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AARP: A Profitable Nonprofit Organization

Mainly Funded by Legal Health Insurance Industry Kickbacks


Health Letter, June 2014

Sidney M. Wolfe, M.D.

Everyone knows that AARP, formerly called the American Association of Retired Persons, provides, for its 37 million members age 50 or older, significant discounts on travel, entertainment, clothing, dining and other items.[1] The total annual revenue from membership dues in 2012, the latest year for which data are available, was $281 million.[2]

Much less known is the fact that the major source of revenue that year — and going back decades — is not membership dues, which are $16 a year,[3] but “royalties” from UnitedHealthCare, a health insurer for which AARP is one of the leading sales promoters. In 2012, these health insurance royalties from United amounted to $471 million, 1.7 times larger than membership dues revenue and two-thirds of the total royalties AARP received for selling various kinds of insurance and other products.[4] AARP’s total royalties in 2012 were $724 million, more than half its total revenues and 2.6 times its membership revenue. Another important source of revenue for AARP is payments for advertising in its publications, which totaled $131 million in 2012.

What does all of this mean? First, AARP is clearly more like a business than an advocacy group for Americans 50 and older. At the end of 2012, the net assets of AARP were $877 million, an increase of $98 million over its net assets at the end of 2011.

Second, consideration of the revenue sources might explain, for example, why, on the AARP website, there is almost no mention or description of the details and advantages of a single-payer health care system. Almost no mention — the AARP Virgin Islands website does discuss the recently introduced legislation there that would establish a single-payer system.[5] The other mentions are relegated to the obituaries of several people, all of whom were strong supporters of a single-payer program. These supporters include Maggie Kuhn, who died in 1995. Kuhn not only was opposed to AARP policies on this and other issues, but also founded the Gray Panthers, an effective activist group for older people that supported a single-payer system.[6] This is in contrast to AARP, which, although silent about single-payer on its website, is quite vocal in opposition. Its executive vice president of policy, strategy and international affairs, John Rother, has stated that single-payer would “disrupt the system that is currently in place.”[7] Rother is of course referring to a “disruption” of the private, for-profit health insurance industry, such as the major AARP benefactor, UnitedHealthCare. But, speaking of disruption, consider a recent disruptive action by UnitedHealthCare, an insurer under the increasingly privatized Medicare Advantage program. Last year, United decided to terminate contracts with up to 2,100 doctors serving 8,000 Medicare Advantage patients in the New York metro region, prompting New York State Medical Society President Sam Unterricht to demand a congressional probe.[8]

Is any of this new? Not really. We reprint, below, an excerpt from an article in the February 2004 issue of Health Letter:

Many state and local AARP chapters have begun to rebel at this members-be-damned stance of national AARP and we excerpt a recent example below — an editorial written by Dr. Bruce Douglas, President of the North Shore, Illinois, chapter of AARP, Clinical Professor and Senior Fellow in Aging and Applied Gerontology of the University of Health Sciences/ Chicago Medical School, and Professor of Public Health at the University of Illinois.

The United States Needs a Single Payer Health Care System

The time has come for AARP, the most powerful citizen lobbying group in Washington, to speak out loud and clear in favor of single payer health care reform in the United States. The 34 million members of AARP have been subjected to demeaning, condescending, and elusive tactics long enough by a paid Washington staff that has failed to convince the AARP membership that its ties to the insurance industry have prevented it from demonstrating objectivity in its responsibilities to its members and the American people.

Single payer is so blatantly superior to any other system that has been paraded before the American people, that it is in the words of The New Yorker magazine, "almost embarrassing" to have to "reassemble ... the pile of evidence" that demonstrates that contention to be true.

This editorial is intended to serve as a rallying call to AARP volunteers everywhere to take over the leadership of the organization on the issue of health care reform and to demand that AARP open its eyes, ears, and heart to what is clearly best for the American people.

First, let it be said that “single payer” is intrinsically a free-choice system in which the private system of health care delivery is maintained. The patient has absolute control over his/her choice of health care provider.

Single payer is based on a simple economic concept that the system can only spend as much money as it has. Planning for the provision of care under single payer is based on the amount of money that is available or obtainable, through taxation, and the restraints that are built into the system limit how much is paid to providers and others who make up the infrastructure of the care apparatus. ...

These are the principles AARP should stand for; and this is the position the Association should be taking as it advocates what is best for the American people.

References

[1] AARP. About Us. http://www.aarp.org/about-aarp/. Accessed May 19, 2014.

[2] AARP. Consolidated Financial Statements Together with Report of Independent Certified Public Accountants for the years ended December 31, 2012 and 2011. http://www.aarp.org/content/dam/aarp/about_aarp/annual_reports/2013-06/2012-aarp-consolidated-financial-statements-12-31-12.pdf. Accessed May 19, 2014.

[3] AARP. Membership. http://www.aarp.org/benefits-discounts/my-membership/. Accessed May 19, 2014.

[4] AARP. Consolidated Financial Statements Together with Report of Independent Certified Public Accountants for the years ended December 31, 2012 and 2011. http://www.aarp.org/content/dam/aarp/about_aarp/annual_reports/2013-06/2012-aarp-consolidated-financial-statements-12-31-12.pdf. Accessed May 19, 2014.

[5] AARP Virgin Islands. Single-Payer Health Care System? April 1, 2014. http://states.aarp.org/vi-healthcare/. Accessed May 19, 2014.

[6] Kiger P (AARP). Champions of Aging: Maggie Kuhn. May 1, 2013. http://www.aarp.org/politics-society/history/champions-of-aging-photos/older-american-maggie-kuhn-gray-panthers.html. Accessed May 19, 2014.

[7] Alberti M. Should universal care advocates bite their tongues on single-payer? June 8, 2011. http://www.remappingdebate.org/sites/all/files/Should%20universal%20care%20advocates%20bite%20their%20tongues%20on%20single-payer.pdf.

[8] Campanile C. Elderly Patients Sick Over Losing Doctors Under Obamacare. New York Post. October 25, 2013. http://nypost.com/2013/10/25/elderly-patients-sick-over-losing-doctors-under-obamacare/.

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