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AARP of Two Minds on Private Plans
By Thomas Goldsmith, The News & Observer
November 12, 2007
The nation's largest senior advocacy group, AARP, is warning North Carolina seniors about enrolling in privatized Medicare insurance while also earning money for endorsing three of the plans.
As a Medicare sign-up period nears next week, the state office of the powerful organization joined other groups on Thursday to caution people about signing up for one of the private plans. Some of the insurance policies have brought congressional scrutiny and thousands of complaints nationally.
But in television and newspaper advertisements, AARP is endorsing three plans under the name MedicareComplete, touting it as "the only Medicare Advantage plan with the AARP name."
"We are a part of AARP, and these insurance product endorsements are by AARP," state director Bob Jackson. "If bad things happen, it will affect us."
Jackson said his office will monitor the performance of the new policies.
The apparent discrepancy between the group's advocacy role and its business interests stems from the dual nature of AARP, known for the political clout of its more than 39 million members. Its lobbying and educational activities are funded in part by the for-profit subsidiary AARP Services Inc., which licenses its brand to a wide range of products -- including the new private Medicare insurance policies, called MedicareComplete.
"While there is an endorsement by AARP, or anybody else, you need to make sure that it's a plan to fit your needs," said Carla Obiol, deputy commissioner of North Carolina's Senior Health Insurance Information Program, or SHIIP.
At an informational session at a Zebulon church Thursday, state Insurance Commissioner Jim Long told a group of seniors to take care as they encountered a slew of offers for all the plans.
"You must know what is best for you before you make any changes to your Medicare," Long said.
Bob Hayes, president of the Medicare Right Center, a nonprofit advocacy agency in New York City, called the private Medicare policies "an incredibly complex and difficult market for consumers."
"There's no doubt in my mind that UnitedHealthcare made an inspired business decision in effectively purchasing the AARP brand," Hayes said. "The AARP brand is a comfort zone for people."
Medicare Advantage plans -- more than 70 are being marketed in North Carolina this year -- are authorized by Medicare, but are set up by private companies. People who join are no longer covered by traditional Medicare, a distinction that has been lost on many of those who have enrolled in recent years, say nonprofit and state officials.
"In general, they are worrisome for a lot of people that we have seen," said Gina Upchurch, executive director of Senior Pharmassist, a Durham nonprofit agency. "The major reason is that people have very little understanding of what they are enrolling in. They are not aware they are entering the private insurance market."
Secure Horizons
AARP's partner in the plans is UnitedHealthcare's Secure Horizons affiliate, which has generated numerous complaints in North Carolina and elsewhere. In March, two relatives of memory-impaired residents in a Wake County assisted living center said a salesperson marketing Secure Horizons switched the residents from traditional Medicare to private plans with high deductibles and no access to WakeMed.
Many of the hundreds of complaints associated with private Medicare in North Carolina have arisen from fee-for-service plans, under which consumers are not guaranteed coverage by specific providers. These plans are not endorsed by AARP.
Even so, there's room for confusion, state officials and others said. Many seniors give weight to AARP's endorsement because of its image as their advocate.
"People are going to see AARP endorse Secure Horizons, and if they see any product with Secure Horizons on it, the average consumer would relate that to AARP," Obiol said.
Jon Oberlander, associate professor of social medicine at the University of North Carolina at Chapel Hill, said the relationship presents a potential conflict of interest.
"On the other hand, if they did a good job with this, you could say that's a good thing," Oberlander said.
The for-profit division of AARP is earning a royalty that the group would not disclose for lending its name to the new insurance plans. Meanwhile, the education and lobbying part of the organization is arguing in Congress that Medicare Advantage costs the country far too much and should be scaled back.
But the AARP-endorsed plans sold in North Carolina are marketed at the going rate -- a rate that AARP's advocacy arm says produces inflated profits for insurance companies.
"It's like the Wild West right now," Oberlander said. "We've created a Medicare frontier, and there's a lot of money to be made."
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