With an upcoming State House vote expected on the Health Insurance Consumer Protection Act (House Bill 3923), legislation establishing key reforms on health insurance in Illinois, AARP released the following letter to State Legislators today alerting them that the Association will record roll call votes on the bill, and inform its 1.8 million members in Illinois how their legislator voted.

According to exit polls, roughly 1 out of every 4 voters in the past election was a member of AARP. Nearly 100% of AARP members are registered to vote, while over 70% vote in every local, state and federal election.

“Illinoisans need and deserve to know where their State Senators and Representatives stand on the issues, and AARP will ensure they have that information on issues such as health insurance reform,” said Robert Gallo, AARP Illinois Senior State Director.

With record numbers of people losing their employer-based health insurance and now purchasing coverage in the private insurance market, the Health Insurance Consumer Protection Act, introduced by Representative Greg Harris, will establish several critical consumer protections. The Senate’s vote on the legislation will also be tracked and reported as it happens.

The legislation will:

• Require insurance companies to spend at least 75% of premium dollars on medical care rather than on executives’ salaries, marketing, and profits.
• Establish an Office of Consumer Health Insurance to conduct external independent reviews of denied claims and rate increases.
• Simplify the complicated application process for both individual and small group markets by creating a standard application, making it easierfor them to get coverage.

AARP is urging all legislators to pass the measure; getting the bill signed into law is a top priority for the Association.

Following are excerpts from the letter sent by Gallo to State Legislators:

“AARP members are looking to us to keep them informed about what issues are dominating the policy debates in Illinois and where their elected officials stand on these issues.

“Our members care deeply about fixing our broken health care system; including addressing the unfair and inconsistent practices in the private health insurance market. They want to know both how AARP is representing their concerns and how the Illinois State Legislature is responding to our efforts.

“We believe that people make the right choices when they understand the issues and the positions taken by their elected officials. People need and deserve to know where their Representatives and Senators stand on the issues that matter most.

“Therefore, AARP will be recording House and Senate roll call votes on key issues, and informing our Illinois members of the results of these key votes — and how their elected officials voted.

“AARP will track and report the upcoming House vote on House Bill 3923, the Health Insurance Consumer Protection Act, introduced by Representative Greg Harris. With record numbers of people losing their employer-based health insurance and now purchasing coverage in the private insurance market, the legislation will establish several critical consumer protections.

“The legislation will require insurance companies to spend at least 75% of premium dollars on medical care; establish the Office of Consumer Health Insurance to conduct external independent reviews of denied claims and rate increases; and simplify the application process for both individual and small group markets by creating a standard application.

“AARP strongly urges you to vote in favor of this legislation.”

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Tags: aarp, AARP Illinois Insurance, Illinois Health Insurance News, Illinois Health Insurance Reform

AARP, the largest U.S. membership organization for people 50 and over, was accused in a lawsuit of breaching its duty to members who enroll in group-endorsed health care plans.

The group collects hundreds of millions of dollars annually from insurers who pay for AARP’s endorsement of their policies, according to a complaint filed in federal court in New York. Because of the group’s “relentless appetite for royalty revenues,” AARP permits insurers to make excessive increases in the insurance premiums charged to its members, the suit says.

“By 2007, the royalties from AARP-endorsed health care providers generated 60 percent of the revenue of AARP,” according to the complaint. “AARP received nearly $500 million in royalties.”

The suit, by AARP member Lucille Roussin, who lives in New York, seeks unspecified damages and asks to be designated as a class action, or group, lawsuit on behalf of others.

A spokeswoman for Washington-based AARP, which was formerly called the American Association of Retired Persons, didn’t immediately return a call. The not-for-profit group has a membership of 38 million people who are 50 or older, according to the complaint.

The case is Roussin v. AARP, 09-cv-586, U.S. District Court, Southern District of New York (Manhattan).

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Tags: aarp, AARP Insurance

Health care costs are daunting to nearly a fifth of the people who took part in a recent AARP survey.

The telephone survey, conducted in November by Woelfel Research, included 1,001 U.S. adults age 45 and older. All but 10% of them have health insurance, either from their employer, their spouse’s employer, private insurance, or Medicare.

One survey question was, “How confident are you that you will be able to afford medical care next year?”

Most people — 81% — said they were at least somewhat confident. That leaves the remaining 19% unsure that they will be able to foot their health care bills in 2009. Here are the details:

* Extremely confident: 26%
* Very confident: 33%
* Somewhat confident: 22%
* Not very confident: 9%
* Not at all confident: 10%

People age 65 and older (and thus eligible for Medicare) were especially confident that they’ll be able to afford health care next year. People earning less than $30,000 per year were least confident about being able to pay for healthcare.

Likewise, when asked specifically about affording prescription drug costs next year, most people — 83% — were at least somewhat confident. But 9% were not very confident and 8% were not at all confident that they could afford their prescription drugs. Most participants reported spending up to $200 per month for up to six prescription drugs in 2008.

Taking Action

Survey participants were also asked what they had done to try to contain their health care costs.

