AARP Dirty Secrets - Part 4: Does Not Exactly Help Seniors

“There’s an inherent conflict of interest….They’re ending up becoming very dependent on sources of income.” — Former AARP Executive Marilyn Moon, quoted in Bloomberg article
ARRA News Service - While AARP claims to serve as a seniors’ advocacy organization, many of its operations appear to serve at cross purposes with those stated claims, leading some to question whether and how the organization actually assists the elderly—and who it serves in their stead:

• A review of its financial statements finds that in 2008, AARP received $652.7 million in direct “royalties and fees” from selling products like Medigap supplemental insurance policies. Royalty revenues now comprise more than half — 60.3% — of all AARP revenues; in 2008, fully 38% of AARP’s $1.1 billion in revenue came directly from United Healthcare. How does relying on health insurance company royalty fees for more of its total revenue than membership dues, grant revenue, and private contributions combined make AARP an “independent” seniors advocacy organization?

• In November, news sources reported that AARP suspended the sale of “limited-benefit” health insurance policies, largely as a result of pressure from Members of Congress concerned that the organization was selling policies advertised as a “smart option for the health care insurance you need,” even though the policies would only pay up to $10,000 for surgery costs. However, the fate of the more than 1 million policy-holders who purchased limited-benefit coverage from AARP is unclear. How does AARP selling “bare bones” health coverage as an “option for the health care insurance you need” in order to pocket additional royalty fees help seniors?

• A Bloomberg news analysis published in December found examples of seniors charged hundreds of dollars above market rates for AARP-branded coverage—a practice which several of the organization’s own members called “unconscionable.” How does overcharging insurance applicants who buy AARP-branded coverage—so that AARP can receive royalty fees its members viewed as “kickbacks”—help seniors?

• As part of its support for Democrats’ health “reform,” AARP has supported cuts to Medicare Advantage plans that could cause millions of seniors to lose their current coverage. As a result, many more seniors may be forced to purchase supplemental Medigap policies should their existing Medicare Advantage plans be taken away from them. However, H.R. 3200 would place strict price controls on Medicare Advantage plans—requiring them to pay out 85% of premium revenues in medical claims — Medigap policies face a far less strict 65% requirement. How does forcing millions of seniors to lose their Medicare Advantage coverage — so that AARP can sell more Medigap policies, and generate additional “kickbacks” from same—help seniors?

• A review of AARP’s most recent Form 990 filing with the Internal Revenue Service finds that in 2008, then-CEO Bill Novelli received cash compensation of $788,957 and “other compensation” of $216,423, for total compensation of $1,005,830. AARP’s 18 highest officials (as well as company trustees) received total salaries of $6,623,777, along with nearly another million dollars ($924,556) in other compensation—an average of more than $51,000 in perquisites and additional compensation per employee. How does spending more than $7 million to fund 18 high-paid staff positions — and paying a CEO more than 78 times the average annual Social Security benefit of $12,738 ($1,061.50 per month) — serve seniors? Moreover, how many AARP members are aware that they pay dues to an organization whose CEO receives more than a million dollars in salary and perks?

• The Form 990 filing also reveals donations from AARP to various groups whose purposes do not appear directly to coincide with senior advocacy, including money for “affordable green housing,” donations to the host committees for the Republican and Democratic National Conventions, more than $1 million to 56 school districts, and over $2 million to a local PBS affiliate. How do millions of dollars in donations to elementary and high schools, as well as a public broadcasting station, help seniors?

Given these facts, many may question: Whom does AARP serve: Its members, or the political—and pecuniary—interests of its senior executives? And is AARP a seniors’ advocacy group, or a billion-dollar insurance company masquerading as a “charity” organization?

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AARP Dirty Secrets - Part 1: Helping Seniors or Helping Itself
AARP Dirty Secrets - Part 2: AARP “Kickbacks” Fund Donations to Liberal Causes
AARP Dirty Secrets - Part 3: Will the Real AARP Please Stand Up?

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