The Medigap Money Trap


The American Association of Retired Persons (AARP) is “a membership organization leading positive social change and delivering value to people age 50 and over through information, advocacy, and service,” as they describe themselves on their Web site.  They’re “perceived as the most important voice for older people,” in the words of a former executive.  And yet, they were strong supporters of ObamaCare, which will do an even more thorough job of wrecking health care for seniors than the rest of us.

Why would they do this?  Because tax-exempt “non-profit” AARP stands to make a billion dollars from ObamaCare.

The House Ways and Means Committee has been taking a long, hard look at AARP over the past year, and just released a report of their findings, entitled “Behind the Veil: The AARP America Doesn’t Know.”  I would have called it “Around the World To the Left,” in honor of the way AARP members tend to leave their left-turn signals running all the time after they arrive in my home state of Florida.  (I kid because I love, seasoned citizens of the Sunshine State!)

There’s a lot of information packed into the Ways and Means report, but the basics of the ObamaCare story are simple enough.  AARP collects dues from its members, but it actually makes far more money from its business relationship with for-profit companies, which pay it royalties for its endorsement.  Seniors take AARP endorsements very seriously.  By 2009, these royalties accounted for 46% of its revenue.

The largest of AARP’s business partners is United Health Group, which sells Medigap insurance plans, to cover the difference between what Medicare pays, and the total cost of health care.  Thanks in no small measure to the AARP seal of approval, United is the leading provider of these plans.

The other popular method for covering these costs is the Medicare Advantage program… which ObamaCare just happens to destroy.  The Obama Administration itself estimates that seven million seniors will lose their Medicare Advantage plans.  This will result in “a massive migration of seniors to Medigap plans,” which Ways and Means says will produce a windfall for AARP that “could exceed $1 billion during the next 10 years.”  That’s an impressive haul for a “non-profit” organization!

The authors of the report – Republicans Wally Herger of California, Charles Boustany of Louisiana, and Dave Reichert of Washington – want the IRS to investigate AARP’s lobbying efforts on behalf of ObamaCare, and consider revoking their tax-exempt status.

There will be a lot more of these attempts to use Big Government for fun and profit.  Not to say we didn’t have plenty of them already, but ObamaCare is a giant windmill that will generate windfalls for the politically connected, at the expense of everyone else – including the people nominally represented by power brokers like AARP. 

 Politico had a story today about how six pages of ObamaCare just erupted into a thousand pages of regulations.  There’s a lot of money hidden in those pages.  It will not be surprising to see powerful corporations step on the little people in their haste to collect it.  That’s what always happens, when Big Government merges with Big Business in pursuit of big bucks.  What AARP did was reprehensible, and possibly illegal, but it wasn’t illogical.