Arkansas seniors are justifiably angered by recent headlines that OptumRx, a pharmacy benefit manager (PBM), allegedly “endangered the lives of thousands of Arkansans and Americans who cannot afford insulin” due to a pricing scheme that potentially violates the Arkansas Deceptive Trade Practices Act.
This is hardly the first time OptumRx, a subsidiary of UnitedHealth (the nation’s largest health insurance company), has come under fire for raising the cost of medicine for the most vulnerable. For this reason, President Donald Trump sought to reign in bad actors in the healthcare industry by ordering his Department of Health and Human Services to require PBMs to give the rebate discounts they receive directly to Medicare patients.
But digging deeper—there is much more to this story than what reaches the headline.
Arkansas seniors may be surprised to learn that the entity potentially most responsible for enabling the PBM status quo is none other than an organization that purports to act on seniors’ behalf—the AARP. AARP actively opposed President Trump’s direct discounts to seniors and remains uncharacteristically silent as the Arkansas attorney general investigates OptumRx.
Why is the AARP’s army of well-heeled lobbyists shielding the PBM industry from reform? The answer can be found in a prophetic New York Times editorial written over 25 years ago. In 1996, AARP announced it was expanding its revenue stream beyond seniors’ membership dues and would begin accepting money to license its name and brand to corporate health care interests.
The New York Times warned, “The credibility of the American Association of Retired Persons (AARP) will be at stake if the organization proceeds with efforts to license its name to managed care plans for a fee… 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 AARP.”
Flash forward to today, AARP now raises over $1 billion annually from its corporate licensing agreements. Meanwhile, membership dues only account for a paltry 18% of its annual income. And interestingly enough, AARP’s number one financial benefactor, by far, is none other than UnitedHealth and its subsidiary OptumRx.
If you don’t think this tectonic shift in revenue models has impacted the AARP’s advocacy, you’re going to love my beachfront property in Fayetteville.
Unfortunately, AARP’s betrayal of seniors extends well beyond the PBM industry. An extensive new report in Fortune uncovered that another entity AARP permitted to “license” its brand is facing a federal investigation.
The article notes, “[AARP] agreed to promote a burgeoning chain of medical clinics called Oak Street Health… The deal gave Oak Street exclusive rights to use the trusted AARP brand in its marketing — for which the company pays AARP an undisclosed fee… Less than two months after announcing the AARP deal, Oak Street revealed it was the subject of a Justice Department civil investigation into its marketing tactics, including whether it violated a federal law that imposes penalties for filing false claims for payment to the government.”
The article is well summarized with its quote from David Himmelstein, a professor at Hunter College, “I think the vast majority of people signing up for these products are not aware that AARP is paid a very large amount for use of their name.”
This is crucial to keep in mind the next time you hear AARP attacking proposals that would give seniors direct discounts at the pharmacy counter or when they support legislation such as Build Back Better, which contains health care language designed to enrich its own financial benefactors while crushing seniors on fixed incomes with higher inflation.
Arkansas seniors — the AARP has, quite literally, sold you out.