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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.
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.
