AARP Gets Hundreds of Millions from Insurance
Companies to Endorse Policies
Bloomberg.com report finds part of this goes to pay
on $200 million marble and brass-studded headquarters
Dec. 4, 2008 - AARP, already being investigated by
the Senate Finance Committee, and exposed by the New York Times for its
massive selling of its endorsement to commercial companies, was hit
again today. The latest is an article on Bloomberg.com, that lays bare
the story of how the organization collects hundreds of millions of
dollars annually from insurance companies who pay for AARP’s endorsement
of their policies.
The insurance companies build the cost of these
so-called royalties and fees, which amounted to $497.6 million in 2007,
into the premiums they charge AARP members, according to AARP’s
consolidated financial statement, the story reports.
“AARP uses the royalties and fees to fund about
half the expenses that pay for activities such as publishing brochures
about health care and consumer fraud -- as well as for paying down the
$200 million bond debt that funded the association’s marble and
brass-studded Washington headquarters,” according to reporters Gary Cohn
and Darrell Preston.
“In addition, AARP holds clients’ insurance
premiums for as long as a month and invests the money, which added $40.4
million to its revenue in 2007.”
The writer’s quote Marilyn Moon, former director of
AARP’s Public Policy Institute from 1986 through 1989, as saying,
“AARP’s mission to help seniors has been compromised by its reliance on
royalties and fees.”
“There’s an inherent conflict of interest,” she
told the reporters. “A lot of people there are trying to do good, but
they’re ending up becoming very dependent on sources of income.”
The article points out that AARP’s annual revenue
from royalties has increased by $197 million, since the Medicare drug
program was approved in 2003, with strong support and lobbying by the
AARP. They immediately began marking insurance in the program, which
caused many to question the group’s motives in backing the bill.
“AARP has been in the insurance business since its
founding in 1958,” according to the report”. Ethel Percy Andrus, a
former school principal, discovered that a retired teacher couldn’t
afford an apartment and was living in a chicken coop.
“Andrus worked with Colonial Penn Group to provide
health insurance to retired teachers starting in 1947. She expanded
AARP’s offer to include health insurance for all retirees 11 years
later.”
The Bloomberg.com story says, “AARP stopped selling
basic health insurance for seniors in 1965 after President Lyndon
Johnson signed Medicare into law. The organization continued to offer
several kinds of insurance, including a supplement to Medicare, offering
additional coverage.”
(To read the complete report at Bloomberg, see link
at bottom of this story.)
Sen. Grassley Finds AARP Deceptive
Senator Charles (Chuck) E. Grassley (R-Iowa) on
Nov. 3, the day before the election, notified AARP that he found some of
the insurance programs marketed by AARP with UnitedHealth Group to be
deceptive in their marketing.
Sen. Grassley has asked the AARP to account for the
way its marketing materials for a product it calls health insurance
fails to limit policy holders’ exposure to the potentially high cost of
a serious illness. Grassley said the AARP materials include examples of
medical expenses, but the examples are “misleading and do not reflect
how the policy would actually work in a typical situation.”
The senator sent AARP a list of questions to answer
as said the answers should be returned to his office by November 24.
(See link to more on this in sidebar on left.)
It was the Grassley inquiry that prompted the New
York Times’ Robert Pear to look into the matter. He wrote, “Though known
in Washington as a potent lobby, AARP is also a huge business that
offers travel services, life and homeowner’s insurance, mutual funds and
credit cards. Its operating revenue last year was $1.2 billion, more
than 40 percent of which came from royalties, according to its 2007
financial statement.”
It also inspired an opinion piece in The Des Moines
Register on November 19.
“The headline on a recent press release from
Sen. Chuck Grassley's office proclaims: ‘Grassley asks AARP about
misleading marketing of product called health insurance.’
“Hallelujah. Because what Janice and Gary Clausen
of Audubon purchased through AARP shouldn't be considered health
insurance -- not when it left them owing $250,000 in medical bills.”
Dec. 4, 2008 - AARP, already being investigated by
the Senate Finance Committee, and exposed by the New York Times for its
massive selling of its endorsement to commercial companies, was hit
again today. The latest is an article on Bloomberg.com, that lays bare
the story of how the organization collects hundreds of millions of
dollars annually from insurance companies who pay for AARP’s endorsement
of their policies. 