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2003-11-21 -- AARP will make millions from Medicare bill

Thanks to Physicians for a National Health Plan's Don McCanne for
this:

AARP's Conflict of Interest in the Medicare Drug Bill
Statement of David U. Himmelstein, M.D. & Steffie Woolhandler, M.D.,
M.P.H. Harvard Medical School and Physicians for a National Health
Program

November 19, 2003

The AARP derives significant income from the sale of health and life
insurance policies, and stands to make hundreds of millions more under
the Medicare Prescription Drug bill now being debated before Congress.
Yet the AARP's financial interests in the bill have received scant
attention.

The AARP's current insurance-related revenues come in several streams.

1- They receive royalties from "AARP" insurance policies marketed to
their members by UnitedHealthcare, MetLife and others. Last year these
royalties amounted to $123.283 million.

2- They receive list access fees from insurance firms that market to
their membership. In 2002, such fees totaled $10.794 million.

3- AARP receives "Quality Control fees" from insurers that amounted to
$893,000 last year.

4- AARP also earns investment income on the premiums received from
members until such premiums are forwarded to UnitedHealthcare and
MetLife. In 2002, AARP earned $26.708 million in such investment
income.

The table below summarizes the AARP's income for each of these
categories over the past 4 years (edited to year 2002 as a
representative year), as well as their total operating revenues, and
the proportion of revenues accounted for by insurance-related items.
All data are derived from the AARP 's Consolidated Financial
Statements. Dollar figures are given in millions.

2002
$123.3 - Insurance Royalties
$10.8 - List Access Fees
$0.9 - Quality Control Fee
$26.7 - Income from Premiums Invested
$161.7 - Insurance-Related Total
$635.8 - Total Operating Revenues
25.4% - Insurance-Related as % Of Operating Revenues

We believe the AARP's huge insurance business helps explain why it has
endorsed a bill that threatens the future of Medicare and the health
of America's seniors. Under the proposed Medicare legislation the AARP
would almost surely reap hundreds of millions of dollars in additional
insurance revenues over the next decade. The Medicare bill would pump
$400 billion in Federal Government money into new Medigap drug
policies over the next decade. At present, the AARP's profit from its
huge insurance sales amounts to 3.9% of the insurance premiums it
collects. If AARP's partners were to capture even 10% of the new
Medicare prescription drug coverage market, their premiums would
amount $40 billion, and the AARP's profits would be $1.56 billion.

The Medicare prescription drug bill offers huge payoffs to the drug
industry, private insurers, and some large employers. It would provide
paltry benefits to Medicare recipients and take a giant step toward
privatizing Medicare. In effect, the AARP leadership has shamefully
agreed to sell out its members in exchange for the organization's
financial gain.

http://www.citizen.org/documents/AARP_harvard.pdf

For Rep. Pete Stark's letter to colleagues and for Public Citizen's
analysis:
http://www.citizen.org/congress/reform/rx_benefits/drug_benefit/index.
cfm

And...

Los Angeles Times November 20, 2003

When AARP's Director Speaks, Lawmakers Listen By Elizabeth Shogren

After a one-on-one meeting with President Bush, William D. Novelli,
executive director of AARP, emerged from the White House late Monday
afternoon with a broad grin on his face.

Only a few hours earlier, the nation's largest seniors group, 35
million members strong, had endorsed the Republican-drafted plan to
revamp Medicare. Now, Novelli had been praised, in person, by the
president for the important role he and his group were playing to make
the legislation a reality.

Novelli is unabashed about his rarefied position as a private citizen
with considerable say over the fate of public policy. In fact, he
says, the chance to help wield the colossal influence of AARP,
previously known as the American Assn. of Retired Persons, was why he
took the job.

Novelli's next challenge is to use the ads, AARP's state
organizations, the group's publications and other resources to
convince members, their children and legislators that the positives of
the bill outweigh the negatives.

Novelli said he was "accountable" for AARP's endorsement of the bill
because he strongly influenced the board to support it.

On Capitol Hill, AARP advisor Gingrich tried to win the support of
conservative House members by drawing lawmakers' attention to a
tax-free savings measure buried in the bill.

"He said this was the first step in revolutionizing the way we provide
health care," said Rep. Rob Portman (R-Ohio), adding Gingrich was
greeted with a standing ovation.

http://www.latimes.com/news/nationworld/nation/la-na-novelli20nov20,1,
3960087.story?coll=la-home-todays-times

Don McCanne's Comment: William Novelli and the AARP board are
accountable for endorsing this legislation that provides inappropriate
support to pharmaceutical firms, pharmacy benefit managers, health
plans, and AARP's own insurance entities. Even worse is that it will
take Gingrich's "first step in revolutionizing the way we provide
health care."

Actually this bill is not about providing health care. It is about
funding health care. It is designed to end Medicare as a model of
social insurance, and to shift more of the responsibility for funding
care to the individual. This will be disastrous for those with modest
incomes but with greater health care needs.

My remaining productive years are dedicated to ensuring universal
access to affordable health care. Novelli and AARP have endorsed a
bill that will decrease both access and affordability, a much more
serious indictment than the self-serving issues. I am deeply saddened
by this dramatic move towards social and health care injustice. Let's
hold Novelli and the AARP board accountable.

I see no option but to resign my AARP membership.

If you agree, AARP's national hotline is 1-800-424-3410.

You may want to report your response to MoveOn.org at:
http://moveon.org/aarp.html

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