Caldwell: AARP has self-interest in health care reform

Republicans are shocked the AARP and its licensed insurance plans stand to benefit from a health care reform bill, and will sacrifice the best interest of its members to make a buck.

Democrats are shocked the AARP and its licensed insurance plans stand to benefit from a health care reform bill, and will sacrifice the best interest of its members to make a buck.

Can you put these two statements in chronological order?

Eight years ago, the organization representing 37 million seniors stunned Democrats by endorsing the Bush administration Medicare drug benefit plan. As the tireless defender of Social Security and Medicare, AARP had always been a reliable ally of the Democratic Party.

You could not have squeezed a tongue depressor between then-House Majority Leader Newt Gingrich and Bill Novelli, who was AARP chief executive at the time, when the organization endorsed the Bush proposal.

His administration was deliberately understating the potential cost of the new drug benefit, which was underscored last week when Medicare officials announced the program will pay $93,000 per patient for a prostate cancer drug that will extend life an average four months.

In the wake of its defection to the Bush side, AARP lost thousands of members who believed their leadership had sold them out.

But providing insurance for seniors had been one of the founding objectives of what was in 1947 the National Retired Teachers Association. As it evolved into the American Association of Retired Persons, and now AARP, the organization became an insurance powerhouse.

AARP does not sell insurance, but receives royalties for the use of its name and mailing list from insurance companies, primarily United HealthCare. Between 1999 and 2008, AARP royalties — not all from insurance — more than tripled, from $200.1 million to $652.7 million.

According to a report issued Wednesday by Republican members of the House Ways and Means Committee, royalties constitute nearly one-half of all AARP revenues, and well over twice membership fees.

“Behind the Veil: the AARP America Doesn’t Know,” co-authored by Rep. Dave Reichert, R- Wash., alleges AARP supported President Barack Obama’s health care reform bill because cutbacks in the Medicare Advantage program would drive more seniors into Medigap insurance plans that will be more lucrative for AARP.

In effect, the report says AARP backstabbed its members and other seniors — most buyers of AARP-branded plans are not members — because its leaders foresaw as much as $1 billion in new revenues over the next 10 years.

And while its insurance revenues increased, support for the organization’s charitable foundation has increased only slightly, and contributions to its legal counseling service have diminished. Dues, however, remain low.

“It’s clear AARP appears to be operating much more like a big insurance company than a non-profit seniors’ advocacy group,” Reichert says.

The report was turned over to the Internal Revenue Service for a possible investigation into AARP’s tax-exempt status. Two Ways and Means subcommittees held a hearing on the report Friday.

In response, AARP repudiated any suggestion it cares only about the bottom line.

“AARP has long-maintained that we would gladly forgo revenue in exchange for lifetime health and financial security for all older Americans,” President Lee Hammond said. “We have been conducting ourselves in pursuit of that mission for more than 50 years.”

The organization also posted its annual reports, Form 990s and other filings, although it considers some information regarding its relationship with United HealthCare proprietary.

AARP’s dedication to free universal health care for seniors is, in fact, long-standing. But protests that a windfall from health care reform did not figure in its support of the measure are more than a little incredible.

As to “Behind the Veil,” it’s political payback.

The cover features a syringe loaded with a $100 bill. It belongs on a report on campaign finance.