AARP’s Corrupt Business Model Puts Seniors Last

The American Association of Retired Persons (AARP) remains one of the most powerful lobbying arms in the country, claiming to represent the interests of close to 40 million seniors. But it’s worth asking—whose interests are they really protecting, yours or theirs?

Though politicians are loath to lob public criticism at the group, ample evidence suggests the AARP may be focused far less on its publicly declared principles and far more on its profits—even at the expense of reforms that would benefit seniors.

This has been especially true when it comes to Obamacare, which has been a boon to the salaries of AARP executives. AARP’s business model is largely misunderstood. In it we find a key to understanding much of what motivates the organization’s policy positions. Rather than being an organization funded by membership dues, as is popularly assumed, AARP actually makes a significant chunk of its profits from insurance sales.

AARP partners with UnitedHealth Group, the parent company of insurance giant UnitedHealthCare. And since the passage of Obamacare in 2010, AARP has made an eye-popping $4.5 billion in profits through the UnitedHealth’s sale of Medigap plans—a supplemental insurance product that is especially profitable because, unlike most plans, it can still deny care to vulnerable individuals with preexisting conditions.

In other words, AARP has spent the past 10 years raking in billions from the sale of insurance plans that routinely deny care to the most vulnerable Americans.

Despite the fact that reforming the Medigap loophole obviously would benefit the disabled seniors who are its primary users, AARP refuses to advocate—and has, at times, outright opposed—reforms.

According to emails released as part of a House Energy and Commerce investigation into Obamacare, AARP coordinated closely with the Obama White House during the passage of the law “before crucial details pertaining to seniors had been addressed.”

In November 2009, a senior AARP executive wrote to the White House, “we will try to keep a little space between us” on healthcare because the organization’s “polling shows we are more influential when we are seen as independent, so we want to reinforce that positioning.”

Kimberly Strassel at the Wall Street Journal pointed out that while AARP has “long lambasted cuts in fees to Medicare doctors,” the lobby reversed itself for Obamacare, claiming that the law’s provider cuts were now just fine.

As health care expert Chris Jacobs summarized it,

…the organization was attempting to protect its image by publicly deceiving members—acting detached in public, even as AARP was frantically lobbying behind the scenes to ram the legislation through for the good of the liberal cause.

A year later, AARP worked to keep its profits in place. The organization lobbied Congress to oppose a Medigap reform proposal that the Kaiser Family Foundation said would lower senior premiums by as much as 60 percent and save seniors an average of $415 per year.

This pattern of putting its own interests first has only continued. AARP consistently has refused to speak out on behalf of seniors when doing so might disrupt its $600 million financial arrangement with UnitedHealth. When UnitedHealth announced it was pulling out of Iowa’s Medicaid market—and leaving 425,000 poor, disabled, and senior Iowans without coverage—AARP said nothing.

The Trump Administration in May proposed regulations aimed at reducing drug costs for seniors by cracking down on pharmacy middlemen known as “pharmacy benefit managers.” Unfortunately for the seniors represented by AARP, UnitedHealth happens to be one of those middlemen. Accordingly, AARP opposed the Trump Administration’s proposal.

“AARP,” said one patient advocate, has defined itself “as being for kickbacks that are costing the American patient money at the pharmacy counter and in hospitals.”

UnitedHealth’s role as a middleman (through its ownership of OptumRx) is currently under investigation in Kentucky and Ohio for allegations that the company overcharged state programs by millions of dollars. AARP itself is now subject to several class action lawsuits over the approximately 5 percent royalty it receives on every Medigap policy it sells or renews.

AARP purports to be a “nonprofit” organization. But with a $1.2 billion operating budget, questionable business partners, and a history of prioritizing profits over beneficial reforms to seniors, it’s an open question whether AARP exists to serve itself or the senior citizens it claims to represent.

“We Hear You” was the slogan of a series of recent AARP town halls. Do they? Or are they too busy laughing all the way to the bank?

About Rachel Bovard

Rachel Bovard is senior director of policy at the Conservative Partnership Institute and Senior Advisor to the Internet Accountability Project. Beginning in 2006, she served in both the House and Senate in various roles including as legislative director for Senator Rand Paul (R-Ky.) and policy director for the Senate Steering Committee under the successive chairmanships of Senator Pat Toomey (R-Penn.) and Senator Mike Lee (R-Utah), where she advised Committee members on strategy related to floor procedure and policy matters. In the House, she worked as senior legislative assistant to Congressman Donald Manzullo (R-Il.), and Congressman Ted Poe (R-Texas). She is the former director of policy services for the Heritage Foundation. Follow her on Twitter at @RachelBovard.

Photo: William Thomas Cain/Getty Images

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