AARP Says Not Influenced By Insurance Revenues
Republicans in the House of Representatives on Friday accused the AARP of gaining financially from President Barack Obama’s healthcare overhaul, which the powerful advocacy group for older Americans supported.
Republican members of a House Ways and Means subcommittee grilled AARP Chief Executive Officer Barry Rand and AARP President Lee Hammond on the nonprofit organization’s health insurance operations.
Rand defended the group’s public policy positions and said money received from insurance licensing agreements was used to fund social-welfare programs for AARP’s 37 million members.
Republicans argued that the group would gain financially by cutbacks in the law to the Medicare Advantage program that delivers Medicare health benefits through private insurers.
“The facts show AARP no longer operates like a seniors’ advocacy organization,” said health subcommittee Chairman Wally Herger, a California Republican. “Instead, it more closely resembles a for-profit insurance company.”
Herger was referring to a report on AARP finances and operations that he wrote with fellow Republican Representative Dave Reichert and which was released this week. They have asked the Internal Revenue Service to investigate AARP’s tax-exempt status as a nonprofit organization.
Democrats questioned the motives of Republicans for holding the hearing, saying it was political payback for supporting Obama’s healthcare restructuring.
“Your sin … is that you backed the Affordable Care Act,” Democratic Representative Jim McDermott said to Rand.
Rand challenged the Republican report’s findings saying: “We reject the allegation that our public policy positions are influenced by our revenues.”
He said that it was more likely the group would lose money under the law, as AARP-branded insurance plans for people between 50 and 64 become obsolete when insurance companies in 2014 can no longer exclude people from coverage because of medical history.
The healthcare law also beefs up the Medicare drug benefit for the elderly and limits how much more insurers can charge older people for coverage compared to younger people.
UnitedHealth Group Inc. (UNH.N) offers supplemental health plans, called medigap plans, using the AARP brand. The plans fill in the coverage gaps left by traditional Medicare. The company also offers a Medicare Advantage plan, which offer more comprehensive coverage, through AARP. Aetna (AET.N) offers AARP-licensed health plans to the 50-64 age group.
The Republican report said that Aetna plans represent a small portion of the $657 million in insurance royalties received by AARP in 2009. Sixty-five percent of AARP royalties come from medigap products that stand to gain from the healthcare law, the report said.
Reichert said that the report pointed to “a direct conflict of interest between AARP’s advocacy for eliminating the Medicare Advantage program … and the massive profits AARP receives from sponsoring medigap plans.”
Rand said the money was used to support AARP’s social welfare programs, which include helping older Americans find jobs, providing information on financial security and aiding the hungry.
It is not the first time AARP’s nonprofit tax status and its insurance affiliations have been questioned. In 1995 then Republican Senator Alan Simpson, who served as co-chairman of Obama’s deficit commission last year, probed the organization’s business practices.
The group came under fire from Democrats in 2003 for its support of the Republican-backed Medicare prescription drug plan. (Reporting by Donna Smith; Editing by Xavier Briand)