Is AARP still the American Association of Retired Persons?

Published 9:55 am Wednesday, June 19, 2013

by Bob Holt

The simple answer is “no.” The organization is referred to now as just AARP and no longer uses the term American Association of Retired Persons.

AARP has 37 million members, or almost 12% of the total US population. Its mission as stated on its web site is to help “people 50+ have independence, choice and control in ways that are beneficial to them and society as a whole.” Its monthly magazine is the world’s largest circulation magazine.

AARP has come under intense scrutiny the past few years for its increasing venture into insurance products and the resulting possible conflict with its tax-free status as a nonprofit organization.

It offers all types of insurance — auto, home, and life; but it is best known for its health related insurance products such as major medical, Medicare supplement, Medicare Advantage, and long-term care as well as discounts for dental, vision, hearing products, prescription drugs, and medical supplies.

In the months preceding the passage of Obamacare, AARP endorsed President Obama’s proposed law overhauling the health care industry in the United States. Many AARP members did not support Obamacare which took $716 billion from Medicare to help pay for the proposed new law.

In essence, money that had been placed in government hands by payroll deduction from hard-working seniors during their working years would now be moved out of the program that benefits them in their retirement years. When AARP endorsed Obamacare, many members were furious. They called AARP headquarters and by a 50:1 ratio, expressed their dissatisfaction with the endorsement. Members said “why would an organization formed to support seniors agree to the transfer of $716 billion from one of the federal programs designed to assist them from funds to which members themselves contributed over many years?” The answer they received was that the loss of the $716 billion for Medicare would be replaced by making providers more efficient (translation: reducing payments to doctors and hospitals.) There were also provisions to do more in the area of controlling Medicare fraud.

AARP’s insurance products provide its most “profitable” income. Writing in an article last year for Politico, former Sen. Jim DeMint (R-S.C.) indicated that member subscriptions accounted for only 20% of AARP’s revenue; the remainder was generated mostly from insurance products.

In 2011, AARP earned $458 million from the sale of health insurance products alone. Since AARP is a nonprofit and tax-exempt organization, their insurance earnings are referred to as “royalties.”

Why would AARP lobby for passage of Obamacare despite the fact that 98% of its members opposed it? As with many odd decisions, money was the driving force. Obamacare forced seniors off the popular Medicare Advantage program and onto other Medigap supplemental insurance products offering less coverage at higher costs.

This act alone cost seniors $415 annually in premiums, but increased “profits” for AARP. Medigap insurance represents optional coverages such as assistance for co-pays and deductibles seniors can purchase to offset the cost of services not provided in basic Medicare. Obamacare also exempted AARP from most of the mandates in the new law.

For example, AARP coverage may discriminate against subscribers with pre-existing conditions, and it is exempt from rate review, two important provisions in the new law that all other insurance companies must follow. In addition, Obamacare places a cap of $500,000 for health care industry executive compensation.

AARP is exempted from that restriction and several of its executives earn in excess of $1 million annually. AARP is also exempted from premium taxes placed on other health insurers. AARP is allowed to have twice the administrative costs as the other health care insurers must maintain.

In reality, AARP has become an insurance company and lobbyist masking as an advocate for seniors. You be the judge.