AARP Insurance Promotion is a Fraud

Seattle

Beryl Gorbman

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.

Unfortunately, most of those quoted here are Republicans who are against President Obama’s health bill. Apparently the health bill strengthens the position of Advantage programs and is likely to expand them, increasing AARP’s influence because consumers mistakenly trust 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.”

LOL.

Comments welcome.

.

About BG

Beryl Gorbman is a writer and private investigator who divides her time between Seattle WA and Merida Yucatan Mexico. She has published two works of fiction, 2012: Deadly Awakening, and Madrugada. They are both available on Amazon and other outlets. Also at Amate Books, and Casa Catherwood in Merida. You can read about them in various articles on this site.
This entry was posted in General Blog, Merida Expat Life and tagged , , , , , , . Bookmark the permalink.

15 Responses to AARP Insurance Promotion is a Fraud

  1. Marc Olson says:

    Wow. What a mess. I am not particularly afraid of getting old, but this type of thing (and, for instance, seeing the horrid morass of paperwork my brother and sister deal with in managing my parents’ insurance claims) makes me wary. How are we supposed to deal with all this when we are old and sick? Things should get easier for elders, not harder. It’s nuts.

    I am glad I live in Mexico where health care is reasonably priced and much more personalized.

  2. mario says:

    Once again our expert investigator ignores the facts of her own investigation. She writes “Unfortunately, most of those quoted here are Republicans…” Thus, what she reports are distorted right-wing reactions. Of course Republicans are opposed to AARP, it leaves them out of the loop of making a profit for their corporate sponsors, the big insurance companies. If you want to join forces with those lining the pockets of insurance giants, do not use AARP. As for me, thank God somebody gives me some options that do not reinforce a reactionary, conservative political agenda.

  3. lynne says:

    I understand how everybody thinks AARP is an insurance company but they are just an association. The Hartford or the companies owned by The Hartford are the auto and home carriers. Think of AAA (triple a) people think when they purchase their coverage through AAA that they are the company when it’s just and association and agency. Ever senior says “I have AARP” when I ask who his current carrier is and industry wise we know that’s Hartford but most do not. The AARP branding is genius because even I a little ole insurance agent in Seattle wishes I had enough regular Hartford business on the books so I would stop loosing my clients to AARP. Even I call it AARP and we, the sellers of Hartford coverage are in direct competition with the big bad AARP. The good news is we have the opportunity to get access to the AARP group rates offered by The Hartford and eventually I will be able to offer those discounted rates. I refuse to talk about Medicare until I have to. :)

    • BG says:

      Well, here’s my question, Lynn. Why don’t they need an agency or broker license? You are reselling national brands and you need one to sell in this state. Or why can’t your company be an Association like they are?

  4. Mic says:

    I get completely confused when reading the Medicare & You book. We have had United Healthcare supplemental thru AARP for many years . We got no bills when I had a quad bipass last year….. I had cataract surgery on both eyes last year……both of us went to Sleep Clinics and perscribed cPAP machines for COPD…..all completely covered & no copay. We get an $80 copay at the first of every year from our family doc but thereafter, no bills for any visits/lab work/ etc. Husband has MS so gets alot of lab work in checkups when he goes. We pay $297 per month to United Healthcare for our Supplemental & RX coverage for both of us.

    My older sister in Branson, MO pays considerably less for a much better policy with Humana which includes vision/dental/and a gymn membership for her husband….which we don’t get. I was going to change to Humana but they quoted me a 1/3 higher premium than I was currently paying….so decided it was best to stick with what we have…..also because I’m afraid if we changed, we might get stuck with no pre existing conditions coverage.

    Maybe it’s different policy coverage & premiums for different states ?? In Alaska, we usually get charged much more for everything because of shipping distance. But don’t see how this needs to affect insurance coverage when we are using local medical facilities….so it’s confusing that Humana (not AARP) would charge more for less coverage than my sister gets in Missouri.

    • BG says:

      It sounds like you are getting a good deal, about the same as mine on the premium and benefit, except we have no copay or deductible. You have UHC and I have Mutual of O. We get vision – exam and glasses 1x per year, but I have to buy prescription coverage for $30/mo. elsewhere. Are you getting supplemental (medigap) or Part C, Advantage? I bet you are getting supplemental, which i think is a better deal. I do resent that AARP represents themselves as the only way to go to purchase it. they get a comission. Things are different in every state.

      • Mic says:

        I have Medicare A & B card….another card that says Medicare Supplemental Healthcare Options…and another card that says AARP MedicareRX Preferred. We don’t have any coverage for eyes or dental unless it is a medical problem – which cataract’s were.

        Our RX coverage is included in the $297 payment. We do have co-pays on RXs – forgot the % but I had a $46 dollar copay on an inhaler for copd. Husband recently had a $90 copay on a new sleep medication. Usually we get generic and it’s much less….Valium= $11, Simvastatin + $7, etc. Baclafen= $14, etc

        The Humana Rep. lady quoted 1/3 more for the same coverage we have….and the vision & dental & gym membership (like my sister was getting) were not included. Sis’s premium was approx. half what I was paying which is why I made the call.

        Yes, after talking with Humana, I thought we had a good deal. Need to find a reasonable policy for dental & vision.

  5. Sandy says:

    This system is horribly complicated.

    • BG says:

      I dropped the ball on this AARP thing, but think I will pick it up again. Thank you. The WA State Insurance Commissioner never got back to me as to why AARP is not licensed as an insurance agency or broker in the state of WA.

  6. Doc Blase says:

    Mic has mentioned a key player in this situation. United Healthcare’s lobbyists have been in the thick of it every time anyone tries to amend Medicare coverage.

    The most recent example can be seen in the Medicare Prescription (Part D) reform efforts in which UHC, along with other powerful Pharma interests, have successfully defeated (as in bought off) enough votes to delay or prevent complete coverage in the Medicare plans, thus making their “insurance products” necessary to all but the wealthy if expensive, long-term medical regimes are indicated.

    AARP/UHC then portrays itself in its ads as the knights in shining PR, riding in to save the day. To provide the solution to the problem it helped to create.

    It’s going to be 5 years before I qualify for coverage, so my attention has not been on this issue full-time, but follow the lobby money from United Healthcare and you will quickly see how things became like they are.

    It’s enough to make you sick.

  7. Greg says:

    AARP is not a licenses broker in washington or any other state because they have nothing at all to do with underwriting, selling or producing med shops or Medicare advantage plans. This is all united healthcare an uhc employees… The relationship between the two is very simple, uhc writes AARP a check to put there name on their policies. In fact the association AARP and the company united healthcare are on opposing sides of the fence when it comes to the new healthcare reform. The same is true for car insurance from the Hartford and life insurance through new York life. In fact… With united healthcare you don’t have to have any association with AARP whatsoever I get an AARP branded advantage plan or Medicare drug plan because these plans are actually considered part of Medicare and are regulated as such( Medicare part c and d respectively). Medicare supplement, while regulate by the state is private insurance and AARP requires a membership for AARP uhc supplement plans. It’s all a cluster$&@! I know, but realize the policies you buy with AARP name on it are regulated and administered by that company. AARP just cashes a big check from each to use their name.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Spam protection by WP Captcha-Free