AARP says it opposes the proposed change to Medigap because it would harm older Americans, even though they may pay lower premiums. The group warned that seniors would suffer because of the higher deductibles and co-pays, and it said seniors prefer the certainty associated with lower deductibles and co-pays.
A study by the Kaiser Family Foundation last year found that Medigap premiums would fall so drastically under some reform plans that most seniors would save up to hundreds of dollars per year.
A separate proposal for revising Medicare — and perhaps the most widely discussed — involves raising the eligibility age from 65 to 67. Obama discussed this idea with House Speaker John A. Boehner (R-Ohio) in the summer of 2011 during efforts to resolve the debt-ceiling crisis. More recently, GOP lawmakers have called for raising the eligibility age as part of a deal to avert the fiscal cliff. AARP objects to the idea.
Health-care experts and former AARP executives said raising the eligibility age for Medicare would hit the group’s revenue because Medigap is available only to individuals who qualify for Medicare. Under the proposal, 65- and 66-year-olds would no longer be able to buy Medigap coverage, and AARP’s royalties could fall.
But raising the age also could benefit AARP financially because the group could offer other insurance products to seniors cut out of Medicare and Medigap.
Frederick R. Lynch, a professor at Claremont McKenna College who wrote a book about AARP, said the group’s opposition to Medicare-related changes is motivated by the needs of its members. “This is a battle they were born to fight: to preserve Medicare and Social Security,” he said.
Bill Novelli, who was AARP’s chief executive from 2001 to 2009, said that he “never saw financial incentives come into play” when the group was setting its advocacy agenda during his tenure. But, he added: “It’s fair to say that AARP does have a financial interest in Medigap insurance because it’s a significant revenue-raiser for them. If Medigap were somehow reduced, then AARP would have a financial reduction.”
Three Republican members of the House Ways and Means Committee — Wally Herger (Calif.), Dave Reichert (Wash.) and Charles W. Boustany Jr. (La.) — criticized what they called a conflict in a report last year that questioned whether AARP was letting its financial interests dictate its public positions.
Advocacy and products
AARP has been offering products to its members since it was founded in 1958 by a retired high school principal who was outraged that former teachers lacked health insurance. Medicare was passed by Congress in 1965 to provide health insurance to the elderly, but Medigap policies emerged to help pay catastrophic costs, co-pays and deductibles that Medicare doesn’t cover.