WASHINGTON (Reuters) - Republicans in the U.S. House of Representatives on Friday accused the AARP of gaining financially from President Barack Obama’s healthcare overhaul, which the influential elderly advocacy group supported.
Republican members of a House Ways and Means subcommittee grilled AARP Chief Executive Officer Barry Rand and AARP President Lee Hammond on the non-profit organization’s health insurance operations. Rand defended the group’s policy positions and said money received from insurance licensing agreements is used to pay for its social-welfare mission.
Republicans argued that the group would gain financially by cutbacks in the law to the Medicare Advantage program that delivers Medicare health benefits through private insurers.
“The facts show AARP no longer operates like a seniors’ advocacy organization,” said health subcommittee Chairman Wally Herger, a California Republican. “Instead, it more closely resembles a for-profit insurance company.”
Herger was referring to a report on AARP finances and operations that he wrote with fellow Republican Representative Dave Reichert and which was released this week. They have asked the Internal Revenue Service to investigate AARP’s tax-exempt status as a non-profit organization.
Democrats questioned the motives of Republicans for holding the hearing, saying it was political payback for supporting Obama’s healthcare restructuring and they defended the AARP, which has about 37 million members.
“Your sin ... is that you backed the Affordable Care Act,” Democratic Representative Jim McDermott said to Rand.
Rand challenged the Republican report’s findings saying: “We reject the allegation that our public policy positions are influenced by our revenues.”
He said that it was more likely the group would lose revenue under the law, as AARP-branded insurance plans for people between 50 and 64 become obsolete when insurance companies in 2014 can no longer exclude people from coverage because of medical history.
The healthcare law also beefs up the Medicare drug benefit for the elderly and limits how much more insurers can charge older people for coverage compared to younger people.
UnitedHealth Group Inc. offers supplemental health plans using the AARP brand that fill in the coverage gaps left by Medicare. The company also offers a Medicare Advantage plan through AARP. Aetna offers AARP-licensed health plans to the 50-64 age group.
AARP receives millions of dollars in royalties from these plans.
Reichert said that the report pointed to “a direct conflict of interest between AARP’s advocacy for eliminating the Medicare Advantage program ... and the massive profits AARP receives from sponsoring medigap plans.”
Rand said the money was used to support AARP’s social welfare programs, which include helping older Americans find jobs, providing information on financial security and aiding the hungry.
It is not the first time AARP’s non-profit tax status and its insurance affiliations have been questioned. In 1995, then Republican Senator Alan Simpson, who served as co-chairman of Obama’s deficit commission last year, probed the organization’s business practices.
The group came under fire from Democrats in 2003 for its support of the Republican-backed Medicare prescription drug plan.
Reporting by Donna Smith; Editing by Paul Simao