AARP Benefits Financially From Medicare Prescription Drug Benefit It Helped Pass

Main Category: Medicare / Medicaid / SCHIP
Article Date: 21 Dec 2007 - 8:00 PDT

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Some advocates have expressed concern over the commercial success of AARP-branded Medicare prescription drug plans, administered by UnitedHealthcare Services, the Philadelphia Inquirer reports. AARP's Medicare drug plans account for the No. 1 selling plan in the nation -- the AARP MedicareRX Preferred -- and two others in the top five, though they "often cost hundreds of dollars" more annually than the lowest-priced competing plans, according to the Inquirer. The three plans trump the sales of any other brand of drug plans, including those marketed by UnitedHealthcare that do not carry the AARP name.

According to the Inquirer, "While its cachet comes from advocacy, AARP is also an entrepreneurial juggernaut that profits from the Medicare drug benefit it helped pass." However, Judith Stein, executive director of the Center for Medicare Advocacy, said she is concerned about AARP's dual role as an advocate and commercial enterprise. Stein said, "The privatization of Medicare in general is a very bad thing and a good thing for the companies that are making a huge profit. When one of those companies is benefited by the AARP brand, I think it's a conflict."

Experts attribute the success of AARP's plans to appeal of the brand and the trust consumers have in the organization. "It's peace of mind. That's why AARP/United is able to get a premium," according to Richard Stefanacci, director of the Center for Medicare Medication Management at the University of the Sciences in Philadelphia. The Inquirer reports, "As the Dec. 31 deadline approaches for Medicare members to change plans or sign up, many seniors are choosing AARP to cut through the clutter of a confounding marketplace." The not-for-profit reached $1 billion in revenue last year and expects to see $4.4 billion in sales over the next seven years from new deals with Aetna and UnitedHealthcare (Stark, Philadelphia Inquirer, 12/20).

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