AARP Makes $2.8 Billion Off Of ObamaCare

Avik Roy explains:

Here’s how it works. AARP isn’t your every-day citizens’ advocacy group. The AARP is also one of the largest private health insurers in America. In 2011, the AARP generated $458 million in royalty fees from so-called “Medigap” plans, nearly twice the $266 million the lobby receives in membership dues.

Medigap plans are private insurance plans that seniors buy to cover the things that traditional, government-run Medicare doesn’t, like catastrophic coverage. Medigap plans also help seniors eliminate the co-pays and deductibles that are designed to restrain wasteful Medicare spending…ObamaCare’s cuts to Medicare Advantage will drive many seniors out of that program, and into traditional government-run Medicare, which will increase the number of people who need Medigap insurance.

Benefit to AARP: $1 billion over the next ten years. Plus there is another $1.8 billion subsidy because AARP’s insurance is exempted from the general health insurance reforms. Chris Jacobs explains:

  1. AARP’s lucrative Medigap insurance was exempted in ObamaCare from the ban on pre-existing conditions; medical loss ratio requirements; caps on insurance industry executive compensation; and the tax on all other health insurance plans.
  2. The Department of Health and Human Services…also exempted Medigap insurance from premium rate review — even though AARP, which carries the plan with the largest market share, earns greater profits the more seniors pay in premiums.
  3. At a conference hosted by America’s Health Insurance Plans in March 2010, HHS Secretary Sebelius encouraged the insurance industry to give up some of its profits, at a time when health insurance profit margins were about 2 percent. Yet neither Secretary Sebelius nor anyone else in the Administration ever criticized AARP for making a profit margin of nearly 5 percent on its Medigap insurance.

Comments (11)

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  1. Nichole says:

    AARP is gaining a profit there…

  2. Ender says:

    Surprise, surprise, AARP scheming with the government.

  3. Buster says:

    What a scam! Pretend to be an advocate for a group and then work against their interest when it becomes more lucrative.

  4. Robert says:

    Well if you get in with the AARP you get in with a very large voting bloc.

  5. Alex says:

    That’s deplorable. It seems left-leaning politicians love corporations, but only when they plot with them instead of against them.

  6. August says:

    This isn’t a conservative/liberal thing; this is a fundamental problem with government today. The outside money that AARP brings to the table gives them access to and influence over politicians.

    I’d like to see how Romney avoid running afoul of AARP.

  7. hoads says:

    AARP is also a tax-exempt organization. Surely its insurance portion is not, but I don’t know. Anyway you look at them, however, they are not nonpartisan.

  8. Lucy Hender says:

    Sounds very convenient to AARP. They can’t lose as long as they have healthcare dollars coming in.

  9. Richard Williams says:

    Robert, that’s the problem. If you are a member of AARP, you add to their total, which gives them credibility and political clout, even though you may oppose the political direction they are supporting. AMAC, for one, offers similar discounts, with a more conservative philosophy, more in tune with seniors best interests. Dump your AARP membership, and look for an organization that has your best interests foremost.

  10. Jordan says:

    +1 August. Go go lobbying.

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