President Barack Obama is scheduled to speak Friday via satellite to a convention sponsored by AARP. His speech will likely extol the virtues of “Obamacare,” and engage in scare tactics about conservative proposals to make Medicare sustainable. But here are five facts you’re unlikely to hear from the president, or AARP, about how each treats seniors:
First, while AARP poses as a disinterested senior advocate, it functions as an insurance conglomerate, with a liberal lobbying arm on the side. AARP depends on profits, royalties and commissions to make up more than 50 percent of its annual revenues. Membership dues from seniors account for only about 20 percent. The sums involved aren’t chump change: AARP’s $458 million in health insurance revenue in 2011 would rank it as the nation’s sixth most profitable health insurer.
Second, AARP wins when seniors lose. Because AARP receives a “royalty fee” of 4.95 percent of every premium dollar paid by seniors buying Medigap insurance from the organization, AARP earns more profit when seniors pay more in premiums. Even former AARP executives admit that the billions of dollars raised from these business enterprises have compromised the organization’s mission and independence.
Third, AARP’s policy positions just happen to coincide with its financial interests. “Obamacare,” which AARP lobbied heavily for, could yield the group windfall profits of more than $1 billion over the next decade by forcing seniors off Medicare Advantage plans and into Medigap supplemental coverage. Conversely, AARP engaged in a secret lobbying campaign to block Medigap reforms last year that by one estimate would have saved nearly 80 percent of seniors an average of $415 per year – but cost AARP billions in profits.
Fourth, AARP knows it can protect its financial interests by aligning with Democrats, no matter what its members think. That’s one reason why AARP endorsed “Obamacare,” though the organization’s call response logs indicate opponents outnumbered supporters by more than 50 to 1.
Consider: One senior AARP executive wrote the White House in November 2009, saying “we will try to keep a little space between us” on health care – because AARP’s “polling shows we are more influential when we are seen as independent, so we want to reinforce that positioning….The larger issue is how best to serve the cause.”
“The cause” in this case is liberalism, the Obama agenda and “Obamacare” in particular.
Fifth, the Obama administration has reciprocated AARP’s support by giving the group preferential treatment. “Obamacare” exempted Medigap insurance – a market AARP dominates – from virtually all its new mandates, including the ban on preexisting condition discrimination. The Department of Health and Human Services exempted Medigap plans from insurance rate review, though AARP, whose plan is the most popular form of Medigap coverage, makes more in profit the higher premiums rise. Though the administration has publicly attacked other insurance companies with much smaller profit margins, it has not openly criticized AARP’s business practices.
It’s not that AARP and the administration don’t know better – they do. The AARP executive who wrote White House officials knew that AARP had to be “seen as independent.” He wasn’t independent, of course – comments about “serv[ing] the cause” make that clear. But he knew he had to appear impartial to AARP’s members.
And as a former state insurance commissioner, Health and Human Services Secretary Kathleen Sebelius must know that percentage-based “royalty” payments create a strong incentive for abuse. Nonetheless, Sebelius called AARP the “gold standard” for “accurate information” – though AARP makes more profits the higher the Medigap premiums rise for seniors.
As much as Obama claims to eschew Chicago-style politics, this administration’s crony relationship with AARP gives every appearance of being an old-fashioned protection racket. The administration lets AARP make billions of dollars in profits off seniors, as long as they continue to support “the cause” and funnel those profits toward supporting Obama’s liberal agenda.
That’s why the administration won’t speak out against AARP’s abuses; why Democrats who said they ended “the worst insurance industry abuses” in “Obamacare” exempted Medigap insurance from virtually the entire law, and why the Obama campaign is so willing to use AARP as a political shield in running negative attack ads against his opponent.
The president recently said, “no American should have to spend their golden years at the mercy of insurance companies.” What he won’t tell seniors today is that, thanks to his administration’s protection racket, that isn’t true.
Millions of seniors have been — and will continue to be — taken advantage of, because this administration’s protection racket turns a blind eye toward the insurance industry abuses of the AARP.
This post was originally published at Politico.