As evidenced by AARP State Director Sam Wilson’s recent Kenosha News op-ed, AARP Wisconsin has been pushing hard for a bevy of new, federal healthcare regulations.
These changes, supported by House Speaker Nancy Pelosi, would fundamentally reshape America’s Medicare system, imposing draconian, nationwide price controls over the cost of prescription drugs. Why, then, is the AARP supportive of such a radical policy? For that answer, simply follow the money.
It may surprise many to learn that the AARP now receives hundreds of millions of dollars each year — and billions over the last several years — in product royalties from the largest health insurance company in America: UnitedHealthcare. UnitedHealthcare also wholly owns one of the largest PBMs in the country. Many of their products are marketed and sold under AARP’s brand to AARP members – which is why the AARP has faced lawsuits alleging it receives illegal kickbacks. As Juniper Research’s Chris Jacobs explains:
“In fact, the organization’s “royalty fees” — which the organization claims constitute payments for the use of its logo, brand, and intellectual property — represent well over half (57.6%) of AARP’s total annual revenues. In 2019, AARP received nearly $1 billion in such revenue from what more appropriately constitutes the sale and marketing of products to members, equal to nearly double the revenues generated by membership dues, grant revenue, and contributions combined.”
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By all accounts, this arrangement has been a uniquely lucrative financial partnership for both parties. In fact, corporate royalties received by AARP now dwarf what the organization receives in dues from its own members. If Pelosi’s plan becomes law, AARP’s corporate funders — big health insurers and PBM middlemen — would, in the near term, save massive revenue by not having to cover the costs of certain drugs.
Rather than help seniors, Medicare price controls would have a devastating impact on their access to care, making medicines, treatments, and prescriptions much harder to obtain. By capping drug prices, the AARP-backed proposal would push drug manufacturers into a financial corner, forcing them to reduce drug prices below the market rate and recoup the added costs elsewhere. Drugmakers would slash their production of existing medications and reduce innovation as a result. And ultimately, Medicare recipients — American seniors — would be left with fewer, less innovative options at the pharmacy counter.
Contrary to what AARP wants you to believe, nothing in the plan requires 100 percent of any so-called drug cost “savings” to be passed on to individual seniors or patients. The AARP’s Sam Wilson might argue that price controls would reduce prescription drug costs for Wisconsinites, but there’s no provision to guarantee such an outcome. Meanwhile, the federal government’s own budget analysts and economists agree that under Pelosi’s plan, healthcare investment will decline. And seniors, who benefit most from the development of new and innovative medicines, would face the consequences.
People are free to draw their own conclusions on what influence Big Insurance has over AARP’s positions. That said, we can know one thing for sure: the AARP-supported policy of Medicare prescription drug price controls would only harm American seniors. There may have been a time when few felt to need to question AARP’s motivations, but that time has certainly long passed.
Jon Decker is the executive director of American Commitment, a Washington-based organization that advocates for free markets, economic growth, constitutionally-limited government, property rights, and individual freedom.