AARP: An Organization that Stands with PBM Kickbacks and Hidden Prices
Marion Mass MD writes how AARP's conflicts of interest in the healthcare space explain why they advocate for policy that keeps healthcare expensive for all Americans.
A year ago, President Biden announced he would enforce an executive order issued by former President Trump that requires hospitals to post their prices publicly — to be “transparent.”
Not only did the administration insist on compliance, but it doubled down by increasing the penalties for the 80% of large hospitals that had dragged their feet.
Both administrations should be congratulated for the patient-friendly policy, but getting compliance has proven difficult. Patient Rights Advocate semi-annual report on transparency recently reviewed 2000 hospitals, discovering that 84% of the hospitals were continuing to hide prices from consumers.
As we often discover when contemplating Washington’s healthcare policymaking swamp, there’s many a profiteer who stands to make a killing from the final decision. If voters only knew of the countless ways that healthcare law and regulation have been turned to the service of picking their pockets… time to get woke about the skeeziness in which this sector of the American economy is drenched!
Anyway, we shine today’s spotlight on AARP. (What?! You mean those nice people who arrange discounts and put out a magazine that makes oldsters look better than the overwhelming majority of youngsters?!)
In April 2021, the Biden administration proposed exceptions to the order on price transparency. Specifically, the exception meant that rates negotiated by hospitals for Medicare Advantage plans could be excluded from Medicare’s reporting of hospital prices.
Hmm. Rules for thee, but not for me.
Let’s follow the money.
Surprise! It leads to AARP.
In reality, only about 10% of Medicare beneficiaries rely solely on Medicare. The other 90% have supplemental plans.
In 2018, 60% of Medicare beneficiaries were enrolled in Medicare Advantage or Medigap plans.
The use of such plans has doubled over the last decade. United Healthcare provides more of these plans than any other private insurer.
Guess who earns a royalty from United Healthcare for help in marketing these plans.
According to the organization’s own financial statement for 2019, AARP made more than twice as much from these royalties as it did from membership dues.
Even a director of AARP’s Public Policy Institute acknowledged the problem as far back as 2009. “There’s an inherent conflict of interest,” said Marylin Moon. “They’re… becoming very dependent on [royalty] sources of income.”
Like other big players in the price-concealing thicket of American health care, AARP has a history of lobbying to protect its cash cows. (AARP is number 11 on the list of spenders on lobbying.)
More than once, AARP’s official positions on healthcare policy have even defied the wishes and interests of its members, who could see that those positions would expand the debt to be carried by their children and grandchildren.
For example, AARP lobbied vigorously against the inclusion of Medigap reforms in the Affordable Care Act (aka Obamacare). Those reforms would have been helpful financially to AARP members, but they would have cost AARP $2.8 billion over 10 years.
Despite 75% of its members disagreeing with the position, AARP has historically fought the elimination of the legalized kickback system enjoyed by pharmacy benefit managers (PBMs), notorious middlemen in the American system of health care.
AARP’s recent applause of passage of the Inflation Reduction Act is no surprise for those who realize that the act prevented the flow of money to seniors at the pharmacy counter: the Inflation Reduction Act ensures that the PBM will continue to collect kickbacks, now over $200 billion per year.
Why would AARP aid and abet the PBMs? United Healthcare, who pays AARP royalties owns Optum Rx, one of the big 3 PBM.
Meanwhile, AARP markets itself as “the world’s largest non-profit, nonpartisan membership organization.”
For a non-profit, AARP’s brass collects a lot of silver.
CEO Jo Ann Jenkins makes $1.2 million annually; 13 other executives each make over $400,000 annually.
AARP employees earn an average of $50,000 annually, 28% less than the national average of $66,000. The lowest-paying job at AARP is a receptionist — $21,000 annually.
For an organization ostensibly dedicated to preventing poverty among seniors, it appears to enrich itself by abetting it. The spectacle has contributed to the emergence of a competitor to AARP, the Association of Mature American Citizens (AMAC).
Washington should note these awkward facts and revisit that proposed exception to the requirement for transparency on prices negotiated by hospitals with insurers. And future lawmaking escapades regarding drug pricing should hit the $200 billion in PBM kickbacks, not help the PBM.
Yes, to insist on the “full Monty” from all of the players in American health care would be a departure from Washington’s habitual skeeziness.
That would serve AARP’s members, their descendants, and the general public well. The general public would do well to remind their lawmakers and the administration of it.