AARP and the Health Care Bill- You Decide

Cross posted at What Makes Us Right

I was listening to a Phone Town Hall meeting last week with my local congressman (Pat Tiberi), and the discussion was primarily focused on the health care bill.  There were quite a few seniors who were quite concerned over the health care bill and were asking Mr Tiberi, some very direct questions.  For the most part, the congressman was giving fairly standard answers, until there was a question about AARP and why they would support a bill, if it was so bad for senior citizens.  His response surprised me bit, so I wrote the congressman for some more information.  Basically, the response to the question was that due to the fact that AARP is the largest provider of supplemental insurance, they would ultimately benefit the most from cutbacks in Medicare Advantage (over $200 billion dollars).  The information below is what I received back from the congressman's office.


 The new health care law exempts AARP from:

• The prohibition on pre-existing condition exclusions, such that AARP can continue to impose waiting periods on vulnerable seniors with pre-existing conditions – as it does currently (Section 1201(2)(A), Page 81 of H.R. 3590);  
•    a $500,000 cap on executive compensation for insurance industry executives, so that AARP can continue to give its CEO more than $1 million in annual compensation – over 78 times the average annual Social Security benefit of $12,738 (Section 9014, Page 1995 of H.R. 3590);

• the tax on insurance companies that will total more than $14 billion per year – even though according to its own financial statements AARP generated more money from insurance industry “royalty fees” than it received from membership dues, grant revenues, and private contributions combined (Section 10905(d), Page 2395 of H.R. 3590); and

• a requirement imposed on Medicare Advantage plans to spend at least 85 percent of their premium dollars on medical claims – AARP Medigap policies are currently held to a far less restrictive 65 percent standard, and the difference can be used to fund “kickbacks” to AARP paid out of the pockets of its senior citizen members (Section 1103, Page 49 of H.R. 4872).

 In a written response from the AARP COO Thomas C Nelson, AARP continuously avoided the question of how much money AARP was receiving as a result of this bill, or how much AARP would financially benefit from the cuts.  Repeated answers from AARP to the questions were basically that the decision to support H.R. 3962 was not based upon any financial considerations, and AARP has not analyzed the data to understand the impact.

I have basically three questions:

1. If AARP is not analyzing the data, how can you support a bill that you have no idea of the impact to your financial stability (both good or bad).?
2. Has AARP been overcharging seniors all of these years for MEDIGAP policies;  apparently there is no logic behind the fees being charges?
3. Who will benefit from the reduction in dollars that can be saved by not spending on medical claims (65% versus 85%)?

Although I highly doubt anything illegal has happened hear, I just question the ethics of this organization if they are making decisions without fully vetting out the financial impact of major decisions.