The senior group AARP is expanding its already considerable reach into the health insurance market. New contracts AARP has signed with United Health Group and Aetna will offer a variety of new types of coverage, including new plans for those aged 50 to 64.
AARP CEO Bill Novelli says the longtime insurance partner United and newcomer Aetna will get bonuses if they improve the health of AARP members who join the insurance plans.
"Today, we're announcing plans through which we will seek to improve people's health and quality of life by changing the marketplace," Novelli said.
AARP already uses profits from lending its name to insurance plans to support its advocacy efforts. But some on Capitol Hill are questioning how long the group can continue to wear both hats.
AARP's insurance partners have to meet targets for criteria such as using plain language or reaching out to populations that have had trouble obtaining health care services. If they don't, the companies would have to pay penalties.
AARP officials expect to double enrollment in AARP-branded insurance over the next seven years. And the group expects to receive an additional $1.5 billion in royalties. Novelli says those funds go toward AARP's social and political agenda, which includes a focus on consumer protection for low-income and vulnerable populations, driver safety programs, and information and support for grandparents raising grandchildren.
But at the top of that agenda is health care reform, starting with a bill being debated on the Senate floor Wednesday. It would allow the federal government to negotiate prices under the year-old Medicare prescription drug program.
AARP Policy Director John Rother says the bill is critical to the group's members.
"One of our top priorities is to keep prescription drugs affordable, and we've seen prices go up double or triple the rate of inflation the last few years," Rother said. "So we really need to have more pressure on prices to keep them reasonable."
That bill, however, has become caught up in a largely partisan tug of war. Democrats who say the Medicare bill was too generous to the drug industry want to show voters they can act. President Bush and Republicans, on the other hand, say the program is working well and should be left as is. AARP sided with Republicans when the law originally passed. Now it's siding with Democrats to change it.
And its new contracts are making AARP's politics even more awkward. As part of its deal with United Healthcare, AARP will become the largest single sponsor of private Medicare health plans under a program called "Medicare Advantage." Yet the group is lobbying to reduce payments to those Medicare plans, which analysts say are being overpaid by the government. Novelli denies there's a conflict.
"AARP believes inflated payments to Medicare Advantage plans are unfair and fiscally irresponsible," Novelli said. "Congress should ensure that traditional Medicare and Medicare Advantage compete on a level playing field."
But others, like former Minnesota Republican Sen. Dave Durenberger, who now runs a health care think tank, aren't so sure how long AARP can keep its business and consumer interests separate.
"It's like bowling, Durenberger said. "You can only bowl one ball at a time. Can they throw this ball with their right hand and another one with their left hand? I'm not sure they'll be able to pull that one off."
Even current allies, like House Democratic Caucus Chairman Rahm Emanuel, say AARP's latest step further into the insurance realm gives him some pause.
"When their principles about Medicare drug prices and reimportation run into their business practices," Emanuel says, "which goes? Business practices? Or principles?
AARP officials, however, say they've heard those concerns before. And they plan to just keep doing what they've always done. Just more of it.