This article asks the question as to how political, or better yet how partisan, do we want social agencies known as SWO (social welfare organizations) to become. Definitions and examples as to what SWOs become involved with in terms of political activities, especially those of the AARP are provided.
Before we converse about the AARP, let’s take a moment to acknowledge the American Seniors Association (ASA) and why and how it is different than the AARP. Accordingly, it is the mission of the ASA to assure that America’s seniors possess choices, information, and services they need to live healthier and wealthier lives, ASA members cherish the rights and freedoms granted them by their forefathers as fully embodied in our Constitution.
So in comparing another nonprofit organization to the likeness of the ASA, that being the AARP – formerly the American Association of Retired Persons, it is apparent that a transformation has taken place within the AARP; from a social welfare organization role to that of a partisan agenda-setting, profit making role. It goes without saying that portrayal of this role, or any select role for that matter, lends itself to creating distance from one’s entire constituent base. It appears that the AARP could not be any further, philosophically, from seniors who hold conservative thoughts and values. The question to ask here is how political, or better yet how partisan, do we want such organizations to become under the label of operating as a social welfare organization (SWO)? And by the way AARP is chartered as a 501(c)(4) entity, and such organizations are still identified as SWOs by the government.
Distinct from charities (who charter as a 501(c)(3) and who offer tax breaks for their donors, a 501(c)(4) entity is unable to offer their donors deductions on their income taxes, which makes for a profound disadvantage in fundraising efforts; however the advantageous flip-side of this is that (c)(4)s can engage in unlimited lobbying efforts in the name of social welfare, and invest in certain electoral activities (but just how much is still a gray area) versus charitable entities who cannot undertake these types of activities at all. Investments in political causes has returned positive windfalls for many (c)(4)s.
Back in 2012 an article written by Avik Roy (Forbes Staff) illustrated how the AARP made $2.8 billion by throwing their support behind Obamacare; where Roy summarized that Obamacare would cut some $716 billion from Medicare in order to pay for its $1.9 trillion budget that would expand coverage to low-income families. The question proposed at that time was why did AARP support a law that many seniors opposed? The answer is that Roy derived his article from a report published by then Sen. Jim DeMint (R-S.C.), where these Medicare cuts would generate a windfall of approximately $1 billion in insurance profits (discussed later) and furthermore preserve another $1.8 billion that AARP was already generating from similar business relationships.
Specifically, AARP lobbied to keep Medigap reforms out of Obamacare, due to the fact that AARP receives a nearly 5 percent royalty on every dollar that seniors spend on their Medigap plans. DeMint estimated this change would have cost AARP $1.8 billion over ten years. Adding to this problematic scenario, the Kaiser Family Foundation (KFF) determined that the reforms AARP blocked (those reforms offered by the conservative factions) would have saved the average senior as much as $415 in premiums per year. It was this direct show of advocacy, by the AARP, for former president Obama’s health reform agenda that upset numerous seniors, not just those of conservative orientation. As we know, Medigap plans (also known as Medicare Supplements) are private insurance plans for sale that are purchased individually to cover the items that the government-issued Medicare plan does not.
Back in 2011 an investigative report to honor the tireless work put forth by former House representative Ginny Brown-Waite of the 5th District of Florida (2003-2011) was published noting Brown-Waite’s unparalleled stamina in advocating for all seniors’ rights. A good portion of Brown-Waite’s platform is akin to the five (5) foundations that guide the day-to-day tactics exercised by the ASA, and those being: (1) Rebuild national values, (2) Reform social security, (3) Reform Medicare, (4) Reform the tax code, and (5) Control government overspending. This report was titled: Behind the Veil: The AARP America Doesn’t Know, authored by Representatives Wally Herger (R-CA) and Dave Reichert (R-WA).
Brown-Waite was cited as saying, "Every day I hear from constituents who are concerned that AARP no longer represents their values," she wrote, "They are surprised to learn that AARP is the largest reseller of insurance in the country and as such has a vested interest in seeing that the market for reselling supplemental insurance expands. " She went on to say, “AARP unfortunately has become a mouthpiece for this president (Obama) at the expense of what is best for America's seniors.” Many others repeated Brown-Waite’s conclusion where the thought of the day was that AARP was supporting heath care reform for the mere sake of securing additional revenue streams.
For those of you who don’t know, AARP has held a long-term marketing relationship with private insurer United Healthcare, a division of United Health Group (UHG), when combined they are the No. 1 seller of Medigap coverage, owning nearly 30 percent of the market per Mark Farrah Associates. Recall that the proposed conservative plan for reforming Medicare Advantage (MA – which is a program where the federal government reimburses private insurance companies a set amount to treat Medicare patients) contained some ‘extra’ benefits, to the point where patients did not require the Medigap insurance. Thus AARP was very critical of this ‘conservative’ proposed MA program, because they understood that it was being crafted as a true cost-containment plan, where open market competition among private plans would lower participant costs.
AARP is required to file as a nonprofit entity where on their IRS Form 990, one can see in black & white that they derive a significant proportion of their income from their co-branded marketing agreement with UHG in the form of royalties. It’s been estimated that royalties, depending on how sales figures are categorized, account for anywhere from 46 to 57 percent of its total revenues. Per the Herger-Reichart report, AARP’s total revenue stream was an extraordinary $1.14 billion back in 2009, and profits were $427.03 million! Is AARP in the business of selling health insurance, maybe so, and if so, would that not be a consideration to reclassify them as a for-profit organization?
Everyone has a different opinion as to the actual level of political activity a national SWO, like the AARP, should assert in terms of its political weight to turn a profit. Everyone would probably surmise that it is a good thing for any nonprofit to adopt marketing and operational practices from private businesses and become adept at doing more with less, while generating additional income to fund core social programs, and become less dependent on the government. Yet, tied to this profit is the principle of “public interest” and at what degree of meliorism do we determine just how impacting the AARP is in terms of reaching out and advocating for “all” seniors, no matter what political preference they hold. Overall Medicare has been a huge success for our elderly, America’s seniors are living longer, and profoundly it is due to the efforts of the ASA and other conservative organizations, making sure that any and all distributions or redistributions of social resources include those of America’s seniors first.