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AARP responds to Congressional report on health insurance conflict of interest charges Posted: April 11th, 2011

By John Frook

Three U.S. House Republicans have charged that the AARP, the nonprofit senior-citizen lobbyist organization, stands to gain as much as $1 billion over the next decade from the health care reform law, and that the organization should have its tax-exempt status investigated.

Health subcommittee chairman Rep. Wally Herger (R-Calif.) and Rep. Dave Reichert (R-Wash.) released a 40-page report titled "Behind the Veil: The AARP America Doesn't Know," which alleges what it calls "the conflict between AARP's drive for profits, the best interests of its members and the organization's tax exempt status."

Allegations of a conflict of interest

The Congressional report says that because the health reform law calls for cuts of about $500 billion in Medicare spending, it is likely to drive sales of Medigap supplemental insurance--the AARP's top-producing insurance sponsorship.

The sponsorship of the supplemental insurance product is a conflict of interest and grounds for an investigation by the Internal Revenue Service to see whether AARP qualifies for tax-exempt status as a non-profit, according to the GOP congressmen. Rep. Herger and Rep. Reichert were joined by House Ways & Means oversight subcommittee chairman Rep. Charles Boustany (R-La.) in questioning the AARP's motives as they relate to health reform.

AARP revenues for sponsoring products reached $657 million annually in 2009, including revenues from insurance products sold by UnitedHealth Group, MetLife, Genworth Financial and Aetna.

"Health care law, which AARP strongly endorsed, could result in a windfall for AARP that exceeds over $1 billion during the next 10 years," the report says. Lawmakers set an April 1 hearing to review the report, and discuss AARP's organizational structure and finances.

The AARP fires back

The AARP is firing back. On its website, the group posted an extensive response under the heading "You Decide," including a video message from AARP President Lee Hammond, access to AARP annual reports and audio access to a press conference.

"AARP is most disturbed by the accusation that our support of any legislation would be done with revenue in mind," said AARP president Hammond in a press statement. "AARP has long-maintained that we would gladly forgo revenue in exchange for lifetime health and financial security for all older Americans."