One of the subplots to the health care debate I've been following is the cozy relationship between AARP and the Obama administration, as the group has thrown its full-throated support behind the Democrats' health care push even though their membership comes from the age group most opposed to Democratic health care proposals. Today, House Republicans have issued a report providing evidence that AARP is in a position to recieve tens of millions of dollars in "kickbacks" if Democratic health care legislation becomes law.President Obama and Democrats have proposed saving money to pay for health care legislation, in part, by cutting $162 billion in payments to Medicare Advantage, which allows Medicare recipients to choose privately-administered coverage. If these changes go through, millions of seniors who have chosen Medicare Advantage would lose their current coverage, forcing them into government-administered plans with less generous benefits. As a result, many of them would have to purchase policies to supplement traditional Medicare. Enter AARP.
In 2008, AARP generated $652.7 million in revenue by selling products like Medigap supplemental Medicare insurance, accounting for over 60 percent of the group's revenue, according to an analysis of its financial statements cited in the report released by the House Republican Conference.
If the House Democrats health care bill becomes law, the report argues, it would be a boon to AARP, because while Medicare Advantage plans will be required to pay out 85 percent of the money collected in premiums to claims made by policy holders, the requirement would only be 65 percent for the kind of Medigap policies sold by AARP.
"In other words, under the Democrat bill, seniors could pay as much as 20 cents more out of every premium dollar to fund 'kickbacks' to AARP-sponsored Medigap plans than Medicare Advantage plans," the GOP report charges.