Despite massive and systemic problems with for-profit Medicare plans denying care to seniors while costing the government more than $7 billion annually in excess fees, the leading advocacy group tasked with protecting older Americans is welcoming the privatization of the national health insurance program — while earning as much as $814 million annually from insurers advertising the plans.
The state of affairs lays bare a conflict inside AARP, the major advocacy organization for Americans fifty and older, over how to approach the regulation of Medicare Advantage, the for-profit version of Medicare.
On one hand, AARP, formerly known as the American Association of Retired Persons, collects enormous amounts of revenue from Medicare Advantage insurers to supplement huge executive salaries (the nonprofit’s CEO made $1.3 million in 2020). On the other hand, the organization is expected to advocate for the best interests of their 38 million members — and the 28.4 million Americans now covered by Medicare Advantage plans, or nearly half of all Medicare beneficiaries.
“The AARP makes money through its own Medicare Advantage plans,” said Don Berwick, an administrator of Centers for Medicare and Medicaid Services (CMS) in the Obama administration who has emerged as a prominent critic of the program. “It would be understandable that it would try to protect one of its major income sources.”
AARP had a chance to call out problems with Medicare Advantage denying care to patients — arguably the most important issue facing its members enrolled in Medicare Advantage — when CMS, the federal agency that oversees Medicare, released a request for comments about the program at the beginning of August. But in its resulting August 30 letter, AARP hardly touched on care denials, instead recommending modest increases in transparency on issues like racial equity and telehealth funding — while championing the expansion of the privatized insurance program.
“Throughout the current public health emergency, we have supported the expansion of supplemental benefits in [Medicare Advantage] to help alleviate the unprecedented health care crisis brought about by the COVID-19 pandemic,” noted the letter.
Meanwhile, AARP has been reaping the financial benefits of its own Medicare Advantage plan, which it has been offering in partnership with the for-profit insurance giant UnitedHealthcare since 2003. Starting in 2021, AARP also launched a lucrative partnership with the major Medicare outsourcing firm Oak Street Health, which is a participant in the ACO Realizing Equity, Access, and Community Health (REACH) program that privatizes Medicare benefits for seniors without their consent, as reported by Kaiser Health News in June.
In 2021, AARP earned $814 million in “royalties” for its health care work, according to a recently released financial statement reviewed by the Lever. That figure is more than double what the organization collects in dues and is 20 percent higher than 2018.
“At the direction of the third party insurance carriers, the plan pays AARP, Inc. a portion of the total premiums collected for the use of its intellectual property, which is reported as royalties in the consolidated statements of activities,” AARP explains in its latest tax filing.
Representatives of AARP did not respond to repeated requests for comment.