Good stuff. AARP is the Death Star of American entitlements, so if the GOP wants to reform Social Security and Medicare, they’re going to have to fire some photon torpedoes. This one could do a little damage: Seniors have always been wary that O-Care will siphon off money from Medicare, which makes it exceedingly odd that their chief lobbyist came out in support of the legislation. In fact, CBS reported in 2009 that up to 60,000 seniors had canceled their memberships in disgust over it. Hence the political value of today’s report: On the eve of a Republican push on entitlements, the GOP’s planting another seed of doubt in seniors’ minds about AARP’s integrity. Won’t be decisive, but since fiscal conservatives are going to be smeared nine ways to Sunday once our “adult conversation” on mandatory spending begins, the opposition should be made to answer for its sins too.
# Since 2002, income generated from AARP membership dues has increased 32%, or $60 million. However, during this same period, income derived from AARP’s business relationships, primarily with insurance companies, has nearly tripled, increasing by $417 million. Royalty payments from for-profit companies comprised nearly 46% of AARP’s revenue in 2009, while membership dues totaled just 17% of total revenues.
# As a result of the new health care law, the Obama Administration estimates more than 7 million seniors will lose their current Medicare Advantage plans, resulting in a massive migration of seniors to Medigap plans. AARP is the nation’s leading provider of Medigap plans and has a contract in which AARP financially gains for every additional Medigap enrollee.
# Based on low, mid and high-range estimates, AARP stands to financially gain, over and above the millions of dollars they currently receive from United, between $55 million and $166 million in 2014 alone as a result of new Medigap enrollees stemming from the health care law’s cuts to MA, which AARP strongly endorsed.
# Under the midrange estimate and under their current contract, AARP’s financial gain from the health care law could exceed $1 billion during the next 10 years. This is because AARP will see their royalty payments increase as seniors are forced out of MA plans and buy AARP Medigap plans instead.
More from the AP, noting that the Republicans behind the report are now calling on the IRS to probe AARP’s tax-exempt status:
The business side of the organization runs money-making enterprises. The most lucrative involves “branding” a series of health insurance plans for seniors and older adults with the AARP name, akin to the Good Housekeeping seal of approval.
The public policy side is a civic organization that acts as a watchdog over Social Security and Medicare, representing 37 million members and consumers generally. Boards overseeing the business and tax-exempt social policy branches have overlapping directors.
Royalties from licensing the use of AARP’s name earned $657 million for the organization in 2009, or nearly half its total revenue, according to publicly available records. Health insurance plans accounted for most of that.
“During this investigation it became very clear that despite its privileged tax-exempt status, in many cases, AARP represents a for-profit entity, in fact, an insurance company,” Boustany said.
It’s like Oprah for seniors, if Oprah had made it her life’s work to defend unsustainable levels of federal spending. For more, read Robert Bluey’s post at Red State reminding us that it was Bush’s Medicare Part D bill that first started pouring money into AARP’s coffers. Look on the bright side: If the left ever does make a serious move towards single-payer, the Death Star will be there to protect its new Medigap insurance racket. Silver lining, no?