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Medicare, Money and Motivation: How AARP Stands to Profit under Democrats’ Health Care Law

August 17, 2012

AARP is being held up again today as a credible source committed to protecting seniors – this time in a new round of attacks on bipartisan policies that would extend the solvency of the Medicare program.  This is the same AARP that hailed the law as benefitting seniors, despite a recent estimate by the Congressional Budget Office that the law cuts Medicare by more than $700 billion to fund a new entitlement program.  The Obama Administration’s own actuaries warned the Democrats’ law could jeopardize seniors’ access to health care.  However, according to a 2011 Congressional investigation of AAAP, it just so happens that the bulk of these cuts will likely result in AARP growing their revenues by more than $1 billion between 2011 and 2021 alone.

AARP’s Financial Interest in Medicare Cuts in the Democrats’ Health Care Law

  • As a result of the Democrats’ health care law, the Obama Administration’s own actuaries estimate more than 7 million seniors will lose their current Medicare Advantage (MA) plans, resulting in a massive migration of seniors into Medigap plans.  AARP and UnitedHealth Group’s (United) Medigap plan is the largest in the nation.
  • AARP receives a fixed fee for its endorsement of MA plans, regardless of enrollment.  Conversely, AARP receives a portion of every Medigap premium.  Under its current contracts with United, AARP’s financial gain from the health care law could exceed $1 billion between 2011 and 2021 alone.
  • Over and above the millions of dollars they currently receive from United, in 2014, new Medigap enrollees stemming from the law’s cuts to MA could result in AARP gaining between $55 million and $166 million.

So, to AARP, reducing Medicare spending is only acceptable when AARP benefits financially, regardless of how it impacts America’s seniors.