AARP to Make a Series of Left Turns
For those non-sports fans out there, you may have missed this week’s story that AARP was spending more than $40 million of its members’ hard-earned dollars on…NASCAR racing. Specifically, the AARP Foundation signed a three year deal to sponsor Jeff Gordon’s 24 car with a price tag in excess of $14 million per year.
It’s worth noting the comments of team owner Rick Hendrick, who said “he had no idea how big AARP was until he started talking to the organization.” He also said he “didn’t know when we started what kind of deal this was going to be – I thought it might be an insurance company deal.”
It turns out Mr. Hendrick was right to think that AARP’s involvement “might be an insurance company deal.” As we’ve previously reported, AARP’s own 2009 financial statements document that royalty fees (or, as their members call them, kickbacks) from the sale of insurance and other products rose to $657 million – an all-time high. Of that amount, fully 65% – or more than $427 million – came directly from United Health Group for the sale of AARP’s lucrative Medigap coverage and other related health insurance policies. In the past three years alone, AARP has generated more than $1.1 billion in royalty fees directly from United Health Group for selling insurance products—all of which represents pure profit to the organization.
AARP claims its sponsorship is intended to raise awareness of poverty among seniors, and marshal resources to that end. But the more than $40 million* in sponsor fees AARP is paying come directly out of the pockets of its senior citizen members – and will go to a race team that, almost by definition, doesn’t include many members over age 65. So that raises the question: If AARP really wants to help fight poverty among seniors, why doesn’t it stop overcharging them for insurance products instead?
*The NASCAR article also mentioned that “companies who want to get on Gordon’s car apparently will be able to purchase that space from AARP. It’s unclear whether AARP will charge such companies seeking such advertising the same type of “kickbacks” it charges its own members when selling insurance products.