Thursday, January 20, 2011

AARP Admits: “Regulations on the Insurance Industry Don’t Apply to Us”

In case you missed it, last week the AARP’s President submitted a letter to the editor in response to Karl Rove’s column discussing the exemptions AARP’s Medigap insurance received in the health care law.  The full piece is clipped below, but contains three relevant points.  First, AARP claims it’s not an insurance company, and that “regulations on the insurance industry don’t apply to us any more than regulations on the paper industry apply to the Journal.”  Some may find this analogy irrelevant and misleading, because the point of the Rove op-ed was that new regulations applied to insurance policies for the under-65 population through the health care law were not extended to Medigap plans at all—and AARP just so happens to have a dominant share of this market.

The second point AARP makes in its letter is that AARP Medigap plans “already meet or exceed many of the ‘exemptions’” discussed in the law.  Some may also find this statement curious, given that AARP has steadfastly refused to disclose the overall amount it makes from selling Medigap plans, even though its Board Chair agreed at a December 2009 hearing to make this information public.  Since AARP is writing letters to the Administration asking federal regulators to make other insurance companies’ “pricing more transparent,” why has AARP refused to disclose exactly how much money it makes off the sale of Medigap plans?  Don’t seniors deserve to know how much they’re being overcharged to pay “kickbacks” to AARP?

Finally, AARP admits that it does endorse a statutory change to prohibit Medigap plans from discriminating against senior citizen applicants with pre-existing conditions – a practice AARP engages in currently.  But while the letter talks about bringing “passion” to the issue of ending health status discrimination in the Medigap market, it really only raises more questions than it answers:

  1. At a December 2009 hearing, AARP’s Board Chair admitted she had no idea that legislation being considered (and the legislation ultimately enacted) allowed Medigap plans to continue imposing waiting periods on sick seniors.  Why did it require a series of questions by Republican Members of Congress, a Justice Department investigation, and others outlining AARP’s hypocrisy before the organization was embarrassed into supporting this position?
  2. In December 2009, AARP forced Democrats to fully close the “doughnut hole” before they would endorse health care legislation – why didn’t AARP also insist that the legislation end Medigap discrimination before Democrats brought the bill to a vote?  Was AARP not looking out for its members’ interests – or was it just putting its own profits first?
  3. If AARP now has a “passion” for ending Medigap discrimination, as it claims, why won’t AARP unilaterally agree to eliminate all waiting periods for Medigap applicants, rather than waiting for Congress to act?
  4. Alternatively, if AARP can’t (or won’t) stop discriminating against sick Medigap applicants with pre-existing conditions, why won’t AARP at least choose to give up all its “kickbacks” so it won’t be profiting from discrimination against sick AARP members?
  5. According to its third quarter lobbying report (fourth quarter reports are still in the process of being filed), AARP spent more than $4.7 million from July-September 2010 – not a penny of which was related to Medigap insurance reform.  AARP’s 62-page lobbying disclosure included (by my count) 164 separate bills and issues on which AARP advocated before Congress.  How passionate is AARP toward Medigap reform if it doesn’t rank on a list of 164 bills on which to lobby – and does the fact that AARP couldn’t be bothered to lobby on this issue have something to do with the billions of dollars in profits it’s received from insurance sales?


AARP’s Business Is Advocacy, Not Health Insurance

Few understand better than AARP that health reform often sparks strong feelings on both sides of the debate. While we don’t agree with everyone, we don’t question their motives. Everyone is striving to solve the health-care challenges before us. Unfortunately, Karl Rove’s “ObamaCare Rewards Friends, Punishes Enemies” (op-ed, Jan. 6) is wrong about AARP and its insurance products. While there are insurance products that carry the AARP name, they are underwritten by insurers such as UnitedHealth Group, Delta Dental, Aetna and others—not AARP.

AARP is not an insurer, and never has been—we work to ensure products meet our standards and provide value to our members. Regulations on the insurance industry don’t apply to us any more than regulations on the paper industry apply to the Journal. AARP is a nonprofit, nonpartisan social welfare organization with a membership, not an insurance company.

Specifically, the Medigap plans that carry the AARP name are underwritten by United HealthGroup and already meet or exceed many of the “exemptions” Mr. Rove discusses.

We agree with Mr. Rove, however, about the need to eliminate pre-existing condition exclusions from all insurance markets, including the Medigap market. AARP believes no one should be denied coverage because of his medical history and we supported legislation last year that would end pre-existing condition exclusions in Medigap plans.

We would welcome Mr. Rove’s passion to the cause of eliminating that hurdle.

Lee Hammond

AARP President and Volunteer