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Grassley had staff members pose as consumers (AP file photo)

Sen. Grassley knows a good story when he sees it

COMMENTARY | November 10, 2008

AARP, asked by the Iowa senator to explain its profits from insurance plans it touts, suspends marketing of one of them. Gil Cranberg laments that the press has pretty much ignored this important story—and points out that it’s not too late for reporters and editors to get in on it.

By Gilbert Cranberg

AARP, which purports to be the seniors' friend, has a lot of explaining to do to Iowa's Senator Charles Grassley, ranking Republican on the Senate Finance Committee. In a scorching letter to AARP, Grassley implies that the organization is more interested in profiting from seniors than in serving them.

In saying AARP “purports” to be seniors’ sidekicks, I have in mind the way it exploits the belief of its members, many of them elderly, that it gives reliable, disinterested advice when it puts its name to insurance products and promotes them. Actually, it profits from what it peddles. How much does it make from the tie-ins? In a piece I wrote for this site in November 2007, I described how I questioned AARP about its financial interest in a Medicare Advantage plan it touted in behalf of United Health Care, the large and prosperous private health-care insurer. The response from an AARP spokesman: as a "private business contract" it won't be disclosed.

AARP could stonewall me without consequence, but now it has to contend with Grassley, whose letter to AARP has "United States Senate" in big, bold letters atop the stationery. Grassley wants AARP to divulge "a detailed description of any sales commissions, inducements, incentives or other compensation offered to agents for the sale of each of the AARP insurance products." Further, he wants to know how AARP, as an organization, "benefits financially from the sale of these policies and, if so, please provide the annual gross and net revenues to AARP from the point in time when the policies were first marketed up to the present." Grassley set a Nov. 24 deadline for answers.

The financial data could shed important light on what really interests Grassley: why AARP sells to its members insurance policies that prove to be essentially worthless when coverage is needed.

In a press release accompanying the letter to AARP, Grassley lit into the organization:

"The pitch for these products should be straight-up and informative, instead of designed to leave the impression of being comprehensive when the product is, in fact, very limited and leaves consumers seriously in debt if they need intensive medical care. Individuals shopping in the health insurance marketplace shouldn't be taken advantage of. A big-time advocate for health security should not target under- and un-insured Americans with misleading marketing."

Grassley based his attack, in part, on what he learned from staffers posing as consumers shopping for coverage who were told by AARP marketers that a product, a "supplemental indemnity plan," with flimsy coverage was "good health insurance." The coverage was so poor that a Texas woman, Lisa Kelly, who bought it, was told by a major hospital treating her for leukemia, that it was unacceptable; the hospital even balked at changing a chemotherapy IV until her husband could show proof of payment.

AARP can take a hint; a few days after Grassley sent his letter, the organization said it would suspend marketing the inadequate supplemental benefit plan that so irked the senator.

Grassley learned about Kelly and her experience with AARP's recommended policy from a story in the Wall Street Journal. The press as a whole, however, has been derelict in shining light on the organization's practices and ties to the commercial insurance business. An exception has been the Des Moines Register, which ran two strong editorials Dec. 9 and 10 connending Grassley and criticizing AARP.

Senator Grassley shouldn't have to do the press's work for it. AARP has some 40 million members. It is a powerhouse. The press should have been all over this issue long ago. The least it can do now is pay close attention to the answers Grassley gets from AARP and from the 24 state insurance commissioners he also queried in states where the flawed AARP-backed policy is sold.

[Editor’s note: A related issue—the privatization and weakening of Medicare through Medicare Advantage plans—also cries out for press attention. See pieces on this site by Judith Stein, executive director of the Center for Medicare Advocacy.]

Posted by Charles Arena
09/22/2009, 05:27 PM

I had one of those useless policies from AARP.
They refused to pay and as a result the money I was saving for a newer work truck went to the hospital.
Thanks AARP.

Independent Life Insurance Agent
Posted by Leonard A Robbins
08/21/2010, 08:11 PM

As long as you're discussing the AARP and insurance, perhaps it is worth a look at the life insurance offered by them through New York Life.
While it is a financially strong carrier, they are also one of the least competitive carriers in the marketplace.
LifeNet Insurance

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