In a move that rivals Johnson & Johnson's (NYSE:JNJ) decision to sue the Red Cross in the quest for the Maybe-There's-a-Better-Way-to-Solve-This Award, Republicans this week decided to pick on the beloved AARP.
No matter which side of the health-care debate you fall on, it's easy to see that Republicans are going to have a tough time coming out of this fight looking like the good guys, even if they are right.
What's in a name?
For a nonprofit with a well-recognized name like AARP, about $650 million. That's the amount the nonprofit made from licensing its name to companies carrying AARP-branded products, such as credit cards and insurance policies. UnitedHealth Group (NYSE:UNH), which sells AARP-branded Medicare Advantage and Medigap coverage to seniors, contributed 63% of that amount, according to reports.
Republicans want to know whether AARP would get more money from its branded Medigap policies, because it's expected that cuts to Medicare Advantage will result in having seniors switch from Medicare Advantage to cheaper Medigap coverage. If that's true, Republicans say AARP may be supporting health-care reform simply because it'll make more money.
Even so, does it matter? AARP is a nonprofit organization, after all. If it's going to make more money by having the legislation passed, then it'll obviously have more money to support seniors and can save money in other areas. It's kind of a cyclical argument.
And besides, there's a much simpler reason AARP supports health-care reform.
Caught in a pickle-flavored doughnut hole
It's true that health-care reform isn't going to be perfect for seniors. There's a good chance that Medicare Advantage payments are going to get cut. Doing so will result in less coverage or higher rates by the private insurers that offer the plans.
But the cuts were coming whether a larger health-care reform happened or not. The Medicare Advantage program, which offers additional service above what Medicare provides, is an easy target because it costs the government 14% more to cover someone on it rather than somebody on traditional Medicare. AARP had to pick its battles, and not everything about the health-care bill is bad for seniors.
For instance, the bills making their way through Congress contain a deal negotiated by AARP to get pharmaceutical companies such as Pfizer (NYSE:PFE) and Merck (NYSE:MRK) to cover some of the doughnut hole in the Medicare Part D prescription-drug program.
Seniors currently have drug coverage up to a certain dollar amount, but then they have to pay the full amount of their drug costs -- the doughnut hole -- before catastrophic drug benefits kicks in. This year, that hole is about $4,350 of out-of-pocket expenses. In addition to costing seniors quite a bit of money, it leads to health deterioration, as some seniors simply stop taking medications when the first-level coverage runs out.
Pharmaceutical companies have pledged rebates of up to 50% to cover costs while seniors are in the doughnut hole, but only if comprehensive health-care reform passes. In other words, the industry is willing to kick in, but only if everyone else is, too.
Shut up and get it done already
It's not just Republicans who are playing the worthless blame game. Democrats went on a witch hunt earlier this year, when they questioned health insurers such as Aetna (NYSE:AET) and Humana about their profits.
I'd love to see lawmakers stop with the name-calling and get a health-reform bill passed, but I guess there's tradition in blaming other people. Remember when a previous Congress hounded executives from ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), and other big oil companies about why oil prices were so high?
Unfortunately, it's politics as usual in Washington, and it doesn't appear that it's going to change -- even when it's your mom's health at stake.
Does the AARP have seniors' interests at heart? Or is the organization just after the money, as Republicans seem to claim? Let us know what you think in the comments section, below.
