The year 2024 exposed the lie behind the misnamed “Inflation Reduction Act.” Last summer, the Biden Administration announced a “premium stabilization demonstration”—a bailout of questionable legality—because otherwise seniors’ premiums for Medicare Part D prescription drug coverage would go through the roof. Instead of admitting the flaws of the law Democrats rammed through in 2022, the Biden Administration decided to use additional taxpayer funds to pay insurers an average of $100 million each, undermining Medicare’s financial stability.
Why would AARP, which claims to advocate on behalf of seniors, continue to support a law whose costs to the Medicare program are set to exceed original estimates by $10 billion-$20 billion this year alone? The organization has nearly ten billion—that’s billion with a “B”—reasons to do so.
As I outline in a new report for American Commitment, AARP has become financially beholden to UnitedHealth Group. Since 2007, the organization has received nearly $10 billion in tax-free revenue from that company. What’s more, AARP’s estimated revenues from UnitedHealth have grown every single year over that period, making the organization more and more dependent upon the nation’s largest health insurer as time goes by.
That dependence helps to explain why AARP has endorsed policies that hurt seniors. It supports the IRA’s price controls, which will cut off access to innovative cures and treatments, but just so happen to give UnitedHealth greater control over its drug costs. It supports the law’s raid on Medicare by hundreds of billions of dollars, which just so happened to finance enhanced Obamacare subsidies benefiting UnitedHealth. Likewise, it continues to support the IRA notwithstanding the law’s recent bailouts and cost overruns, which will just so happen to go to the bottom line of insurers like UnitedHealth.
And the policies AARP endorses don’t just harm seniors—so do its business practices. The lucrative Medigap supplemental coverage AARP sells via UnitedHealth imposes a 4.95% “royalty fee,” all of which goes directly to AARP’s bottom line. Rather than aligning its financial interests with those of its members, AARP’s “royalty” scheme gives the organization an incentive to sell insurance policies seniors may not want, need, or be able to afford—because AARP makes more money for every additional premium dollar seniors pay.
The fact is, AARP has done about as great a job controlling costs for seniors as the “Inflation Reduction Act” itself. AARP overcharges seniors for insurance, with the amount of its health care earnings rapidly approaching $1 billion per year. These “royalty fees” help fund AARP’s lavish headquarters and extravagant salaries—according to its most recent IRS filing, the average AARP employee received $184,519.38 in total compensation from the organization in 2023. But overcharging seniors struggling to afford food and medicines represents neither good policy nor something a supposed seniors advocacy organization should be proud of.
Seniors deserve better than to get overcharged for health coverage by a “non-profit” organization. They also deserve better than an entity financially compromised by its dependence on an insurer under investigation for its Medicare billing practices. If AARP cannot or will not reform its business practices, Congress, the new Department of Government Efficiency, or both, should investigate. Because this new report provides billions of pieces of evidence: Seniors deserve better than AARP.
Mr. Jacobs is Founder and CEO of Juniper Research Group, and author of the book The Case Against Single Payer.
