We’ve Been Robbed $2.8 Billion – By The AARP
posted at 7:33 am on September 24, 2012 by Matt Vespa
As polling shows, seniors and white Americans over the age of 65 generally don’t support PresidentObama or his health care reform bill. They are appalled at the $716 billion in Medicare cuts, which will be used to expand coverage (and dependency) for lower income Americans – so why does the AARP support it?
Avik Roy, an advisor to the Romney campaign, penned a column in Forbes over the weekend detailing how AARP will gain almost $3 billion from Obamacare “according to an explosive new report from Sen. Jim DeMint (R., S.C.), [stating the] same Medicare cuts will give the AARP a windfall of $1 billion in insurance profits, and preserve another $1.8 billion that AARP already generates from its business interests.”
Roy explains that AARP “in 2011…generated $458 million in royalty fees from so-called “Medigap” plans, nearly twice the $266 million the lobby receives in membership dues. Medigap plans are private insurance plans that seniors buy to cover the things that traditional, government-run Medicare doesn’t, like catastrophic coverage. Medigap plans also help seniors eliminate the co-pays and deductibles that are designed to restrain wasteful Medicare spending.”
However, AARP blocked reforms for their insurance plans during the health care fiasco –which would have saved $415 per senior in premiums. However, the organization fought incessantly to keep those reforms out of Obamacare because they receive a 4.95% royalty on every dollar a senior spends on Medigap. The cost of reform would have been $1.8 billion over ten years.
In another case of the dependency agenda at work, “not only did AARP succeed in getting Democrats to balk at Medigap reform. Obamacare’s cuts to Medicare Advantage will drive many seniors out of that program, and into traditional government-run Medicare, which will increase the number of people who need Medigap insurance.” Furthermore:
…AARP Medigap plans are exempted from most of Obamacare’s best-known insurance mandates. AARP Medigap plans are exempted from the ban that requires insurers to take all comers, regardless of pre-existing conditions. The plans are exempted from the $500,000 cap on insurance industry executive compensation; top AARP executives currently make more than $1 million. AARP plans are exempt from the premium tax levied on other private insurers. IPAB, Medicare’s rationing board, is explicitly barred from altering Medicare’s cost-sharing provisions, provisions that govern the existence of Medigap plans.
And AARP Medigap plans are allowed to have twice the administrative costs that other private insurers are allowed under Obamacare’s medical loss ratio regulations. This last point is key, because AARP’s 4.95 percent royalty is a significant administrative cost.
Democrats routinely excoriate private insurers for supposedly putting profits above people. “No American should ever spend their golden years at the mercy of insurance companies,” President Obama told the AARP yesterday. But the typical private insurer gets by on a profit margin of about 5 to 6 percent. AARP’s 4.95 percent royalty, on the other hand, doesn’t do anything to make a health plan operate more smoothly: it’s just pure profit for AARP.
Additionally, AARP – which is suppose to be an independent and non-partisan organization, was actively supporting Obamacare from the beginning. Roy uses Kim Strassel of The Wall Street Journal and her 71 pages of emails she uncovered to show that AARP worked on issues relating to seniors before it was “relevant” in the debate. Strassel said the AARP had “long lambasted cuts in fees to Medicare doctors,” but, like the wind, reversed their position. This is obviously a compromising position for the lobby – which is why a senior AARP official said they’ll “try to keep a little space between us [referring to the White House]…[our] polling shows we [AARP] are more influential when we are seen as independent, so we want to reinforce that positioning…The larger issue is how best to serve the cause’ of Obamacare.”
Yes, AARP had their little convention in New Orleans last week – whose audience booed Republican Vice Presidential candidate Paul Ryan when he dared to utter the words “repeal” and “Obamacare.” Roy aptly says this a “small wonder” since the AARP’s phone log reportedly had “seniors registered 50 to 1 against the law.” In all:
Obamacare…saved the AARP from $1.8 billion in Medigap reforms, while potentially earning the group an additional $1 billion in royalties from seniors who are forced out of Medicare Advantage. That’s a swing of $2.8 billion over ten years, all thanks to Obamacare.
It’s a testament to AARP’s political power—and our broken health-care system—that the lobby is allowed to carry on a half-billion-a-year business that’s based on increasing the premiums that seniors pay, and draining money from the taxpayers who get billed for wasteful Medicare spending. Sen. DeMint has done a public service by bringing these problems out into the open.
So, we’ve been robbed. It’s wrong. It’s unjust. Although, that’s usually the case for any organization that has a conflict of interest operating in the public sphere.
Recently in the Green Room: