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The News Hound

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What's AARP's priority? Health, or healthy profit?

Saul Friedman
Family & Relationships

June 30, 2007

Here is a puzzle for people who care about the survival of Medicare as the nation's only universal health insurance program: Is AARP ahead of the curve or throwing us one?

I refer to the organization's announcement in April that, in partnership with UnitedHeath Care and in a new agreement with Aetna, AARP will expand health insurance offerings for its 38 million members, beginning next year, with special emphasis on insuring people 50 to 64, who are too young for Medicare.

"AARP is driven by our mission to create a healthier America," said CEO Bill Novelli. "These relationships will make the marketplace better and will continue raising standards in health care" to meet members' changing needs.

Of course, AARP stands to earn more millions from commissions - called royalties - and the expansion would further privatize Medicare.

In 2003, AARP's sudden policy flip-flop provided the crucial support for late-night passage of the privatized Part D prescription drug benefit. And AARP has profited, selling several of the most popular Part D plans through UnitedHealth, including Medicare Advantage plans (HMOs, and PPOs), which compete with Medicare.

In addition, AARP's Medicare supplemental plans (Medigap) are among the best sellers, and AARP offers drugs-only Part D plans plus life insurance and coverage for hospital incidentals. In 2005, AARP reported nearly $380 million in royalties, mostly from insurance.

Next year, AARP's United Medicare Advantage policies will run for two years instead of one, thus locking in participants longer. And while United will offer health insurance for the 50-to-64 population, AARP says Aetna will focus on the needs of this population, many of whom cannot qualify for or afford insurance.

Aetna says it won't be able to cover everyone who applies, which suggests the company may "cherry pick" and deny coverage for applicants with previous health problems. But AARP's insurance program, which has 7 million subscribers and now covers more people over age 50 than any other provider, is aiming for 14 million subscribers by 2014 and more than $1 billion in royalties over the next decade. Rep. Pete Stark (D.-Calif.), a friend of Medicare, welcomed AARP's planned insurance offerings as a step toward public and private universal health care. Yet even as AARP is expanding its Medicare Advantage policies, Medicare advocates and congressional Democrats, led by Stark, are battling the insurance industry to cut or eliminate government subsidies for Medicare Advantage policies, because those policies cost more per patient than the government spends for traditional Medicare coverage. And the sales techniques to push Medicare beneficiaries into Medicare Advantage plans have been roundly denounced by lawmakers.

Oddly, although it is pushing Medicare Advantage policies, AARP has joined Democrats and most traditional-Medicare advocates in supporting cuts in Medicare Advantage subsidies. David Certner, AARP's chief lobbyist, told me, "We believe in a level playing field between traditional fee-for-service Medicare and Medicare Advantage plans." At the same time, AARP's John Rother, the group's director of legislation and public policy, denies that the group's expansion of Medicare Advantage offerings undercuts traditional Medicare.

Vicki Gottlich, senior Washington attorney for the non-profit Center for Medicare Advocacy, disagrees. AARP's effort to sell millions of Medicare Advantage plans will undermine the growing campaign for universal health care and the expansion of Medicare to cover every American, she said. "We are concerned that people aged 50 to 64 will just age into Medicare Advantage plans without considering the traditional Medicare program."

Judith A. Stein, director of the advocacy center, which represents people with Medicare problems, suspects AARP is double-dealing: "AARP will not be perceived as a truly independent advocate on Medicare if it's making hefty profits by selling insurance products that provide Medicare coverage, she says. "AARP's role in the market could give a big boost to the privatization of Medicare."

In an essay titled "Give the real Medicare program a chance," Stein wrote that because "the AARP brand name is widely recognized, many beneficiaries may switch from traditional Medicare into AARP's privately managed care plan based on the name alone. ... Private Medicare is not best for Medicare beneficiaries, and it's more expensive for taxpayers. Based on these standards and the history of Medicare, we cannot support the privatization of Medicare and we regret AARP's decision to do so."

Medicare officials announced in April that Medicare Advantage plans, already getting 12 percent more per patient than the cost of traditional Medicare, would get a 3.5 percent raise in 2008. While AARP says it opposes the higher subsidies, its own Medicare Advantage business undermines its argument, and I see no public evidence that it is putting its considerable lobbying clout into ending these subsidies, which will cost Medicare $8.1 billion next year.

But the insurance lobby, America's Health Insurance Plans, has formed a front group, the Coalition for Health Care Choices, which has recruited union and black and Hispanic leaders to lobby against cuts in Medicare Advantage subsidies, as well as support from subscribers who don't realize what's at stake. While AARP's motives may not be clear, what is clear is that every dollar that goes to AARP for its Medicare Advantage royalties comes out of traditional, original and struggling Medicare.

WRITE TO Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY, 11747-4250, or by e-mail at [email protected]. Copyright 2007 Newsday Inc.

AMA Television Ad Calls On Congress To Stop Medicare Doctor Cuts

Tue, 06/26/2007 -
Preserve Seniors' Access To Care

June 25, 2007 -- WASHINGTON - The American Medical Association (AMA) is now airing television ads calling on Congress to stop Medicare physician payment cuts to seniors. The ad, titled the Faces of Health Care, depicts seniors who will be hurt by looming Medicare cuts and the physicians who care for them.

"This television ad is part of our campaign to get Congress to stop Medicare physician cuts that will harm seniors," said AMA Board Chair Cecil Wilson, MD. "We are raising awareness of the severity of the problem."

Next year, Medicare will cut payments to physicians by 10 percent. Over nine years the cuts swell to about 40 percent, while practice costs increase 20 percent. Only congressional action can stop the cuts, and avert an access to care crisis for seniors who rely on Medicare.

"Sixty percent of physicians tell the AMA that next year's Medicare cut will force them to limit the number of new Medicare patients they can treat," said Dr. Wilson. "As the baby boomers begin to age into Medicare in just three short years, we're concerned that the cuts will mean that there simply won't be enough doctors able to care for all the new Medicare patients."

The AMA is encouraging seniors and their loved ones to contact their members of Congress to tell them we need action to stop Medicare cuts to physicians now. Americans can contact their members of Congress through the AMA's Patient Action Network Web site or at (888) 464-6200.

The AMA also published print ads earlier this month in Capitol Hill papers. The print ads call on Congress to stop next year's Medicare physician payment cut and replace the fatally flawed payment formula with one based on practice costs. The ad features a Medicare patient with high blood pressure, cholesterol and blood sugar levels with the headline, "A doctor would tell this patient he's in trouble. Too bad he may not have a doctor."

Source: AMA

I've seen the AARP/United health plans - reminds me of "Right Start" type of coverage. They can be beat both in terms of coverage/benefits and price by any number of current carriers/plans. The AAPR isn't doing the 50 - 64 year old clients any favors.

The 2 people whom I've quoted were so brainwashed that the "AARP is looking out for them" that they almost called me a liar when I compared current plans with theirs. I converted one to a new plan and the other would not return phone calls, so I let that one go. Hope that person enjoys his plan (including the 5K Rx deductible) when he needs it.

The only thing the AARP looks out for is the AARP!
If it is so clear that thes MA plans are draining medicare thenwhy the hell are they still around and why are they raising the subsidy? Talk about some freakin idiots.

AARP is definetly brainwashes people.
I find it interesting that AARP has an MA plan that runs for 2 years. Now that tells me their inside contacts in D.C. assured them these CMS subsidies are locked in that long. And as for those underage health plans, i'm not surprised they can be beat. Their other plans, including LTC, are not that strong. But perception is everything, and the consumer believes this company looks out for them.
AARP is the word of God to some people out there.

The questions to pose to clients is:

If their (AARP) intentions are good, why would they only endorse one insurance carrier for health insurance?
AARP is the word of God to some people out there.

The questions to pose to clients is:

If their (AARP) intentions are good, why would they only endorse one insurance carrier for health insurance?

Excellent point. I'll have to use that next time I talk to an AARP prospect.

AARP is their "God" because they cater to the "I'm living on a fixed income" concept. (I am so tired of hearing that.)

I believe if a direct mail piece was put together that started out with something like:

"Are you trying to make ends meet living on a fixed income? Our agency has saved thousands of seniors, living on a fixed income, a substantial amount of money on their Medicare Supplement policies..."

If I want to get a seniors attention, and show them that I am on "their side", all I have to do is say something like "it must be really tough living on a fixed income". "I think I can help you keep a little more money in your pocket."

Or, "I'm sure saving every penny you can has become incredibly important to you now that you are having to live on a fixed income".

I almost think people are pre-programmed at birth so when they reach the age of 65 they automatically start saying "I'm on a fixed income you know". Some days I wish I was on a "fixed income". :D
My rebuttal is: Yeah my dad loved being on a fixed income. House paid off, no debt, kids on their own, money in the bank, and just living off his monthly checks like Ss, pensions and interest.
When you talk about insurance and AARP, do not mention AARP.

Client: We have AARP
Me: How do you like United Health care?
Cleint: We love it...they pay everything...blah blah blah
Me: I have numerous clients with plan F as well, they love it too. However, they do not pay that much to have it.

Leave it there. I have done that with BCBS of KC. Either they are going to say how much or that is nice. The first one is a sale (provided they can pass underwriting) and the second is, for the most part a lost cause until the next rate increase.