Right now it’s time to buy or renew your Medicare coverage if you are 65 or older. As I mentioned in a previous article, the options are numerous and can be confusing. You have to plan on spending days reviewing all the options and evaluating which are best for you. I am being deluged, in the mail and on TV, with promotions from AARP, trying to sell me Medicare Advantage Plans. The text of the written and spoken materials deliberately states that you should buy your insurance through AARP. It does not mention that there are other options.
AARP can be confusing. There is AARP.org, the traditional organization that advocates for seniors, gives advice, publishes a magazine, etc. When you turn 50, AARP sends you a letter suggesting that you join. How depressing. Does the whole world know I’m 50? I always wondered how they got my name and knew my DOB. From a federal source, perhaps?
Then, there is AARP.com, the profit-making part of the organization, which dwarfs the .org section. Under the .com umbrella, there are dozens of sites that start with “AARP.” Included in their names are words such as “Medicare Supplements” or “Auto Insurance.” These companies are operating as insurance brokers all over the country and making a fortune.
Apparently the profit-making arm and the non-profit making arm of AARP are in a state of conflict. There are two separate boards of directors, with some people being on both boards. Those board meetings must be horrendous.
I called the office of Mike Kreidler, our Washington State Insurance Commissioner and was told in writing, ”AARP isn’t an insurance company. AARP is an association. Associations can buy a group policy that their members can then buy into.”
I asked whether I could form an association and do the same thing, but no one answered.
I asked whether AARP was a licensed broker or agent in the State of Washington and got no response. So I called and to my surprise reached a hostile woman, who said that AARP had nothing to do with the State office, that they contract directly with the federal Center for Medicare and Medicaid Services (CMMS).
“But they are selling insurance in this state,” I said. She actually raised her voice at me, told me to contact the federal agency, and hung up. Wow!
I checked out the CMMS site and learned, “ The insurance company is required to disclose the legal name of the insurance company underwriting the plan on all of their marketing materials. If the health plan is Medicare Advantage, then it is subject to federal Medicare marketing rules. You might want to call Medicare about that. 800-633-4227.” This is the general Medicare phone number. You can imagine how helpful that is.
When I started Googling, I was gratified to see that a lot of individuals and organizations are questioning AARP’s relationship with Medicare.
Several years ago, in a publication called Medicare Covers America, Stan Stovall said on a broadcast that “AARP is one of Medicare’s oldest friends.” You bet they are. They save Medicare the cost and obligation (they think) of interpreting the puzzling options that compose Medicare. The only trouble is, they make it appear that the supplemental insurance can be purchased only through them.
And how about this one:
“There’s an inherent conflict of interest….They’re ending up becoming very dependent on sources of income.”- Former AARP Executive Dr. Marilyn Moon. Ms Moon is discussing AARP.
It is my position that AARP is working in direct conflict with the constituency they profess to serve.
Bloomberg had a lot to say: ”AARP represents 37 million people ages 50 and over in the U.S. Its gains will come from insurance products it endorses and that will attract customers under the health law, a group of Republicans on the House Ways and Means committee said in a report released today.”
Wally Herger, a California representative says, “AARP operates in direct opposition to the needs of their senior membership.” He chairs the House Ways and Means Health subcommittee.
More from Bloomberg:
“It has come to light that the seniors’ lobby group, which took in $1.2 billion last year, makes more than 40 percent of its revenue from royalties and fees — up from 11 percent in 1999, Bloomberg reported.
The source of that money? The higher prices it charges its members for AARP-endorsed insurance policies.”
Bloomberg’s December 5 story cited one customer who bought an AARP-endorsed Advantage plan and another who had purchased an AARP auto insurance policy,….”because he was under the impression the AARP endorsement meant a good deal, but they discovered otherwise. The auto insurance consumer found he was paying twice the average rate, while the health insurance consumer was shocked to get a hospital bill for tens of thousands of dollars not covered by her policy.”
Sen. Charles Grassley (R-IA) sent a letter to AARP CEO Bill Novelli and letters to insurance commissioners in the 29 states where the health plans in question were sold.
“The pitch for these products should be straight up and informative, instead of designed to leave the impression of being comprehensive when the product is, in fact, very limited and leaves consumers seriously in debt if they need intensive medical care,” Sen. Grassley said.
Sen. Grassley demanded answers about AARP’s marketing practices, which prompted Mr. Novelli to call for a suspension of the policies’ sales and an investigation.
Bloomberg reported that Novelli “has expanded AARP’s marketing to include 17 types of insurance,” and that “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.”
AARP is “the largest reseller of insurance in the country” and “has a vested interest in seeing that the market for reselling supplemental insurance expands.”Ginny Brown-Waite on Wednesday, September 9th, 2009 in a letter to AARP.
This stuff is all over the web. AARP is getting rich and huge from Medicare profits. And by the way, they also sell auto insurance (The Hartford), life insurance (New York Life) and other services.
I read on one consumer advocate site that AARP accepts only people with good health for the Advantage programs they are selling, because their margin of profit is higher on people with “good” as opposed to “bad” health.
The AARP has a suite of sites. They are a kingdom. The site that makes me nervous is the AARP Public Policy Institute. Shudder.
Why does this annoy me so much? Perhaps it’s the TV telling us that in addition to a Medicare card, we also “need an AARP card.” This is an outright lie.
There are other companies, like Secure Horizons, that also bundle up Advantage programs and re-sell them to you. You can tell the re-sellers because they spend a lot of money – seminars, brochures, TV bombardment.
You will be a lot better off if you use the US Government website and the book, Medicare & You to research all the options and make your decisions.
And I would like to know why it is that these re-sellers are exempt from many insurance laws, notably the ones from the State of Washington.
Here is the cutest comment I received from Mike Kreidler’s WA State Insurance Commissioner’s office.
“Probably the way AARP does it is that they have some staffers who are licensed insurance agents and they work through their individual licenses.”