Wednesday, December 12, 2012

AARP's Appearance Of A Conflict Of Interest: It's Lobbying Efforts For Seniors Also Protect Its Royalty Revenues: In Whose Best Interests Is It Speaking?

From The Washington Post, "AARP lobbies against Medicare changes that could hurt its bottom line" by Jerry Markon:
AARP, the highly influential lobby for older Americans, is fiercely opposing any Medicare or Social Security cuts and emphasizes that it is fighting for the good of its members. But the proposals for changing Medicare also could affect AARP’s bottom line.

AARP has long played a dual role. It advocates for the interests of seniors, and it makes money allowing its name to be used in selling them private insurance, including coverage known as ­Medigap, which supplements government-provided Medicare. The group gets a 4.95 percent royalty each time someone buys Medigap insurance with the AARP brand. The Medigap insurance policies bring in hundreds of millions of dollars a year and are among an array of AARP-endorsed products that generate slightly more than half of the group’s $1.4 billion in revenue, according to tax records and people familiar with the group’s operations.
By making them pay for more of their health care, policymakers seek to curb unnecessary medical visits and tests. These changes would probably reduce Medigap premiums, similar to how premiums for auto insurance tend to be lower if customers pay higher deductibles.

The smaller Medigap premiums could reduce AARP’s revenue by shrinking its royalties. A report released in September by Sen. Jim DeMint (R-S.C.) estimated that the group could lose $1.8 billion over 10 years. AARP officials said they do not understand how that number was calculated and declined to comment further.

AARP says it opposes the proposed change to Medigap because it would harm older Americans, even though they may pay lower premiums.
More recently, GOP lawmakers have called for raising the eligibility age as part of a deal to avert the fiscal cliff. AARP objects to the idea.

Health-care experts and former AARP executives said raising the eligibility age for Medicare would hit the group’s revenue because Medigap is available only to individuals who qualify for Medicare. Under the proposal, 65- and 66-year-olds would no longer be able to buy Medigap coverage, and AARP’s royalties could fall.

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