AARP and Obamacare

As you may already know, the Affordable Care Act (ACA), widely known as the Obamacare, has cut billions of dollars from Medicare with a purpose to pay for the health care reform’s $1.9 trillion coverage expansion to cater to low-income individuals and families in the US. This is one of the main reasons why older people are more against this new law compared with other age groups. Now, why does the American Association of Retired Persons (AARP), an organization that speaks for seniors, strongly support a law that most of the people they are catering to refute? According to reports, it is because the Medicare cuts imposed by the ACA are the same thing that will generate AARP billions in insurance profits from their business interests.

How AARP Works

AARP is not just your ordinary citizens’ advocacy group, but is one of the biggest private health insurance providers in the country. The organization has been generating millions in royalty fees from the so-called “Medigap” plans, which are private insurance policies that seniors purchase to cover for things that the government-run Medicare does not, such as coverage for catastrophic events. Moreover, Medigap plans help older people with eliminating the deductibles and co-pays that are designed to control or hold back wasteful spending on Medicare.

AARP’s Position on the ObamaCare

According to AARP’s website, the organization is a huge institutional backer of the ObamaCare because it contains benefits and protections for their members. Among the many ACA provisions they expressed support to include additional preventive services (such as cancer screenings and immunizations), annual wellness visits, care coordination efforts and the closing of the Part D “donut hole”. After the ACA’s upholding by the Supreme Court, AARP CEO A. Barry Rand said, “We are pleased that the Supreme Court found the majority of the Affordable Care Act constitutional. We look forward to the continued implementation of this critically important legislation so that millions of Americans can continue to receive the benefits it provides. AARP will continue to be a source of information and support as Americans navigate the benefits of the law.”

Now, the organization also likes to see a cut for the Medicare Advantage Plans (Part C) subsidies and the continuing efforts to refine the Plan Rating System on the part of the Centers for Medicare & Medicaid Services (CMS). As believed by AARP, Part C payments should be based on benchmarks that do not go over fee-for-service costs. Generally, the group supports private insurance options as long as the Medicare program will remain an affordable and viable option. However, they do not support private fee-for-service or medical savings accounts, which they believe would risk attracting healthier enrollees who will prove too costly for Medicare in the long run, leaving them with the unhealthiest of beneficiaries.

Benefits Gained by AARP from the ObamaCare Mandates

One huge part of bipartisan plans in the past is adding coverage for catastrophes to Medicare, while preventing Medigap plans to waste money, which is a key to Medicare reform. According to the Kaiser Family Foundation, reforms in Medigap that AARP has blocked would have saved seniors hundreds of dollars in premiums each year. However, the organization has aggressively (and successfully) lobbied to keep reforms in Medigap out of the ACA, as they will receive 4.95% of royalty on each dollar older people spend on their Medigap plans. Not only this, but the organization has succeeded in persuading Democrats to waver Medigap reforms. Now, with the new law making cuts to Medicare Advantage, many senior citizens will be driven out of the program and into traditional and government-run Medicare, increasing the number of individuals who need Medigap insurance.

Exemption of AARP Medigap Plans from the ACA Insurance Mandates

The organization’s Medigap plans are exempt from most of the best-known insurance mandates by the Obamacare, including the ban that requires insurance companies to take all comers, without considering pre-existing conditions, and the cap on insurance industry executive compensation. Also, AARP plans are exempt from the premium tax levies that are being imposed on other private insurance providers. Moreover, these plans are allowed to have twice the administrative costs that other private insurance companies are allowed to have under the ACA medical loss ratio regulations, a provision that bears great significance, as AARP’s 4.95% royalty is a substantial administrative cost.

Now, Democrats are routinely excoriating private insurance companies for supposedly putting profits above people. As what President Barack Obama told AARP, “No American should ever spend their golden years at the mercy of insurance companies.”

Implications of AARP’s Support to the ACA Health Care Changes for Seniors

According to Executive Vice President of AARP John Rother, older people in the US use more healthcare services than other age groups and are among those who receive the most benefits from reforms that enhance healthcare quality at lower costs. He said that they are fighting in behalf of their Medicare members for improvements that will reduce costs of prescription drugs, improve quality of care and maintain access to physicians. For people 50 to 64 years of age who do not have employer-based insurance and often find themselves in a bad place in terms of health coverage, the health care reform is stated to guarantee that they will have insurance even if they lose their job or have pre-existing conditions.

On the other side of the coin, President of 60 Plus Association Jim Martin said that seniors will definitely benefit from the right kind of reform—one that improves and protects the Medicare system that these people have paid for most of their lives, as well as extends care options and inspires more individuals to become doctors and nurses. But for him, the reform that is currently being proposed could be devastating to the country’s senior health care. He said that, while the ObamaCare has proposed adding millions of individuals to the government’s health care plan and cutting billions of dollars from Medicare, there is no plan to add new doctors, which means that as government obligations grows and resources shrink, older citizens will be negatively affected.

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