Republicans Challenge AARP's Tax-Exempt Status At a hearing on Friday, Republicans on the House Ways and Means Committee said the group's lucrative operations resemble those of an insurance company, not an advocacy organization. Democrats, meanwhile, said the hearing on the seniors lobby looked more like a "political witch hunt."

Republicans Challenge AARP's Tax-Exempt Status

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This is ALL THINGS CONSIDERED from NPR News. I'm Michele Norris.


And I'm Melissa Block.

The seniors' lobby, AARP, was in the congressional hotseat today. Republicans on the House Ways and Means Committee said the group's lucrative operations resemble those of an insurance company, not a tax-exempt advocacy organization. Democrats said the hearing sounded like a witch hunt. NPR's Peter Overby has the story.

PETER OVERBY: It seems as though someone on Capitol Hill is always mad at AARP. Not so long ago, it was the Democrats who didn't like the group's support of President George W. Bush's Medicare drug plan. This year, it's the Republicans, angry that the group worked so hard to pass President Obama's health-care law.

Today, the big question involved AARP's finances. A report by two committee Republicans shows that in 2009, AARP got less than 20 percent of its money from member dues and 45 percent from royalties, mostly on AARP-branded insurance coverage. California Republican Wally Herger, one of the authors of the critical report, ran the hearing.

Representative WALLY HERGER (Republican, California): The facts show that AARP is dependent on the hundreds of millions of dollars it receives, primarily from insurance companies.

OVERBY: And that led Herger and other Republicans to a pair of conclusions: first, that AARP acts like an insurance company; and second, that its board thinks more about profit than the needs of its 37 million members.

Mr. BARRY RAND (Chief Executive Officer, AARP): Quite frankly, we disagree with each of the conclusions drawn in this one-sided report.

OVERBY: That's Barry Rand, AARP's chief executive officer, who insisted that branded insurance products don't set the agenda.

Mr. RAND: This is not something that we devise. All of these insurance products come from our members and then the 50-plus population who say, we have these needs.

OVERBY: The report, and the hearing, made much of AARP's role in passing the health-care law last year. Again, congressman Herger.

Rep. HERGER: AARP stands to gain an additional $1 billion over the next 10 years as a result of the Democrats' health-care law.

OVERBY: During the health-care fight, AARP lobbied to undo one program it makes money on, Medicare Advantage, which pays insurance companies extra to add benefits to the standard Medicare coverage.

AARP endorses Medicare Advantage plans, but it makes much, much more money on Medigap insurance: supplemental policies that retirees are likely to buy if they go off of Medicare Advantage. Here's Texas Republican Sam Johnson.

Representative SAM JOHNSON (Republican, Texas): How do you explain that to the seniors you're supposedly advocating for? And you know, it looks like you're raking in the cash while they're losing benefits, and paying more for coverage.

OVERBY: But here's the policy argument against Medicare Advantage: Only one-quarter of Medicare recipients use it, but everyone helps to pay for it in their Medicare premiums. The other AARP officer at the hearing, President Lee Hammond, said that without Medicare Advantage...

Mr. LEE HAMMOND (President, AARP): In fact, Medicare would be strengthened.

OVERBY: Republican Lynn Jenkins, of Kansas, was unmoved. She addressed the AARP executives.

Representative LYNN JENKINS (Republican, Kansas): Please don't mislead our seniors. Please don't use them as pawns to line your pockets on their backs.

OVERBY: While Republicans challenged the two AARP leaders, Democrats challenged the GOP majority. Here's John Lewis, of Georgia.

Representative JOHN LEWIS (Democrat, Georgia): This is nothing other than a political witch hunt. The Ways and Means Committee is better than this.

OVERBY: Democrats said if this was an oversight hearing on tax-exempt groups, why did the committee majority single out just one?

Peter Overby, NPR News, Washington.

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