KERPEN: A $9 Billion Health Care Gorilla

The health insurance industry always seems to win in Washington health care debates.

The most famous example was Obamacare, which transformed from a liberal crusade against insurance companies into a law guaranteeing them new profits, mandating Americans to buy their products, protecting them from competition, and providing hefty subsidies to shift skyrocketing costs onto taxpayers.

More recently, insurers dominated the so-called Inflation Reduction Act. Through the law, they protected the exemption their pharmacy benefit manager subsidiaries use to pocket huge rebates on prescription drugs and extended supersized Obamacare subsidies that flow directly to them. Now, insurance companies have convinced Democrats to shut down the federal government to demand yet another extension of those subsidies, which were supposed to be a temporary COVID-era measure.

If they succeed again, it will probably be because the biggest health insurance company in the country has turned the largest political advocacy group into something close to a wholly owned subsidiary.

I've written many times about AARP's lucrative arrangement with UnitedHealth, in which the latter's cash cow AARP-branded Medicare plans divert about 5% of premiums to pay "royalties" to AARP. We estimated these payments totaled around $800 million per year, around triple what AARP collects in membership dues. That already made AARP the $800 million gorilla in D.C. health care debates, overwhelmingly supporting Democrats and outcomes favorable to the insurance industry.

Now we have to call them the "$9 Billion Gorilla." That's billion with a "b," or nine thousand million. That's how much UnitedHealth paid AARP in a one-time payment in 2024. Chris Jacobs of Juniper Research, who closely monitors AARP's finances, believes the $9 billion payment is an advance on their premium skim, which has been raised again to 5.95% of premiums.

This news comes as seniors in AARP/UnitedHealth plans stare at hefty premium increases. Last year, AARP received 31 times as much money from UnitedHealth as it did from its members. This explains why all of their advocacy work appears to advance insurance industry priorities, even if it means higher prices for seniors.

Even before the incomprehensible $9 billion juicer, the kind of money AARP was collecting in its premium skim was enough to create a political juggernaut, and AARP spent hundreds of millions of dollars on advertising and events that stop just short of urging a vote for a particular candidate but almost always favor elected Democrats and the party's policy priorities.

Around the Inflation Reduction Act debate, AARP held 94 events for members of Congress with just one favoring a Republican – Senator Mike Crapo, who was cruising to an easy re-election – and the list of Democrats looks curiously like the party campaign committee's list of vulnerable members.

Somehow, AARP operates this business model while maintaining its non-profit status.

Obviously, Republicans who get crosswise with such a lavishly funded juggernaut face political danger. But ducking and hiding won't make the $9 billion go away. It's better to shine a spotlight on the corrupt arrangement, and there is political upside there.

A couple years ago, my organization, American Commitment, commissioned a poll of voters age 55 and older that found 89% are concerned AARP is paid billions in corporate royalties from health insurance corporations like UnitedHealth while lobbying legislators and government officials on related issues.

Health care costs are spiraling out of control. We need real solutions that bring more choice and competition, less heavy-handed regulation, and less government spending flowing to the big insurance companies to paper over the problem. That requires exposing AARP for what it is: a de facto subsidiary of UnitedHealth.