So where’s the disconnect between AARP and their 35 million members? Most AARP members are completely opposed to Obamacare, but AARP is very much in favor of it.
If you thought they acted in their senior members’ best interests, think again. Actually, they’re much more concerned with their bottom line than helping people over 50.
Whenever we think about how a monstrosity of a bill like Obamacare could have ever been enacted, we think of the left’s and particularly Obama’s affinity to socialism and their desire to control people and make people more and more dependent on government programs for survival. These things are obviously true, but there are other factors involved as well like money. When you “follow the money” behind Obamacare, you’ll find that AARP actually gained about $2.8 billion dollars as a result of it being enacted.
AARP isn’t really an insurance company in the way we normally think of an insurance company. The way it makes its money is by licensing its name out to private insurance companies who sell “Medigap” policies and keeping 4.95% of the premiums paid to these insurance companies. AARP calls this 4.95% “royalties.” This comprises over half of its income, while only 20% of its income is from membership dues. Medigap policies are policies that supplement Medicare by covering Medicare’s deductibles and coinsurance. They also cover catastrophic care.
Avik Roy is a health care policy advisor to the Romney campaign and also a contributing writer to Forbes. He points out that there were Medigap reform plans that were proposed that would have saved policy holders hundreds of dollars in premiums. But AARP blocked these reforms because AARP would have lost $1.8 billion if they had been enacted. So, in keeping these reforms out of Obamacare, AARP was able to hold on to that $1.8 billion at their senior members’ expense.
Roy also pointed out that AARP supported Obamacare’s proposed cuts to Medicare Advantage plans because in so doing, it would force seniors out of those plans, into traditional Medicare and therefore in the market for Medigap policies. And AARP makes a majority of their income from these Medigap policies. In fact, AARP would stand to gain about $1 billion in additional revenue because of Obamacare’s cuts.
AARP is exempt from Obamacare’s insurance mandates:
- AARP Medigap plans are exempted from most of Obamacare’s best-known insurance mandates.
- They’re 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.
- 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.
You think AARP cares about their members? Top AARP executives currently make more than $1 million. All they want is to make sure they get the most money possible.