Thursday, March 18, 2010

Democrats Find an Insurance Company They Like...

From the Republican Policy Committee (Senate):
This morning, deep in the bowels of the Capitol, Congressional Democrats are meeting with executives from one of the nation’s largest insurers: AARP. According to its own Form 990 filings with the IRS, the AARP has a wholly owned “AARP Insurance Plan” that gives to AARP “a portion of the total premiums collected” from the sale of Medigap, Medicare Advantage, and Medicare Part D plans. In 2008, according to AARP’s financial statements, those “royalty fees” totaled $414 million – pure profit to AARP’s bottom line, and a higher amount of net revenue than that generated by such large insurers as Cigna ($292 million profit) or Health Net ($95 million profit) during the same time period. Even as premiums continue to rise for seniors, AARP’s profits have skyrocketed in recent years, jumping 31 percent just from 2007 to 2008.

It’s also worth highlighting how the AARP Insurance Plan treats AARP members – and how, in drafting health care legislation, Democrats have bent over backwards to help the AARP Insurance Plan continue to rake in profits:

  • AARP currently denies access to individuals with pre-existing conditions by imposing waiting periods on its Medigap plans – and the Democrat legislation would allow them to continue this practice, even as it prohibits insurance companies who sell to the under-65 population from the same type of behavior.

  • AARP-sold Medigap plans are not subject to the same restrictions applied to all other forms of insurance in the Democrat bill, which require at least 80 cents of every premium dollar to be spent on medical expenses.

  • AARP’s then Chief Executive Bill Novelli received more than $1,000,000 in total compensation from the organization in 2008 – more than 78 times the average annual Social Security benefit of $12,738 – yet the amendment supported by 56 Democratic senators to place a $500,000 cap on insurance executive salaries somehow exempted AARP from its provisions.

  • A backroom deal cut in Sen. Harry Reid’s office exempts AARP’s lucrative Medigap plans from the new tax on health insurers (Section 10905(d), Page 2395 of H.R. 3590 as passed the Senate) – and the cuts to Medicare Advantage plans included in the Senate bill will doubtless encourage millions more seniors to buy Medigap supplemental coverage, where AARP plans consume the largest market share.

  • While insurance companies have responded positively to Secretary Sebelius’ request for additional transparency in their pricing policies, AARP has publicly refused to disclose the exact amount of revenue it receives from the sale of its Medigap plans – even though the organization’s board Chair made a public pledge to Congress to do so. Perhaps not surprisingly, Democrats have yet to comment on AARP’s “stonewalling” tactics, as the ostensibly “non-profit” organization attempts to hide the exact amount by which its Medigap business will financially benefit if health “reform” is enacted.

  • Given these actions, it’s worth asking whose side Democrats are on: The side of seniors, or the side of an advocacy organization that makes money from them?