Wednesday, August 11, 2010

AARP and Insurance Company Executive Salaries

With Health Care for America Now releasing yet another report about insurance company CEO salaries, it’s worth examining the compensation practices of one organization selling insurance that the HCAN report did NOT examine – AARP.  As previously noted, according to its own financial statements, AARP received $427 million, or more than one-third of its total operating revenue, from United Health Group in 2009 – all of it pure profit to the organization.  It made that money by imposing waiting periods on individuals with pre-existing conditions seeking to buy supplemental Medigap insurance from AARP.  And according to its 2009 Form 990 tax return filed with the IRS, AARP’s executives – and much of its staff – profited quite handsomely by denying coverage to seniors with pre-existing conditions:

  • Departing CEO Bill Novelli received a grand total of $1,647,419 in salary, deferred compensation, and benefits over his last several months in office.
  • New CEO Barry Rand also fared well, receiving a total of $648,640 for less than a full year’s work heading the organization (Mr. Rand was recently profiled in National Journal as “giving back” to the community through his quite lucrative service).
  • The AARP Form 990 lists a total of 529 individuals – that’s right, more than five hundred individuals – “who received more than $100,000 in reportable compensation from the organization.”

To put these staggering numbers in some perspective, it’s worth pointing out that the average Social Security benefit is $12,830 – meaning that at least 529 individuals at AARP make more than eight times what an average Social Security recipient receives.  And AARP’s salaries are high even by Washington standards – per capita income for the region in 2009 was $56,442, and the 529 individuals with more than $100,000 in compensation received nearly double the region’s average income.

Remember, all these high salaries were paid out by an ostensibly non-profit advocacy organization – and were funded by charging seniors “kickbacks” and/or imposing waiting periods for individuals with pre-existing conditions seeking coverage.  So the question must be asked: Whose interests are AARP executives looking out for – those of their senior citizen members, or their personal financial interests?