One of the subplots to the health care debate I’ve been following is the cozy relationship between AARP and the Obama administration, as the group has thrown its full-throated support behind the Democrats’ health care push even though their membership comes from the age group most opposed to Democratic health care proposals. Today, House Republicans have issued a report providing evidence that AARP is in a position to recieve tens of millions of dollars in “kickbacks” if Democratic health care legislation becomes law.
President Obama and Democrats have proposed saving money to pay for health care legislation, in part, by cutting $162 billion in payments to Medicare Advantage, which allows Medicare recipients to choose privately-administered coverage. If these changes go through, millions of seniors who have chosen Medicare Advantage would lose their current coverage, forcing them into government-administered plans with less generous benefits. As a result, many of them would have to purchase policies to supplement traditional Medicare. Enter AARP.
In 2008, AARP generated $652.7 million in revenue by selling products like Medigap supplemental Medicare insurance, accounting for over 60 percent of the group’s revenue, according to an analysis of its financial statements cited in the report released by the House Republican Conference.
If the House Democrats health care bill becomes law, the report argues, it would be a boon to AARP, because while Medicare Advantage plans will be required to pay out 85 percent of the money collected in premiums to claims made by policy holders, the requirement would only be 65 percent for the kind of Medigap policies sold by AARP.
“In other words, under the Democrat bill, seniors could pay as much as 20 cents more out of every premium dollar to fund ‘kickbacks’ to AARP-sponsored Medigap plans than Medicare Advantage plans,” the GOP report charges.
But this isn’t the only way that AARP is getting special favors, according to the report.
Earlier this month insurer Humana Inc. sent customers who enrolled in the company’s Medicare Advantage plan a letter warning them that their benefits would be in danger if the Democratic health care legislation passed. Senate Finance Committee Chairman Max Baucus complained to the Centers for Medicare and Medicaid Services, which not only ordered Humana to stop sending the letters to its customers, but prohibited any other private insurers from doing the same. Except, that is, AARP — which sponsors a Medicare Advantage program in addition to the Medigap policies it offers, but was exempt from the Obama administration’s gag order.
I have a call into AARP, and will update the post once I get a response.
UPDATE: AARP emailed this statement from its executive vice president, Nancy LeaMond, as a response, though it doesn’t address any of the specific charges raised in the report:
“Any effort to derail AARP’s commitment to reform will not succeed. Similar to “death panels” and other scare tactics, this latest effort is a misguided attempt to talk about anything other than the health care reform this country needs. AARP will continue to work on reform for our members that prohibits insurers from discriminating based on health status or pre-existing conditions, strengthens Medicare by improving quality of care, cutting out fraud and abuse, and closing the so-called ‘doughnut hole’ for prescription drugs.
“AARP was started more than 50 years ago to fight for older Americans and their need for health care — our fight continues today. Over those 50 years our public policies have always dictated every decision we have made.
“The only benefit AARP is looking for in health reform is relief for the millions of Americans who are crushed by soaring prescription drug prices, relief for the millions of Americans who are told they can’t get coverage because they’re too old or too sick, and relief for the millions of Americans who need Medicare strengthened. Period.”