AARP! AARP!

AARP was founded in 1958 by a medical doctor, Ethyl Percy Andrus, under the name “American Association of Retired Persons” and evolved from the good doctor’s other foundation, the National Retired Teachers Association (founded in 1947 to promote productive aging) and was intended to solve the issue of medical coverage for retired teachers. According to the organization’s own Website, “At that time, private health insurance was virtually unavailable to older Americans; in fact, it was not until 1965 that the government enacted Medicare, which provides health benefits to persons over age 65. Dr. Andrus approached dozens of insurance companies until she found one willing to take the risk of insuring older persons. She then developed other benefits and programs, including a discount mail order pharmacy service.”

Today, the AARP is perhaps the largest non-governmental organization that lobbies for seniors, and it provides its own set of Medicare supplemental policies, which are provided (read: “sold”) to seniors based on a menu selection process... as well as other forms of insurance (e.g., automobile) for seniors. Over the years, the AARP has pissed off a lot of politicians with its asks and policies. In 2003, it angered Democrats and got a ringing endorsement from Republicans as it supported Republican President George Bush in his changes to and expansion of Medicare pharmaceutical benefits.

That the AARP collects massive fees from the insurance packages it provides seniors (marketed by the AARP but covered by its selected private insurance companies) brought it under fire at the time and continues to generate controversy. The December 5, 2008 Boston.com (the Boston Globe) noted: “[The AARP] collects hundreds of millions of dollars annually from insurers who pay for AARP's endorsement of their policies... The insurance companies build the cost of these so-called royalties and fees, which amounted to $497.6 million in 2007, into the premiums they charge AARP members, according to AARP's consolidated financial statement for that year... AARP uses the royalties and fees to fund about half the expenses that pay for activities such as publishing brochures about health care and consumer fraud - as well as for paying down the $200 million bond debt that funded the association's marble and brass-studded Washington headquarters.”

Today, that “fee structure” has brought the AARP into the crosshairs of their former supporters, the new conservative Republican majority in the House of Representatives. With their clear plan to repeal “Obamacare,” these Republican Congressmen and women believe they need to decimate AARP’s credibility with older Americans to garner senior support. AARP’s unspeakable crime: they supported Obama’s healthcare reform. With AARP’s insurance “mark-ups,” they are sitting ducks.

Republican chairs in powerful Ways and Means health and oversight subcommittees are holding hearings with a clear message for their constituents: AARP doesn’t care about seniors; it cares about generating fees for itself. The justification for one such hearing was presented in the March 30^th Washington Post: “‘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.’”

The AARP response: “AARP President Lee Hammond said [March 30^th] 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 pendulum swings back and forth on the hot political issues. One group of Americans – apparently those who are confident they will always have private insurance coverage, won’t lose because of pre-existing conditions or hit any lifetime caps… or believe they are too young and fit to need such coverage – simply doesn’t want what they see as an inefficient government forcing folks into plans and coverage they don’t want or think they don’t need. The others are scared for their medical future.

But the writing on the employment wall – as many unions have discovered – is that healthcare costs are simply too large for most companies (and now state and local governments) to cover to past levels (if at all). Workers must pay more. And if you read the papers, you can see rolling reports of insurance companies foisting 20%... sometimes double that… increases on policy-holders. Think we can afford that constant price gouging of the private system?

Further, in the new workforce paradigm of “contract employment” – the vast network of subcontractors who seem like fulltime employees until your read their contracts (work for only a stipulated time period and not beyond… although such agreements are routinely renewed) – company benefits retirement and health insurance are notably absent. Add to that list the ever-growing number of “permanently unemployed” – folks who have exceeded their unemployment benefits, as well as part-timers, who are not even counted in the unemployment statistic anymore – and you have a growing body of people who fall into the uninsured or Medicaid hole… which the taxpayers and folks who pay for hospital care through insurance are covering anyway.

Healthcare bankruptcy is almost uniquely an American tradition in the developed world. The healthcare reform legislation is flawed and needs fixing, but what would life be like if you didn’t have healthcare coverage? And what about holding hearings on whether our federally elected representatives – who are provided amazing healthcare and retirement benefits for life even if they only serve short terms (like two years!) – should lose those benefits when they are out of office… like most of the rest of us.

I’m Peter Dekom, and to those who want to throw the baby out with the bath water, be careful what you wish for…