« BACK  |  PRINT

RS

MEMBER DIARY

AARP Investigation Reveals Obamacare Will Enrich Non-Profit Seniors Lobby

AARP Revenues

An 18-month congressional investigation into AARP reveals that the organization stands to make more than $1 billion over the next 10 years from Obamacare, a law the seniors lobby supported despite opposition among its core constituency.

AARP, which operates as a tax-exempt organization in Washington, would profit from an increase in its insurance business, specifically from the sale of Medicare products to older Americans. The lucrative business has already transformed AARP into an insurance powerhouse. If it were a for-profit business, AARP would rank as the sixth-largest insurance company in America with profits of $427 million in 2009.

AARP’s revenues exploded following passage of the Medicare Part D law during the Bush administration and will continue to grow as a result of Obamacare, according the House Ways and Means Committee report. That’s because an estimated 7 million seniors will lose Medicare Advantage plans — a consequence of Obamacare — and shift to Medigap plans instead. Every new Medigap plan sold by AARP, already the largest provider of those plans, results in more royalty revenue.

As seniors begin to make the shift in 2014, AARP stands to make between $55 million and $166 million that year alone. Over 10 years, royalties would total more than $1 billion just in new customers.

The House Ways and Means Committee will hold a hearing Friday to seek answers about AARP’s business practices. Reps. Wally Herger (R-CA), Dave Reichert (R-WA) and Charles Boustany (R-LA) are leading the examination.

AARP, which collected $97 million in federal grants in 2009, denied any wrongdoing in a statement Wednesday.

“AARP is most disturbed by the accusation that our support of any legislation would be done with revenue in mind,” AARP President Lee Hammond said. “AARP has long-maintained that we would gladly forgo revenue in exchange for lifetime health and financial security for all older Americans.”

This isn’t the first time AARP has come under scrutiny. IRS investigations in the 1980s and 1990s produced multi-million dollar settlements. But those settlements came long before AARP began reaping millions from health insurance.

The stakes today are much higher. With more than 40 million members, AARP has the market corned on seniors. The revenue from AARP-endorsed plans for Medicare Advantage, Medigap and Medicare Part D provide royalties that give the organization incredible clout for a non-profit.

Meanwhile, there’s growing evidence that the policies supported by AARP — namely Obamacare — aren’t nearly as popular among its target democraphic. According to the Kaiser Health Tracking Poll this month, a majority of seniors have an unfavorable view of the law. Just 19 percent think the Medicare program will be better off under Obamacare.

Get Alerts