Reichert Asks AARP: Patients or Profits?

Mar 26, 2014 Issues: Healthcare, Tax Policy

Washington, D.C. – Today, U.S. Congressman Dave Reichert (WA-8) sent a letter to AARP CEO A. Barry Rand asking about the effects of Obamacare on its members and what they are doing to stop implementation of further Medicare cuts proposed by the Centers for Medicare and Medicaid Services (CMS).  If AARP plans to support those cuts or is taking no action to prevent them, American seniors could be in serious trouble.

The 2010 healthcare law includes over $300 billion in cuts to Medicare Advantage (MA), which threatens the healthcare of over 15 million seniors enrolled in MA plans, including over 300,000 in Washington State. Despite the deep cuts to seniors’ healthcare to pay for Obamacare, AARP actively and aggressively lobbied members of Congress to support passage of the law.

In 2011, Reichert co-authored the Behind the Veil: The AARP America doesn’t know report which revealed the conflict between AARP’s profit-driven business model and its ability to promote the best interests of America’s seniors.  The report revealed the healthcare law’s cuts to MA could result in a windfall for AARP that exceeds over $1 billion during the next ten years. This is because AARP will see their royalty payments increase as seniors are forced out of MA plans and buy AARP Medigap plans instead. The report called into question AARP’s tax exempt status as a result of this obvious conflict of interest.

Now, the Centers for Medicare and Medicaid Services (CMS) have proposed further cuts to MA beyond those included in Obamacare.  According to analysts, if the cuts CMS is proposing are enacted they will result in a 5.9% cut to MA payments in 2015.  AARP must be held accountable to their members, and their members deserve to know whether or not AARP is supportive of these extensive cuts that will seriously jeopardize seniors’ access to their existing doctors and MA plans but which could lead to further profit for AARP through increased sales of Medigap policies.

These cuts to Medicare Advantage jeopardize the well-being of American senior citizens,” said Reichert.  “Higher co-pays and premiums, reduced benefits, and fewer choices are not how seniors want to spend their golden years.  After decades of hard work, they should be able to enjoy this period of their lives and not have to fear losing the healthcare they like and the doctors they trust.  It is my worry that AARP has unnecessarily put that security at risk by their support of the president’s healthcare law, and seniors deserve to know that AARP is in fact fighting for them instead of fighting for their own financial gain.”

Considering the financial gains AARP is expected to reap from their support of the President’s healthcare law despite its adverse effects on seniors, Reichert has been working to make sure that the tax code does not provide an incentive for AARP to support such harmful cuts.  Just this past February, Ways and Means Committee Chairman Dave Camp released a comprehensive tax reform discussion draft, including language, as suggested by Rep. Reichert in the Behind the Veil report, to ensure organizations like AARP pay taxes on for-profit business activities unrelated to their stated service-oriented missions.  Under the discussion draft, the royalty revenues AARP receives from insurance companies would be properly treated as taxable income from a trade or business activity. 

Reichert asks AARP to provide him with information regarding the number of members who saw increased MA plan premiums, how many lost their plans altogether as a result of Obamacare, and how many have since enrolled in an AARP Medigap plan.  He also specifically asks if AARP supports the cuts proposed by CMS and how AARP plans to protect members’ access to their existing MA plans and doctors.  To read the full text of the letter, click here.