AARP: Protecting Seniors’ Interests–Or Its Own?
On this 45th anniversary of Medicare, it’s worth examining how the nation’s largest seniors advocacy organization supported legislation that won’t improve Medicare’s solvency – but will help one particular organization’s bottom line. An article in this week’s National Journal does just that, by interviewing AARP’s new CEO, Barry Rand. The article points out that the CEO job “is a plum one in the association world – Rand’s predecessor received annual compensation of about $1 million. AARP, which includes an advocacy arm, a business service group, and a foundation, has yearly revenue exceeding $1 billion.”
According to its annual financial statements, more than $400 million of that revenue comes directly from United Health Group, and during the interview, the inherent conflict of interest presented by AARP’s outside “royalties” came up:
NJ: AARP’s business arm, which receives royalties for steering members to insurance plans and other business services, generates an enormous sum of money that is used to fund your advocacy work. Doesn’t this arrangement raise a potential conflict of interest? Is AARP advocating positions to make money for AARP, or is it advocating for the good of its members?
Rand: Those who don’t like our advocacy positions use this as a way to try to destroy our trust level and influence. AARP was created by a retired schoolteacher who couldn’t get health insurance. What she found was that if she created a large enough pool [of seniors], it would bring down the cost of insurance, so she worked with insurance companies to design benefit structures for seniors. And that was how AARP was formed–to help seniors. Our for-profit side is totally separate from our nonprofit side, totally separate boards and separate entities.
Given how its CEO claims that the organization’s non-profit and for-profit arms are completely unrelated, it’s worth noting how many backroom deals and exemptions AARP received from the Democrat health legislation when it came to their most lucrative product – Medigap supplemental insurance:
- EXEMPT from the prohibition on pre-existing condition exclusions, such that AARP can continue to impose waiting periods on vulnerable seniors with pre-existing conditions – as it does currently (Section 1201(2)(A), Page 81 of H.R. 3590);
- EXEMPT from a $500,000 cap on executive compensation for insurance industry executives, so that AARP can give its CEO more than $1 million in annual compensation – over 78 times the average annual Social Security benefit of $12,738 (Section 9014, Page 1995 of H.R. 3590);
- EXEMPT from the tax on insurance companies that will total more than $14 billion per year – even though according to its own financial statements AARP generated more money from insurance industry “royalty fees” than it received from membership dues, grant revenues, and private contributions combined (Section 10905(d), Page 2395 of H.R. 3590); and
- EXEMPT from a requirement imposed on Medicare Advantage plans to spend at least 85 percent of their premium dollars on medical claims – AARP Medigap policies are currently held to a far less restrictive 65 percent standard, and the difference can be used to fund “kickbacks” to AARP paid out of the pockets of its senior citizen members (Section 1103, Page 49 of H.R. 4872).
In the article Mr. Rand claimed that “we are focused on a multimillion-dollar education effort, and we are focused on helping people understand what is in the bill and what the benefits are.” So it’s worth asking: Will that educational campaign highlight all the special exemptions AARP received for its lucrative Medigap policies as part of the health care bill? Will AARP point out to its members that it can still impose waiting periods for seniors with pre-existing conditions wanting to buy Medigap plans, as the organization does now? Or will the non-profit association yield to the pecuniary interests of its for-profit affiliates – and thereby shortchange the organization’s members in the process?