The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Corrupt AARP Health Care Deal Puts Seniors at Risk

Posted by iusbvision on January 14, 2010

Previous coverage of this story HERE.

House Conference Chair Mike Pence:

Speaker Pelosi recently called insurance companies “immoral villains,” and Sen. Jay Rockefeller derided their tactics as “rapacious,” yet the majority has simultaneously relied on an organization that has received billions of dollars in windfall profits from those same insurers as an “independent” source to support their government takeover of health care-AARP.  The Democrat majority has even relied on AARP’s support for legislation (S. 1776) that would increase the federal debt by nearly $250 billion to fund physician reimbursements, even though the bill would raise seniors’ Medicare premiums by over $60 billion.  AARP opposed unpaid-for legislation as recently as December for that very same reason.  An analysis of Democrats’ rhetoric and actions provides evidence why AARP may have changed its position-in exchange for its support of a government takeover of health care, AARP has received special considerations regarding several provisions in health “reform” legislation that could benefit the organization quite handsomely:

  • While the AARP website claims that the organization supports “guaranteeing that all individuals and groups wishing to purchase or renew coverage can do so regardless of age or pre-existing conditions,” a review of the New York State Insurance Commissioner’s website finds that AARP-branded Medigap coverage imposes a six-month waiting period for individuals with pre-existing conditions. Yet Section 111 of H.R. 3200 would exempt Medigap policies from new limits on pre-existing condition restrictions-thus allowing AARP to continue to deny Medigap claims of individuals with serious health conditions.
  • The health “reform” bill approved by the Senate Finance Committee would eliminate the tax deductibility for all insurance company executive salaries over $500,000. However, as drafted by the Committee, the legislation would exempt AARP from this requirement, even though fully 38 percent of its $1.1 billion in 2008 revenue came directly from “royalty fees” paid by United Healthcare-more than AARP received in membership dues, grant revenue, and private contributions combined. But for Chairman Baucus’ exemption, AARP salaries would in fact be subject to the penalties in the Finance bill-in 2008, then-CEO William Novelli received total compensation of $1,005,830-more than 78 times the average annual Social Security benefit of $12,738.
  • Speaker Pelosi has recently discussed the imposition of a new “windfall profits” tax on insurance companies as a potential addition to the House’s health “reform” bill. However, she has made no comments indicating that she would apply a similar tax to AARP-even though the organization by its own admission has received nearly $3.4 billion in profits from selling health insurance and other similar products. Thus it is entirely possible that Democrats could exempt AARP from the insurance windfall profits tax, in the same way that Chairman Baucus created a loophole to allow AARP to continue paying its CEO more than $1 million per year without penalty.
  • White House senior advisor David Axelrod recently offered Administration support for price control provisions included in H.R. 3200 that would require insurance companies to pay out a minimum percentage of their premiums in medical claims. However, while H.R. 3200 would place strict price controls on Medicare Advantage plans-requiring them to pay out 85 percent of premium revenues in medical claims-Medigap policies face a far less strict 65 percent requirement. 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.
  • A Bloomberg news analysis published in December highlighted what one observer called AARP’s “dirty little secret”-overcharging its senior members, many of whom who felt betrayed after paying hundreds of dollars above market price for AARP-branded coverage. One noted that “AARP has great buying power, and people should be able to get the best deal….This is unconscionable, what AARP has allowed to happen.” Another disillusioned senior wrote to the organization’s leadership asking whether AARP had a “‘special relationship’ with [insurance carriers] by which it receives commissions, incentives, rebates, or dare I say ‘kickbacks?'”
  • In November, news sources reported that AARP suspended the sale of “limited-benefit” health insurance policies, largely as a result of pressure from Republicans in Congress concerned that the organization was selling policies advertised as a “smart option for the health care insurance you need,” even though the policies would only pay up to $10,000 for surgery costs. However, the fate of the more than 1 million policy-holders who purchased limited-benefit coverage from AARP remains unclear-and the organization has made no public offers to return the “royalty fees” on the “bare bones” policies it sold under questionable pretenses.

2 Responses to “Corrupt AARP Health Care Deal Puts Seniors at Risk”

  1. […] Among the conspirators of the less publicized, but every-bit-as-contemptuous “deals,” was the seemingly altruistic AARP. These Washington insiders look out for the interests of retired people only when it’s not looking out for itself (which is always). Case in point: it has made billions in windfall profits from insurance companies, but turned on the hand that feeds it with a massive media and lobbying campaign. Its 30 pieces of silver was a guarantee of no less than six favorable provisions in the bill (as reported by IUSB Vision). […]

  2. […] Among the conspirators of the less publicized, but every-bit-as-contemptuous “deals,” was the seemingly altruistic AARP. These Washington insiders look out for the interests of retired people only when it’s not looking out for itself (which is always). Case in point: it has made billions in windfall profits from insurance companies, but turned on the hand that feeds it with a massive media and lobbying campaign. Its 30 pieces of silver was a guarantee of no less than six favorable provisions in the bill (as reported by IUSB Vision). […]

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