NCPA - National Center for Policy Analysis

Citing Health Overhaul, AARP Hikes Employee Costs

November 9, 2010

AARP's endorsement helped secure passage of President Barack Obama's health care overhaul.  Now the seniors' lobby is telling its employees their insurance costs will rise partly as a result of the law, says the Associated Press (AP).

  • AARP says health care premiums will increase by 8 percent to 13 percent next year because of rapidly rising medical costs.
  • AARP adds that it's changing copayments and deductibles to avoid a 40 percent tax on high-cost health plans that takes effect in 2018 under the law.
  • AARP officials said medical inflation is the main reason employee costs will be going up.
  • The health care law is "a small part," said David Certner, legislative affairs director.

Although the tax on so-called "Cadillac" health care plans doesn't take effect for years, employers are already beginning to assess their potential exposure because it is hefty: at 40 percent of the value above $10,200 for individual coverage and $27,500 for a family plan, says the AP.  Certner said AARP's plans are currently under the threshold for the tax.

AARP officials say the organization's public policy recommendations are made independently of other considerations, including its range of business ventures, from travel, to insurance, to publishing.

The 40 million-strong AARP represents people age 50 and older, including retirees on Medicare and Social Security.  Its endorsement of health care overhaul came at a critical time last year, days before a close vote on the House floor, says the AP.

AARP warned its employees that more cost-shifting could be in store.  "AARP intends to make similar changes, as necessary, in the future to avoid the (health plan) tax," said a company e-mail.

Source: Ricardo Alonso-Zaldivar, "Citing Health Overhaul, AARP Hikes Employee Costs," Associated Press, November 4, 2010.


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