by Stuart M. Butler of the conservative Heritage Foundation. During the 1993 health care debate, Republican lawmakers supported legislation that included an individual mandate. And the idea was endorsed by Republican Mitt Romney during his reforms as governor of Massachusetts.

During Congress' recent debate over health care reform, the industry was "playing supporters because there is nothing the health insurance industry wanted more than an individual mandate to force people to buy their product," says Carmen Balber, who monitors health policy at the nonprofit Consumer Watchdog.

At the time the reform law passed, the Democratic Party controlled the White House and both houses of Congress. By supporting the law, the industry was able to stay in the game on a very complex piece of legislation.

While the industry certainly did support parts of the law — such as the individual mandate — there were plenty of provisions it did not like and would like to see repealed.

AHIP and WellPoint — the industry’s top PAC contributor — did not reply to the Center’s telephone or email inquiries requesting comment. Representatives from Aetna, Amerigroup, Cigna and Humana declined to comment for this story.

Rome said he suspects the industry views support of Republican candidates — who will undoubtedly vote for deregulation — as a long-term investment.

For example, under the new law, insurance companies must spend at least 80 cents of every premium dollar on medical care for individual and small business policyholders — and 85 cents for large groups. That’s a provision the industry would like to see repealed.

Insurers must send policyholders or their employers rebate checks if the ratio drops below those levels.

In recent statements, AHIP claims the provision, known as the “medical loss ratio requirement,” could inhibit innovation and drive up administrative costs because of new reporting requirements.

Indeed, AHIP has lobbied extensively for a new bill that — according to Consumer Watchdog’s Balber — “would effectively gut the medical loss ratio requirement,” by allowing insurance companies to include broker compensation as a medical care cost in the ratio.

This legislation, introduced as H.R. 1206, is sponsored by Rep. Mike Rogers, R-Mich., and was forwarded to the House Energy and Commerce Committee on Sept. 11. Rogers ranks 19th on the Center’s list of top health insurance beneficiaries, receiving $90,500 over the nearly six-year period. AHIP supports Rogers' bill, as do several trade associations representing brokers and agents, claiming broker salaries commissions are not necessarily administrative costs, but rather a “human resource” expense because independent brokers and agents help patients select plans.

But to Balber, factoring insurance broker salaries as a medical cost — and thus, part of the 80 percent requirement — is “absurd.” Such a shift in premium calculation would negate the cost-cutting benefits of the medical loss ratio provision — what she considers the law’s strongest consumer protection.

Looking forward
Since the Democrats’ Affordable Care Act was signed into law, the political environment has changed dramatically.

Democrats no longer hold a filibuster-proof majority in the Senate, the House is controlled by Republicans and the president is in a tight race for re-election.

Despite his party’s unified attack on the health care law, Romney, whose own health insurance reforms in Massachusetts were a model for Obama’s plan, has recently hinted at willingness to compromise on some of its politically popular elements.

“Well, I'm not getting rid of all of health care reform,” Romney, the GOP's presidential nominee, said in a Sept.9 interview with David Gregory on NBC’s Meet the Press.

While the individual mandate is widely viewed as unpopular, the opposite is true for many provisions such as the prohibition on companies refusing to cover patients with pre-existing conditions, the closing of the Medicare Part D prescription drug “donut hole” and the option for young adults to stay on their parent’s plan until age 26. According to Bob Laszewski, an insurance industry consultant, a Romney administration would not be able to secure enough votes in the Senate to repeal the law, even if it wanted to.

A more realistic legislative outcome is that congressional Republicans will attempt to defund the law through budget reconciliation rules — a scenario that would likely hurt insurance company balance sheets, he said.

GOP defunding efforts would leave insurance companies subject to the law’s politically popular insurance regulations — like covering patients with pre-existing conditions — but without government subsidies that are provided in some parts of the plan.

“If Romney wins, I think you’re going to see the insurance industry very concerned about Republicans trying to choke health care reform,” Laszewski said.

Andrea Fuller, Lydia Mulvaney and Michael Beckel contributed to this report.

The Center for Public Integrity is a non-profit, non-partisan investigative news organization in Washington, DC.

 For more of its stories on this topic, please go to http://www.publicintegrity.org/politics/consider-source.

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When Nicholas Adrian Revetta of suburban Pittsburgh died in an explosion at a U.S. Steel plant on Sept. 3, 2009, his death did not make national headlines. No hearings were held into the accident that killed him. No one was fired or sent to jail.           

The 32-year-old contract laborer, who left behind a wife and two young children, was one of the 4,551 people killed on the job in America in 2009 -- a number that eclipsed the total number of U.S. fatalities in the nine-year Iraq war. Combined with the estimated 50,000 people who die annually of work-related diseases, it's as if a fully loaded Boeing 737-700 crashed every day.

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The Occupational Safety and Health Act of 1970 entitles American workers to "safe and healthful" conditions in their workplaces. But an examination of Revetta's death by the Center for Public Integrity illustrates how safety can yield to speed, how even fatal accidents can have few consequences for employers -- who are typically fined just $7,900 per fatality -- and how federal investigations can be cut short by what some call a de facto quota system.  

Click here to read the rest of the story.