The credibility of the American Association of Retired Persons will be at stake if the organization proceeds with efforts to license its name to managed care plans for a fee. The 33 million-member organization is a powerful lobbying group that tries to sway Congress on issues important to the elderly and provides services that are supposed to benefit its members. But A.A.R.P. also earns substantial income — amounting to about 40 percent of its $345 million budget — by charging fees for endorsing selected auto, health and homeowner insurance policies. That raises a potential conflict of interest because the policies that might be best for the elderly are not always the policies that are best for the bank account of the A.A.R.P.
The A.A.R.P. collects about $100 million a year from the Prudential Insurance Company of America for putting A.A.R.P.’s seal of approval on Prudential insurance policies — primarily Medigap plans, which pay some of the costs Medicare does not cover. But that income, which is based on the premiums Prudential collects, is eroding as healthier A.A.R.P. members have begun to enroll in managed Medicare plans, which include some Medigap benefits, or to buy less expensive Medigap policies from insurers that, unlike Prudential, offer discounts to younger applicants. So A.A.R.P. plans to recoup the lost income by selling its endorsements to managed Medicare plans as well.
It has hired a consulting firm, Health Benefits America, to evaluate plans in about a dozen regions. A.A.R.P. says it will use the data — which will cover financial reserves, customer satisfaction, inoculation rates and other treatment practices — to decide which plan or plans to endorse in each region. A.A.R.P. will charge for its endorsement, though it has not decided how the fee will be set. That decision is crucial because it will determine whether the organization’s endorsement will be tainted by financial self-interest.
By limiting its endorsement to a single plan in a region, A.A.R.P. could maximize its fee. In contrast, if it endorsed every plan that met its quality standards — thereby providing information of great value to the elderly — the seal might be worth relatively little to the managed care companies.
The responsible course is for A.A.R.P. to let members know about every plan that meets its standards. Indeed, the only way members can trust the group’s endorsement is if it strips its own financial well-being from its calculations. The group should waive fees, or at least limit them to covering the cost of administering the evaluation program.
The taint of financial self-interest is more than hypothetical. Some critics charge that the organization’s tongue-tied role in the raging health reform debate two years ago and refusal to provide its members with information about Medigap policies cheaper than its own followed from its vested interest in private insurance companies. As long as A.A.R.P.’s bank account is linked to its policies, charges of financial self-dealing will never go away.
If A.A.R.P. cleanses its finances, it could serve as a constructive referee for managed Medicare. It could provide disinterested information to its members about each plan’s treatment practices and, once measures are available, treatment outcomes. It could monitor marketing to insure that advertising is accurate. It could provide arbitration of disputes. But before A.A.R.P. goes forward, it needs to remember that referees do not charge fees to a select group of teams.