Obamacare doesn’t stop Medigap providers, AARP partners from discriminating against seniors

Matthew Boyle Investigative Reporter
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The Daily Caller has learned that Democratic lawmakers omitted a section of Obamacare in the summer of 2009 that would have stopped Medigap plan providers, including American Association of Retired Persons (AARP) partners, from discriminating against seniors with pre-existing conditions.

Democrats removed a section that would have required “guaranteed issue,” or coverage regardless of preexisting conditions, for Medigap plans from an early version of the Obamacare bill.

Medigap plans are supplemental coverage that Medicare recipients may purchase. They insure seniors a step further than the basic Medicare coverage.

TheDC has obtained an early copy of the Obamacare bill, dated June 19, 2009, which shows the bill’s original authors had intended to stop AARP partners and other Medigap providers from discriminating against seniors. But, at some point between then and early fall 2009 when Democrats introduced the bill into the House, that provision was removed.

A House Democratic aide told Kaiser Health News (KHN) earlier this year that the Medigap provision was removed from the bill because it cost too much.

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The “provision to provide disabled Medicare beneficiaries better coverage was dropped from the legislation during congressional negotiations because it would have increased Medicare costs, according to a House Democratic congressional aide,” wrote KHN’s Susan Jaffe on March 7. The Congressional Budget Office (CBO) estimated that the exact cost of the provision was $4.1 billion.

The AARP said numerous times throughout the Obamacare debate that it would forgo profits to cover costs of improved health insurance for seniors. “To suggest there is a commercial conspiracy is ludicrous,” AARP’s chief lobbyist David Sloane told the Tacoma News-Tribune in October 2009, referencing charges that the AARP was supporting Obamacare in order to bolster its partners’ Medigap programs and, thereby, making profit. “As we have said, we would gladly forgo every dime of revenue to fix the health care system.”

The AARP generated more than $675 million in 2010 “royalty revenue,” or “kickbacks” as some of its members refer to them as. More than $440 million of that came from AARP’s partnership with United Health Group, a Medigap provider AARP lends its brand to in exchange for royalties.

Jim Martin of 60 Plus, the conservative version of the AARP, told TheDC that this new revelation shows what he thinks the AARP really is: “The Association Against Retired Persons.”

“They’re betraying seniors while going after the almighty dollar,” Martin said. “I don’t mind them making a profit if they use their own dime to do it. But, as you well know, they’ve received well over a billion dollars in tax dollars throughout the years now.”

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A spokesperson for the AARP told TheDC, though, that the group did support a Senate-side piece of legislation introduced by Sen. John Kerry, Massachusetts Democrat, that the AARP contends would have been similarly financially damaging. “We supported including the provision in the health care law, and we continue to support it as standalone legislation,” AARP spokesperson Jim Dau said in an email. “We believe everyone in Medicare should have the same consumer protections, regardless of their health history.”

Kerry’s bill hasn’t moved through the Senate yet.

As for the reason why the AARP hasn’t stepped in and covered the CBO’s estimated $4.1 billion over 10 years in costs for implementing guaranteed issue for Medigap plans, Dau said AARP-branded Medigap plans have accepted almost all applicants.

“In 2010, UnitedHealthcare accepted 99.92% of applicants for AARP-branded Medicare supplement plans,” Dau said. “We can’t control who other Medigap providers choose to insure, but we can lend our name to products that offer access to more Americans than other plans on the market. With the exception of end-stage renal disease, AARP branded plans accept all beneficiaries regardless of preexisting health conditions. Those who apply for coverage while in the hospital, within 90 days of a hospital stay or with a recommendation for surgery may be deferred until 90 days after their hospital stay or surgery.”

Martin still thinks the AARP has been getting political favors from the institutional left for a long time, and the Obamacare legislation is finally bringing it to the surface. “They don’t like us a lot at 60 Plus because we came along and started exposing them, quite frankly, for what they are,” Martin said. “They hide behind seniors to make huge profits.”