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Hmmm: Is the AARP getting “kickbacks” from Obamacare?

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By Michelle Malkin  •  September 22, 2009 10:19 PM

AARP members who are still wondering why their leaders in Washington want to sell them out on Obamacare, pay attention.

The GOP has uncovered one very lucrative possibility: Kickbacks.

Here’s the deal:

This week the Centers for Medicare and Medicaid Services announced it was investigating Humana for providing “misleading” information regarding the Administration’s proposed cuts to Medicare Advantage policies-and prohibited other Medicare Advantage plans from providing similar information on how Democrat health “reform” could take away their current coverage.

Yet the Administration’s edict prohibiting plans from communicating with their beneficiaries failed to include AARP, which sponsors a Medicare Advantage plan but has been a prime advocate of Democrats’ government takeover of health care-quite possibly because AARP has been supporting a health care overhaul from which it stands to gain overall handsomely. Even as AARP advocates for cutting Medicare Advantage plans by more than $150 billion, an analysis of the organization’s operations reveals that it stands to receive tens of millions of dollars at the expense of seniors’ medical care-with Democrats’ full approval:

* The Congressional Budget Office has previously estimated that the cuts to Medicare Advantage plans proposed in Democrats’ government takeover of health care (H.R. 3200) would cause millions of seniors to lose their current plan and enroll in government-run Medicare.

* Because the government-run Medicare benefit is less generous than most private health plans, the independent Medicare Payment Advisory Commission found in June that more than nine in ten seniors not in nursing home settings utilize some form of Medicare supplemental insurance. While many of these individuals currently rely on Medicare Advantage plans for the extra benefits they provide to seniors, many would be forced to purchase supplemental Medigap policies should their existing Medicare Advantage plans be taken away from them due to Democrats’ government takeover of health care.

* A review of its financial statements finds that in 2008, AARP received more than half a billion dollars in revenue from selling products like Medigap supplemental insurance policies-$652.7 million in direct “royalties and fees,” and an increase of more than 31 percent from the $497.6 million in similar revenue AARP generated in 2007.

* Royalty revenues now comprise more than half-60.3 percent-of all AARP revenues; a Bloomberg news analysis published in December found that in 1999, royalties comprised only 11 percent of the organization’s total revenues.

* The Bloomberg article-which highlighted what one observer called AARP’s “dirty little secret”-profiled seniors who felt betrayed after paying hundreds of dollars above market price for AARP-branded coverage. One noted that “AARP has great buying power, and people should be able to get the best deal….This is unconscionable, what AARP has allowed to happen.” Another disillusioned senior wrote to the organization’s leadership asking whether AARP had a “‘special relationship’ with [insurance carriers] by which it receives commissions, incentives, rebates, or dare I say ‘kickbacks?’”-and when he arrived at AARP headquarters for a tour, was promptly escorted out of the marble-covered atrium.

* While H.R. 3200 would place strict price controls on Medicare Advantage plans-requiring them to pay out 85 percent of premium revenues in medical claims-Medigap policies face a far less strict 65 percent requirement. 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 higher prices charged by AARP plans, and the organization’s increasing dependence upon revenue from “royalties,” provide tangible evidence why AARP would support cuts to Medicare Advantage that would likely increase their “kickbacks” from Medigap plans.

A Hill source summed it up for me this way: “AARP has endorsed a huge reduction in funding of Medicare Advantage, which touches over 10 million middle-lower income seniors. If Medicare Advantage funding is reduced, and seniors are forced out of the program, they become potential buyers of the heavily-promoted and very profitable Medicare Supplement program sponsored by AARP (MediGap is 70% of AARP’s annual income). Medicare Supplement is a huge source of revenue to AARP. At a minimum, AARP should be required to disclose this every time they discuss Medicare Advantage. Medicare Advantage plans are making important contributions to the Medicare program. These plans focus on prevention and offer disease management programs for beneficiaries with chronic diseases. This focus on chronic diseases is not seen anywhere in MediGap. New research demonstrates that Medicare Advantage plans have reduced unnecessary hospitalizations and readmission rates for beneficiaries with diabetes and heart disease. By reducing the need for hospitalization and emergency room care, private plans are not only improving the health and well-being of Medicare beneficiaries – but also achieving greater efficiencies and cost savings. The House proposal (supported by AARP) would disproportionately affect beneficiaries in rural counties and areas where fee-for-service expenditures are relatively low. The current provisions in the bill would result in reductions in Medicare Advantage funding by more than 20 percent in many of these areas and likely limit seniors access to coordinated care through the Medicare Advantage program. The areas that are impacted the most by the bill are the same geographic areas where Congress has acted twice since 1997 to establish payment floors for private plan options in recognition of the inadequacy of existing FFS rates as the basis for Medicare Advantage payments.”

Philip Klein at the American Spectator asked the AARP for comment — and received an evasive statement decrying “scare tractics” in response.

Card-carrying members might want to ask AARP headquarters about this:

Toll-Free Nationwide: 1-888-OUR-AARP (1-888-687-2277)

And the question one AARP member asked his AARP representative arises again: “Do you work for us or do we work for you?”

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