In addition, the Ways and Means health and oversight subcommittees have scheduled a joint hearing Friday to grill AARP officials about the organization’s financial ventures.
“This hearing is about getting to the bottom of how AARP’s financial interests affect their self-stated mission of enhancing seniors’ quality of life,” said Rep. Wally Herger (R-Calif.), who chairs the panel’s health subcommittee. “It is important to better understand how AARP’s insurance business overlaps with its advocacy efforts and whether such overlap is appropriate.”
AARP President Lee Hammond said Wednesday that the organization “fully rejects” the Republican allegations.
“AARP has long maintained that we would gladly forgo revenue in exchange for lifetime health and financial security for all older Americans,” Hammond said. “We have been conducting ourselves in pursuit of that mission for more than 50 years, with the same focus on affecting both public policy officials and the private marketplace to achieve our social welfare goals.”
The hearing and the study mark the latest developments in a sustained Republican attack on the seniors lobby for its support of Obama’s health-care law, which AARP says will lower costs and increase the quality of care for older Americans. Republicans say the group is working against its members’ interests because of planned cuts in the growth rate of Medicare spending, primarily for subsidized Medicare Advantage plans.
AARP, previously known as the American Association of Retired Persons, began in the 1950s as a group of retired schoolteachers that sought affordable insurance coverage. It has regularly come under fire over the years for collecting royalties and other fees from the sale of insurance policies and other products. “It’s a new round of the same old questions,” Hammond said in a conference call with reporters Wednesday.
The previous wave of criticism came in 2003, when Democrats attacked the group after it endorsed President George W. Bush’s expansion of Medicare prescription drug benefits. Many Republican lawmakers hailed AARP at the time.
AARP ranks with the National Rifle Association and the U.S. Chamber of Commerce among Washington’s largest and most durable lobbying groups, claiming about 37 million members and spending more than $22 million on lobbying in 2010. The group reported $1.4 billion in revenue in 2009, nearly half of which came from royalties and other fees from the sale of insurance policies, credit cards, travel packages and other products that carry the AARP name, tax records show.
The report released Wednesday by Herger and Rep. Dave Reichert (R-Wash.) alleges that AARP could make more than $1 billion over the next 10 years from the sale of supplemental Medicare, or “Medigap,” policies under the health-care law. The report also says Medigap policies are more profitable for the seniors lobby because of the type of royalty deals worked out with the insurance carrier, UnitedHealthcare.
The lawmakers, who first began leveling criticism at AARP during the 2009 health-care debate, also said they have asked the IRS to examine the group’s tax-exempt status.
AARP “operates as a massive for-profit enterprise” that “conflicts with its legal requirements” as a nonprofit group to promote the social welfare of its members, according to the GOP report. “AARP activities and business arrangements continue to raise concerns about which interests are being served at AARP — those of its 40 million members or the AARP business portfolio.”
AARP says it has no idea what the impact of the health-care law might be on the branded policies it offers, and it noted that most insurance companies were strongly opposed to the law. Officials said brand royalties allow AARP to keep its $16 membership fee low, a strategy followed by many nonprofit groups to provide buying power for members.
“AARP is no more an insurance company than we are an online travel company or an online photography site, all of which contribute royalties to fund AARP’s mission,” Hammond said.