NCPA - National Center for Policy Analysis

AARP: REFORM ADVOCATE AND INSURANCE SALESMAN

October 28, 2009

The nation's preeminent seniors group, AARP, has put the weight of its 40 million members behind health care reform, saying many of the proposals will lower costs and increase the quality of care for older Americans.  But not advertised in this lobbying campaign have been the group's substantial earnings from insurance royalties and the potential benefits that could come its way from many of the reform proposals, says the Washington Post.

Consider:

  • The group and its subsidiaries collected more than $650 million in royalties and other fees last year from the sale of insurance policies, credit cards and other products that carry the AARP name, accounting for the majority of its $1.14 billion in revenue, according to federal tax records.
  • It does not directly sell insurance policies but lends its name to plans in exchange for a tax-exempt cut of the premiums.
  • AARP also heavily markets the policies on its Web site, in mailings to its members and through ubiquitous advertising targeted at seniors.

The group's dual role as an insurance reformer and a broker has come under increasing scrutiny in recent weeks from congressional Republicans, who accuse it of having a conflict of interest in taking sides in the fierce debate over health insurance.  Three House Republicans sent a letter to AARP on Monday complaining that the group was putting its "political self-interests" ahead of seniors.

  • GOP lawmakers point to AARP's thriving business in marketing branded Medigap policies, which provide supplemental coverage for standard Medicare plans available to the elderly.
  • Democratic proposals to slash reimbursements for another program, called Medicare Advantage, are widely expected to drive up demand for private Medigap policies like the ones offered by AARP, according to health care experts, legislative aides and documents.
  • Republicans also question the high salaries and other perks given to some top AARP executives, who would not be subject to limits on insurance executives' pay included in the Senate Finance Committee's health reform package.
  • Former AARP chief executive William Novelli received more than $1 million in compensation last year.

"We are witnessing a disturbing trend of handouts to special interests like AARP," said House Republican spokesman Matt Lloyd, referring to Democratic negotiations over health reform. " In return, AARP is lobbying for a government-run health care bill that will pad their own executives' pockets at the expense of its own members and other vulnerable seniors."

Source: Dan Eggen, "AARP: Reform advocate and insurance salesman; Seniors group makes millions from royalties on health plans," Washington Post, October 27, 2009.

For text:

http://www.washingtonpost.com/wp-dyn/content/article/2009/10/26/AR2009102603392.html 

 

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