* 58% said that when a doctor prescribes a new drug, they always ask if there’s a generic equivalent.
* 62% said they always pick the generic version, if one is available.
* 49% said they’ve asked their doctor if there are things they can do (such as physical activity and diet change) to lower their number of medications.
* 77% said they’ve never been prescribed a brand-name drug that they couldn’t afford.
* 85% said they hadn’t cut back on medications in the past year because of costs.

The survey has a margin of error of three percentage points.

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Tags: aarp, Healthcare 2009

Arthur Laupus joined AARP because he thought the nonprofit senior-citizen-advocacy group would make his retirement years easier.

He signed up for an auto insurance policy endorsed by AARP, believing the advertising that said he would save money.

He didn’t. When Laupus, 71, compared his car insurance rate with a dozen other companies, he found he was paying twice the average.

Why? One reason, he learned, was because AARP was taking a cut out of his premium before sending the money to Hartford Financial Services Group, the provider of the coverage.

Laupus stumbled onto something that many members of the world’s largest seniors organization don’t know: The group, formerly called American Association of Retired Persons, collects hundreds of millions of dollars annually from insurers who pay for AARP’s endorsement of their policies.

The insurance companies build the cost of these so-called royalties and fees, which amounted to $497.6 million in 2007, into the premiums they charge AARP members, according to AARP’s consolidated financial statement for that year.

AARP uses the royalties and fees to fund about half the expenses that pay for activities such as publishing brochures about health care and consumer fraud — as well as for paying down the $200-million bond debt that funded the association’s marble and brass-studded Washington headquarters.

In addition, AARP holds clients’ insurance premiums for as long as a month and invests the money, which added $40.4 million to its revenue in 2007.

“At the end of the day, it’s all about fattening the coffers of the organization,” says Thomas Orecchio, who was chairman of the Arlington Heights, Ill.-based National Association of Personal Financial Advisors until September. AARP, he says, is sponsoring insurance for its members at inflated prices.

“It’s the dirty little secret,” he says.

During the past decade, royalties and fees have made up an increasing percentage of AARP’s income, rising to 43% of its $1.17 billion in revenue in 2007 from 11% in 1999, according to AARP data.

Laupus, a former teacher in Baltimore, and millions of others joined AARP in the belief it would provide discounts, services and publications. The organization ranks behind only Consumer Reports and the American Red Cross as the most trusted large group that influences U.S. politics and business, a 2007 Harris Poll found.

AARP has helped millions with tax returns, estate planning and health care advice.

With stock markets around the world plunging, savings plans in turmoil and medical costs soaring, older Americans need an advocacy organization in their corner.

“The turbulent economy puts more people in the difficult situation of being under- or uninsured,” says U.S. Sen. Charles Grassley, R-Iowa. “That’s why we need to make sure individuals aren’t taken advantage of with misleading marketing, especially by a name brand advocate who carries a high level of trust.”

Grassley sent letters to AARP CEO William Novelli and state insurance commissioners Nov. 3 inquiring into whether the AARP misrepresented what is covered by some health insurance policies it sold. Four days later, Novelli announced AARP would review its marketing and suspend sales of those policies.

AARP’s mission to help seniors has been compromised by its reliance on royalties and fees, says Marilyn Moon, who was director of AARP’s Public Policy Institute from 1986 through 1989.

“There’s an inherent conflict of interest,” she says. “A lot of people there are trying to do good, but they’re ending up becoming very dependent on sources of income.”

Moon is now vice president and director of the health program at American Institutes for Research in Washington.

Novelli, 67, has broadened AARP’s reach and increased its clout in Washington. He has expanded AARP’s marketing to include 17 types of insurance.

The association collects royalties on each of those products. Its membership rose to 40 million from 35 million, and its total revenue grew to $1.17 billion in 2007 from $520 million when Novelli took charge.

Nowhere were AARP’s conflicting roles more evident than in its lobbying in support of a 2003 bill proposed by President George W. Bush to expand Medicare, the federal health insurance program for people older than 65.

The bill, which for the first time added a prescription drug plan to Medicare, passed by a vote of 220-215 in the House of Representatives and 54-44 in the Senate. Thousands of AARP members complained that the legislation was a bad deal for seniors because it provided incomplete coverage and raised costs for seniors with low income.

After the Medicare bill was signed into law by Bush in December 2003, AARP was able to expand its contract with Minnetonka, Minn.-based UnitedHealth Group Inc., which underwrites AARP’s Medicare supplemental insurance plan.

AARP advertises that its Medicare supplemental insurance can save people thousands of dollars.

While every type of supplemental policy sold by all companies must offer the same coverage under federal rules, AARP doesn’t sell the least expensive.

The AARP/UnitedHealth basic policy costs $582 a year more than a lower-cost competitor in New York and $428 more in Los Angeles, according to data on Medicare’s Web page.

AARP’s muscle on Capitol Hill is vested in the size and geographic reach of its membership, as well as its lobbying budget. The association donated no money to candidates in 2007, federal election records show.

“They don’t even have to give any campaign contributions,” says James Thurber, director of the Center for Congressional and Presidential Studies at American University in Washington. “AARP’s enormous clout comes from the threat they could defeat people in Congress who don’t do what they want. They are the most powerful interest group in Washington.”

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Tags: aarp, Medicare, medicare supplemental insurance, united healthcare aarp