Conservative Legal Watchdog Asks IRS to Investigate Enroll America’s Public Charity Status

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July 29, 2013; The Hill


Led by Dan Epstein, Cause of Action is a relatively new watchdog group with a distinctive lean toward the conservative side of the political ledger. Epstein’s bio cites his service between 2009 and 2011 working as counsel for investigations and oversight for Rep. Darrell Issa’s House Committee on Oversight and Government Reform, noting his role in investigations of ACORN and the Service Employees International Union.

It shouldn’t be a huge surprise, then, to learn that Cause of Action has requested that the Internal Revenue Service review the tax-exempt status of Enroll America, the nonprofit that we noted was the intended beneficiary of the fundraising efforts of Health and Human Services Secretary Kathleen Sebelius to help get uninsured persons signed up for health insurance.

Epstein’s argument is that Enroll exists basically to benefit insurance companies. “If Enroll America is designed to benefit insurance companies instead of the American public,” Epstein argues, “then its charitable status no longer applies.”

Describing the Cause of Action complaint as “completely without merit,” Enroll America responded that it is a legitimate 501(c)(3) public charity “focused solely on helping educate American consumers about the new health insurance benefits created by the Affordable Care Act.” Enroll’s mission is to “maximize the number of lower- and moderate-income people either enrolled in Medicaid or certified for exchange-based subsidies.”

Epstein argues that it shouldn’t have the status of a public charity because, “as Enroll America’s purpose is so closely aligned with the commercial interests of these for-profit entities, its activities thus far demonstrate that it is little more than a trade association for the healthcare industry, employing marketing tactics and its high-level access to executive branch officials as a means to increase the sale of healthcare services.” As a trade association, Enroll would not be able to accept tax-deductible charitable donations.

The Hill article indicates that Cause of Action charges that Enroll will benefit the health insurers because “increased ObamaCare enrollment will benefit the healthcare industries that sit on Enroll America’s board.” Who are the healthcare industry representatives on the Enroll board? That language would make one expect to encounter representatives of the likes of Humana, Aetna, and CIGNA Healthcare, or the industry’s trade association, America’s Health Insurance Plans. Here is the Enroll board composition, drawn from its most recent Form 990:

  • Vincent DeMarco: president, Maryland Citizens Health Initiative
  • Roger Schwartz: associate vice president, National Association of Community Health Centers
  • Ronald Pollack: executive director, Families USA Foundation
  • Delma Plummer: director of finance and administration, Families USA Foundation
  • Barbara Campbell: counsel at Families USA Foundation
  • Rich Umbdenstock: president/CEO of the American Hospital Association
  • Sister Carol Keehan: CEO of the Catholic Health Association of the United States
  • Tony Barrueta: senior vice president, Kaiser Permanente
  • Bruce Bodaken: president/CEO/chairman, Blue Shield of California
  • Debra Barrett: vice president, Teva Pharmaceuticals

The Cause of Action complaint describes Barrueta, Barrett, and Umbdenstock as insiders who stand to profit from Enroll’s activities “to confer a substantial private benefit on the for-profit commercial entities represented on its board of directors and advisory council.” The complaint omits targeting Sister Carol Keehan, as the constituency of her organization is composed of tax-exempt Catholic hospitals.

It doesn’t quite make sense. Enroll is educating people about the Affordable Care Act and encouraging lower-income people to sign up for health insurance on the exchanges, consistent with the law. Had the nation not succumbed to conservatives’ drive to make national insurance reform into a program dependent on private insurers rather than a more logical single payer system, Cause of Action wouldn’t have a complaint—or at least not this complaint. The current system of insurers includes for-profits, nonprofits—even nonprofit cooperatives. That’s a wide range of entities, in which the ultimate beneficiaries will be low- and moderate-income people who will get access to affordable, subsidized coverage. The purpose of the legislation, like the purpose of Enroll, is to maximize health insurance coverage for the tens of millions of Americans who would remain uninsured but for the Affordable Care Act. The fact that the structure of the legislation involves the participation of corporate entities, just as the structure of the American economic system does, is an unavoidable element of how this nation achieves policy goals in health, housing, and much else.

The Hill identified Epstein as having worked for the Koch brothers, who have made overturning the Affordable Care Act a key objective of their advocacy group, Americans for Prosperity. Getting people to sign up for health insurance under the ACA simply doesn’t add up to transform Enroll America into a health insurance trade association.—Rick Cohen

  • S. Walter

    Enroll America isn’t a health insurance trade association, but it certainly will churn some money toward for-profit corporations. In addition, is one allowed to suspect that Enroll America’s database, which they hope will be vast, just might be put to use in electoral work, given the very tight connections between EA and the White House and HHS and elite Obama donors? As Cohen has pointed out earlier, HHS Sec’y Sebelius could have been drumming up millions for other nonprofits doing this work, but she did not.