A new federal report concludes AARP could make $1 billion in profits (PDF) in the next 10 years as a result of the healthcare reform law and it questions the tax-exempt status of the organization representing America's seniors.
GOP lawmakers see AARP profiting from reform law, question group's tax status
Reps. Charles Boustany (R-La.,), Wally Herger (R-Calif.) and Dave Reichert (R-Wash.)—all members of the House Ways and Means Health Subcommittee—released the report, which cited Richard Foster, chief actuary at the CMS, as saying that about 6 million to 7 million Medicare Advantage beneficiaries will leave those plans and will “want auxiliary coverage, and Medigap will be the most straightforward way to get it.”
A Medigap policy is private health insurance intended to supplement Medicare as it helps pay some of the healthcare costs that Medicare doesn’t, according to HHS. The report asserts that AARP could gain significantly from an increase in these plans as seniors leave Medicare Advantage plans and buy AARP Medigap plans instead.
“Based on low, mid- and high-range estimates, AARP stands to financially gain, over and above the millions of dollars they currently receive from [UnitedHealth Group], between $55 million and $166 million in 2014 along as a result of the new Medigap enrollees stemming from the healthcare law’s cuts to MA, which AARP strongly endorsed,” the report said.
AARP President Lee Hammond, who will testify in a hearing Friday about the matter, said in a conference call that the organization understands having a prominent profile often invites scrutiny.
“Unfortunately, despite our cooperation, we are very disappointed in the report and reject its conclusions,” Hammond said, adding emphatically later that AARP is not an insurance company.
Leaders for the organization said AARP’s board has not discussed whether it will enter the insurance exchange market, and that it has no plans to enter that market at this time. Regarding the group’s tax-exempt status, Hammond said AARP works closely with the Internal Revenue Service and, at this point, has not received a negative response from the IRS in the past several years. At a briefing with reporters Wednesday, Boustany said the congressional leaders will now submit their report to the IRS so it can determine if AARP violated its tax status.
Send us a letter