As lawmakers in Washington consider policies to make changes to Medicare prescription drug coverage, one solution that would provide immediate relief is sharing the savings biopharmaceutical companies negotiate with insurers and pharmacy benefit managers (PBMs) with seniors at the pharmacy counter. Despite support from policymakers on both sides of the aisle and more than 86% of AARP members, AARP continues to oppose policies that would enable sharing the savings with seniors, while receiving hundreds of millions of dollars in revenue from insurance companies every year.
In comments submitted earlier this year on the Administration’s proposed rebate rule (see here and here), AARP consistently opposes allowing seniors to share the savings at the pharmacy counter. Their comments echoed the concerns used by insurance companies, from whom AARP has received the vast majority of their revenue in recent years. Eighty-five percent of AARP members say they are disappointed in AARP for siding with insurers in opposition to the rebate rule.
AARP chooses to stand with insurance companies rather than their own members. Here are four facts that may explain why:
- Since 2010, AARP has made more than $4.5 billion in royalties and investment income as a result of their relationship with insurance companies. AARP consolidated financial statements available here: 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017.
- AARP earned more than double the amount of revenue from United Healthcare Group (UHG) as they do from their 38 million members. In 2017, AARP recognized $301 million in membership dues, while reporting $627 million in royalties from United (2017). This continues a growth trend going back as far as 2009. From 2009 to 2017, AARP saw a 47% increase in royalties from UHG, from $427 million to $627 million; while membership dues only increased 22%.
- According to a 2011 Congressional report, “United is AARP’s largest business partner. As part of the United and AARP business agreement all three of the Medicare insurance product lines are marketed under the AARP brand name.” This same report further found that “State insurance rate filings show that, in 2010, AARP retained 4.95% of seniors’ premiums for every Medigap policy sold under its name.”
- The same report quoted a former AARP executive as saying that, “The new arrangement with insurance companies creates a tremendous number of potential conflicts for AARP.”
All of these facts beg the question, who is AARP really fighting for?
Get more facts about AARP here.
Tom Wilbur is Director of Public Affairs at PhRMA focusing on message development and opinion research. Prior to joining PhRMA in 2019, Tom worked on Capitol Hill and on political campaigns for nearly a decade, most recently responsible for communications, campaigns and strategy for U.S. Rep. Fred Upton and the House Energy and Commerce Committee. Tom is a proud Michigander and outside of the virtual office enjoys reading, running, hiking, golfing, and spending time with friends and family.