AARP Rips Off Its Own Members
Our household has become an AARP target. I’m suspicious by nature, so the unrequested slick mailings made me wonder why AARP could afford so much junk mail. Now I know.
AARP uses the royalties and fees to fund about half the expenses that pay for activities such as publishing brochures about health care and consumer fraud—as well as for paying down the $200 million bond debt that funded the association’s marble and brass-studded Washington headquarters.In addition, AARP holds clients’ insurance premiums for as long as a month and invests the money, which added $40.4 million to its revenue in 2007.
‘Fattening the Coffers’
“At the end of the day, it’s all about fattening the coffers of the organization,” says Thomas Orecchio, who was chairman of the Arlington Heights, Illinois-based National Association of Personal Financial Advisors until September. AARP, he says, is sponsoring insurance for its members at inflated prices.
I first became critical of AARP during the Medicare expansion debate in 2003. AARP’s actions seemed to place the organization itself ahead of its members, something that the Bloomberg article mentions.
Nowhere were AARP’s conflicting roles more evident than in its lobbying in support of a 2003 bill proposed by President George W. Bush to expand Medicare, the federal health insurance program for people older than 65.The bill, which for the first time added a prescription drug plan to Medicare, passed by a vote of 220-215 in the House of Representatives and 54-44 in the Senate. Thousands of AARP members complained that the legislation was a bad deal for seniors because it provided incomplete coverage and raised costs for seniors with low income.
After the Medicare bill was signed into law by Bush in December 2003, AARP was able to expand its contract with Minnetonka, Minnesota-based UnitedHealth Group Inc., which underwrites AARP’s Medicare supplemental insurance plan.
AARP increased its annual revenue from royalties by $197 million to $497.6 million from 2003 to 2007.
One thing is clear: AARP is out for itself, not its members. I used to get a warm and fuzzy about AARP years back, but not anymore. It is an organization that has profited from that warm and fuzzy feeling at the expense of its members who pay more for services than they would otherwise. Warm and fuzzy? That leaves me feeling as cold as the marble in its headquarters.
