Is AARP Looking Out For Seniors?

When I was in high school, a small group of friends was committed to taking a portion of our paper route earnings and buying stereo systems. We’d speak to salesmen at places like Lechmere, Tweeter Etc., and Tech HiFi, who gave us different opinions whether AR made the best turntable, Pioneer was the best receiver or Advent had the best speakers. Were they giving advice about what product provided the highest quality for the dollar or what was going to provide them with the largest commission?

The magazine we most trusted to sort this out was Consumer Reports since it was understood that its team of scientists and editors were unbiased, that they had no skin in the game.

At the same time, one of our history teachers assigned muckraking journalist Upton Sinclair’s novel, The Jungle, about the meatpacking industry. Sinclair reported on how corrupt employers took advantage of employees by forcing them to work in dangerous and unsanitary conditions.

The most riveting scene is when a worker falls into a huge vat but is not rescued; the owners were willing to put profits before worker safety, even if it meant occasional deaths. The problem is that Sinclair, a trusted journalist, made up this part of the story for its political effect, and our history teacher never told us. I don’t know if the history teacher was unaware of this lie or if their politics were aligned.

I didn’t learn of about this until many years later and at first was angry that we had not been provided with all the facts about Upton Sinclair. Then I realized that this was actually one of those good life lessons—I had been too gullible in placing so much confidence in my high school history teacher’s knowledge and sense of justice. It realized that, unlike the people who publish Consumer Reports, many teachers are not so well-read or able to keep their biases apart from their teaching.

I’m reminded of this as I read a rare piece of honest muckraking journalism by Kimberly Strassel of The Wall Street Journal. In her piece, “Whom Does AARP Serve,” she begins with this assessment of AARP’s position on the new Medicare law:

“It’s been running expensive ads that…demagogue the drug industry, which just worked miracles in the pandemic. ‘Congress has a historic opportunity to deliver relief” from ‘inflation’ and ‘Big Pharma,’ one spot says. By negotiating prices it will ‘put money back in the pockets of seniors.’ Left unsaid is that it may also put money in the pocket of AARP.

“Ask yourself why a group that claims to represent older Americans is plumping for a provision that will take the greatest toll on seniors. The bill would empower the secretary of health and human services to single out 10 to 20 of Medicare’s priciest drugs each year and to penalize any pharmaceutical company that doesn’t accept the government’s proposed price. That’s not a “negotiation”; it’s a gun to the head. The proper term is ‘price controls.’”

AARP, whose magazine is #1 in the US with a circulation of 23 million, says that these negotiations saved $288 billion but the savings was merely transferred from drug research to environmental climate spending. A University of Chicago study of the House price-control plan will reduce research by $663 billion, causing 135 fewer drugs and “estimates a loss of 331 million years of life—31 times the hit from Covid at the time of the study.”

I’ve been skeptical of AARP’s endorsement of New York Life Insurance as its exclusive source for Long-Term Care Insurance. While this insurer is among the very strongest financially, its current product is not competitive in terms either pricing or design.

Now Ms. Strassel also points out the implications of the legislation’s $64 billion extension of ObamaCare premium subsidies:

“That’s a huge boost for insurers, including UnitedHealth Group, for which AARP is now essentially a marketing arm. The seniors group for years has been selling AARP-branded Medicare Advantage and Medigap plans, for which they get royalty payouts. According to public filings, AARP took in more than $1 billion from royalty payments in 2020, and past disclosures suggest at least 65% of that comes from its United Health relationship. These royalty amounts now significantly dwarf what AARP receives from membership dues.

“To the extent inflation price caps on drugs pad insurers’ profits, that’s a win for UnitedHealthcare. To the extent ObamaCare subsidies keep those insurance plans rolling, that’s a win for UnitedHealthcare. To the extent the drug companies are taking a hit, thereby sparing for some further time funding decreases to Medicare Advantage, that’s a win for UnitedHealthcare. Anything that’s a win for UnitedHealthcare is good for its partner, AARP.”

Too bad Consumer Reports doesn’t compete against AARP, whose leadership team can’t square its huge royalties against costing seniors millions in dollars and years alive. How about if AARP restricts itself to making suggestions about stereo components? Be careful about the motivations of those who offer advice about your retirement. It’s a Jungle out there.