REPORT: AARP Wins When Seniors Lose

PDF OF FULL REPORT: http://1.usa.gov/P2YZQX

September 20, 2012

Office of U.S. Senator Jim DeMint (R-South Carolina)

Contact: Wesley Denton (202) 228-5079

New Report: AARP Wins When Seniors Lose

Washington, D.C. - Today, U.S. Senator Jim DeMint (R-South Carolina) released a new staff report, "Profits Over Principles: How AARP Wins When Seniors Lose" that examines how AARP profits at seniors' expense. Senator DeMint also wrote letters to the AARP and the Obama administration asking for further details on questions raised by the report.

The report includes new research showing how AARP would lose billions of dollars if Obamacare is repealed or Medigap reforms are passed. AARP secretly lobbied against bipartisan Medigap reform during last year's debt supercommittee negotiations, which would have lowered costs on seniors but lowered AARP's profits by $1.8 billion, while hiding that information from their members. The report also explores the group's ties to the Obama Administration and Democrat Party. It details the numerous mandate exemptions in Obamacare that Medigap insurance received, a market AARP happens to dominate. The Department of Health and Human Services (HHS) has also repeatedly shielded AARP from new health insurance regulations and government oversight.

"AARP's actions show they're more worried about their own bottom line than what's best for seniors," said Senator DeMint. "AARP helped pass Obamacare even though it was opposed by their retiree members, but blocked bipartisan reform that would help reduce costs on seniors. AARP is not a nonpartisan or independent group, they make billions of dollars from health insurance and work closely with Democrats to protect their business profits. Congress should take a close look at AARP's questionable sales tactics and treat them with the same skepticism as other billion-dollar companies in the health insurance industry when they weigh in on legislation."

REPORT HIGHLIGHTS

*AARP functions as an insurance conglomerate with a liberal lobbying arm on the side. Independent experts and former AARP executives admit that the organization's billions of dollars raised from its business enterprises - most notably the sale of health insurance plans - have compromised the organization's mission and independence.

*In 2010, AARP provided compensation of over $100,000 to 543 separate employees, including one senior executive who received nearly $1.2 million in compensation.

*AARP depends on profits, royalties, and commissions to make up over 50% of its annual budget. Membership dues from seniors account for only about 20% of AARP's revenue.

*AARP's$458 million in health insurance revenue in 2011 would rank it as the nation's sixth-most profitable health insurer.

*The health care law, which AARP lobbied heavily for, could lead to over $1 billion in new AARP health insurance profits over the next decade by forcing seniors off Medicare Advantage plans into Medigap supplemental coverage.

*AARP earns more profit the higher premiums rise on seniors in Medigap plans, charging a "royalty fee" of 4.95% of every premium dollar paid by seniors on these plans.

*In 2011, AARP failed to disclose to its senior membership that it lobbied Congress to oppose Medigap reform, legislation that could lower senior premiums by as much as 60%, and save seniors $415 per year on average.

*AARP could lose as much as $1.8 billion in revenue over ten years if Medigap reforms pass and successfully lower senior premiums.

*Documents show close coordination between Obama Administration and AARP, including efforts to deceive the public. In November 2009, a senior AARP executive wrote to the White House saying "we will try to keep a little space between us" on health care - because AARP's "polling shows we are more influential when we are seen as independent, so we want to reinforce that positioning....The larger issue is how best to serve the cause."

*AARP has benefitted by supporting the Obama Administration's unpopular health care law. Unlike other forms of insurance, AARP's Medigap insurance plans were exempted from many of the health care law's mandates, including the ban on pre-existing condition discrimination.

*The Obama Administration has not publicly criticized AARP's business practices, even though it has publicly attacked other insurance companies with much smaller profit margins than those generated by AARP's Medigap insurance.

*Democrats continue to praise AARP - HHS Secretary Sebelius called them the "gold standard" for "accurate information" - even though AARP earns more profit the higher Medigap premiums rise for seniors.

*Even though President Obama has criticized Republicans for placing seniors at the mercy of insurance companies, the health care law he signed allows organizations like AARP to continue discriminating against Medigap applicants with pre-existing conditions.