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Conflict Of Interest For AARP In Health Bill Debate?

President Obama speaks about health care during a meeting at the AARP's headquarters in Washington. At left is AARP President Jennie Chin Hansen.
Saul Loeb
AFP/Getty Images
President Obama speaks about health care during a meeting at the AARP's headquarters in Washington. At left is AARP President Jennie Chin Hansen.

Whenever Washington considers changes in health care or Social Security, one of the main players is the senior citizens lobby AARP.

The organization's size makes it hard to miss: "One out of every two people over age 50 is an AARP member," says David Certner, who directs AARP's lobbying operation. That comes to 40 million members, he says, half of them 65 or older

AARP, which offers several kinds of AARP-branded health insurance, supports the changes proposed in Congress right now.


Critics say that's because the group would profit if the health care system gets rebuilt.

"There is an unusual advocate for these massive cuts to seniors' health care," says Rep. Dave Reichert (R-WA), referring to the proposed legislation's big cuts in Medicare spending. "It's AARP."

Democrats call those cuts cost savings. Reichert and other Republicans say that really means cuts in services.

"Are they truly looking out for the best interests of seniors?" Reichert asks. "Could it be that AARP has a hidden profit agenda?"

Well, at least on this element of the bill, AARP would lose, not gain. Medicare cuts would fall hardest on the lucrative Medicare Advantage program — one of AARP's products.


Certner says the group doesn't have a conflict of interest.

"We are driven by our policy. Our policy drives our advocacy. Our policy drives what we do in terms of our products," he says. "And that's been the way it has been from the beginning."

Questions About AARP's Finances

AARP revenues show how big its insurance business is.

Last year, the group collected $222 million in royalties from UnitedHealthcare, which provides most of the health insurance marketed under the AARP brand. That figure is almost as much as AARP collected in dues from its members.

But David Mathis, AARP senior vice president for health services, says the organization offers what its members need to have, not what corporate partners want to sell.

"They come into the relationship knowing where that is, even though they may not agree with us and we don't always agree with them," Mathis says. "Everybody's eyes were wide open when we entered this relationship."

Still, questions about the organization's finances have been raising eyebrows for years. And America's two main parties take turns being angry at AARP.

Speaking in 1995, Republican Sen. Alan Simpson said, "AARP has drifted considerably from any possible description of a nonprofit, quote, organization."

And in 2003, Democratic Rep. Maxine Waters said, "Don't forget, AARP is making a lot of money off of the insurance companies."

An Issue Of Trust

It's hard to tarnish AARP, in part because it's not seen as serving an ideology or a narrow economic agenda.

And that helps the group, says Ted Marmor, a Yale professor emeritus of public policy, even if it limits what AARP can do on Capitol Hill.

"They live and die because there are 40 million people paying a small amount of money every year," he says.

Of course, it's possible that of that 40 million, many may be more interested in AARP's travel discounts than in overhauling America's health care system.

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Corrected: November 5, 2009 at 7:57 AM PST
An earlier version referred to an incomplete analysis of poll results about AARP and political parties. The reference has been deleted.