Health insurer extends AARP deal

AARP seems to be interested more in selling junk insurance than acting on behalf of the seniors it purports to lobby for.

UnitedHealth Group and AARP will announce today that they have agreed to extend and broaden contracts that enable the health insurer to sell Medicare products under the powerful AARP brand.

The announcement of a 7-year extension to their marketing agreement puts to rest speculation that UnitedHealth's stock-option scandal would endanger the deal and that AARP would find a new partner. The current 10-year contract expires at the end of the year.

AARP, a lobbying and interest group representing millions of U.S. citizens over 50, is one of UnitedHealth's most significant customers and provides an enormous sales vehicle into the aging population.

The new agreements, which take effect Jan. 1, provide UnitedHealth with a pipeline to AARP's nearly 38 million members.

 "The fact that it is being continued is a positive unto itself," said Thomas Carroll, an analyst with Stifel Nicolaus in Baltimore.

In 1998, UnitedHealth signed a 10-year deal with AARP to offer certain products to AARP members; in 2005, the relationship was expanded to include an exclusive partnership to market drug plans under Medicare's prescription drug program, called Part D.

Last year, analysts began speculating about whether a renewed contract with AARP would be threatened after errors in UnitedHealth's stock-option granting practices came to light. At an investor's conference in New York in December, analysts questioned company officials. Worries were that AARP would view the link with
UnitedHealth as troublesome.

AARP Contracts With Aetna, UnitedHealthcare To Expand Available Health Insurance Policies To People Ages 50 To 64, Quality-of-Care To Be Measured

AARP officials on Monday announced plans to expand the number of health insurance products offered by the group that will target U.S. residents ages 50 to 64 who lack coverage, the Wall Street Journal reports (Fuhrmans, Wall Street Journal, 4/17). As part of the expansion, AARP in 2008 will begin to market with Aetna a PPO for U.S. residents ages 50 to 64, as well as a high-deductible health plan possibly linked with a health savings account. AARP said that underwriting practices for the health plans for such residents -- who "often find that health insurance is unavailable or unaffordable" in the individual coverage market -- will "be less stringent than those of many commercial insurers," although the plans will deny coverage to some sick residents, according to the New York Times (Pear, New York Times, 4/17).


AARP initially will market the health plans in about half of the states. In addition, AARP in January 2008 will begin to market with UnitedHealth Group a Medicare Advantage plan. Medicare beneficiaries who enroll in the plan will have no monthly premiums but will have to make copayments for physician visits and prescription drugs. AARP initially will market the plan in about half of the states (Appleby/Wolf, USA Today, 4/17). The plan is "guaranteed to be in the Medicare marketplace for two years," although premiums and copays could change after the first year, Dawn Sweeney, CEO of AARP Services, said. AARP also will continue to offer Medigap plans (New York Times, 4/17). The new plans likely will double the number of residents who receive health insurance through AARP and UnitedHealth by 2014, according to Sweeney (Phelps, Minneapolis Star Tribune, 4/17). AARP CEO William Novelli said, "In launching these initiatives, we are driven by our mission to create a healthier America" (New York Times, 4/17).

Back in 2003 when AARP got on the Medicare Part D bandwagon, Physicians for a National Health Program pretty much laid out the AARP plan:

The American Association of Retired Persons (AARP) derives significant income from the sale of health and life insurance policies, and stands to make hundreds of millions more under the Medicare Prescription Drug bill now being debated before Congress. Yet the AARPís financial interests in the bill have received scant attention.

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We believe the AARPs huge insurance business helps explain why it has endorsed a bill that threatens the future of Medicare and the health of Americaís seniors. Under the proposed Medicare legislation the AARP would almost surely reap hundreds of millions of dollars in additional insurance revenues over the next decade. The Medicare bill would pump $400 billion in Federal Government money into new Medigap drug policies over the next decade. At present, the AARPís profit from its huge insurance sales amounts to 3.9% of the insurance premiums it collects. If AARPís partners were to capture even 10% of the new Medicare prescription drug coverage market, their premiums would amount $40 billion, and the AARPs profits would be $1.56 billion.

The Medicare prescription drug bill offers huge payoffs to the drug industry, private insurers, and some large employers. It would provide paltry benefits to Medicare recipients and take a giant step toward privatizing Medicare. In effect, the AARP leadership has shamefully agreed to sell out its members in exchange for the organizationís financial gain.