THE CORRUPTION OF AARP
Greed corrupts some non-profits and their executives, just as it does for-profit corporations and their executives. AARP is an example of a corrupt non-profit. It promotes inferior health insurance products from UnitedHealth, a huge, corrupt health services corporation, because it gets nearly $1 billion in kickbacks from UnitedHealth. AARP’s supposed advocacy for seniors is corrupted by its desire for for-profit health care whose providers will give it kickbacks.
(Note: If you find my posts too long to read on occasion, please just skim the bolded portions. Thanks for reading my blog!)
Many of my posts have written about how greed and the profit motive corrupt the behavior of corporations and their executives. Unfortunately, greed also leads to corruption of ostensibly non-profit organizations and their executives as well.
One example of corruption of a non-profit is AARP (formerly the American Association of Retired Persons). AARP is making a big push for new members now because it is raising its membership dues in mid-January. If you’ve gotten a solicitation to join, as I have, I encourage you to read the following before you decide to join (or renew).
AARP, with roughly 38 million members, claims to be an advocacy group for seniors (which it defines as over 50) but it’s largely a marketing scheme for health insurance. For 27 years, AARP has exclusively steered its members to UnitedHealth. It recommends UnitedHealth (and only UnitedHealth) to its members for Medicare Advantage plans, Medicare supplement plans, and Medicare drug plans.
UnitedHealth, a huge, for-profit provider of a wide range of health care services, has a horrible track record. [1] It denies claims for health care services at twice the rate (32%) of the industry average. It has been sued many times. Recently, it was sued based on claims that it knowingly uses an artificial intelligence algorithm that denies claims with a 90% error rate because it also knows that only about 0.2% of policy holders will appeal a denial of coverage. In 2023, the families of two deceased patients sued it for denying coverage for nursing home stays prescribed by their doctors. [2] It has been sued multiple times by its own members over its conflict of interest in promoting inferior insurance products, which often cost more and provide worse service than competitors. Its online discussion forum has numerous complaints about UnitedHealth’s denial of health care claims and numerous comments wondering why AARP recommends such a poor service provider.
UnitedHealth has also been charged with corrupt business practices multiple times. For example, its pharmacy benefit management subsidiary, Optum RX, is being sued by the Federal Trade Commission for anticompetitive and unfair market practices. Optum RX is charged with artificially inflating the prices consumers pay for drugs to get kickbacks from drug manufacturers. (See this previous post for more details.) (Note: A provision in the Congressional budget bill that was scuttled by Elon Musk and later by Trump would have stopped the kickbacks from drug makers to pharmacy benefit managers. The subsequent and final version of the bill, which was passed to avert a government shutdown, did not contain this provision.)
UnitedHealth is not only huge, it’s quite profitable. It had revenue of $372 billion and profits of $23 billion in 2023, making it the eighth largest corporation in the world. Its CEO received compensation of $23.5 million in 2023. UnitedHealth’s size and vertical integration create opportunities for monopolistic behavior, incentives for putting profits before patient outcomes, as well as opportunities and incentives for illegal behavior. (See previous posts here and here for more details.)
So, why does AARP recommend UnitedHealth and why has it done so exclusively for 27 years? Because it has an incredibly lucrative kickback deal with UnitedHealth that provides most of its revenue. UnitedHealth kicks back to AARP 4.95% of premiums paid by AARP members. In 2023, AARP had revenue of over $900 million from kickbacks on health insurance, three times its revenue of $290 million from membership dues. [3]
Furthermore, AARP’s supposed advocacy for seniors has been distorted by its kickbacks from UnitedHealth. It has lobbied heavily for allowing inefficient, for-profit providers to participate in Medicare because this gives AARP opportunities for kickbacks. Independent sources have documented time and again how UnitedHealth in particular, and for-profit health care providers in general, provide poorer service at higher cost than traditional, public Medicare. Moreover, the profit motive leads to a wide range of corrupt and illegal behavior by UnitedHealth and other for-profit health care providers. (See this previous post for more details.)
To add insult to injury, because of its (supposed) non-profit status, AARP paid only about $3 million in income tax on its commercial (i.e., non-membership) income, a rate of less than 0.3%.
I encourage you not to join AARP if you haven’t and to drop your membership if you have one. There are other groups that advocate for seniors with what’s best for seniors as their true and only motivation. These groups are much smaller than the billion-dollar-a-year AARP and therefore often struggle to get noticed. Two such groups are the National Committee to Preserve Social Security and Medicare and Social Security Works. I urge you to check them out and consider supporting their work.
[1] If UnitedHealth sounds surprisingly familiar, it may be because it was the CEO of a UnitedHealth subsidiary that was shot and killed in New York City recently.
[2] Cox Richardson, H., 12/5/24, “Letters from an American,” (https://heathercoxrichardson.substack.com/p/december-5-2024)
[3] Kuttner, R., 12/11/24, “How AARP shills for UnitedHealthcare,” The American Prospect (https://prospect.org/blogs-and-newsletters/tap/2024-12-11-how-aarp-shills-for-unitedhealthcare/)