AARP Collects Nearly $1 Billion in Medicare Licensing Fees Amid Conflict Concerns

AARP collects approximately $1 billion annually in licensing fees from AARP-branded Medicare Advantage plans, primarily administered by UnitedHealthcare, raising concerns over conflicts of interest and the impact on taxpayers and seniors.

These fees, calculated as a percentage of plan spending, create incentives for higher plan costs and potentially influence AARP's endorsement strategies, as the organization has not distanced itself from plans facing federal investigations for alleged fraudulent billing practices and denials of medically necessary care. AARP-endorsed Medicare Advantage plans are heavily concentrated in Special Needs Plans (SNPs), which are more profitable and costly for Medicare despite not necessarily delivering improved health outcomes compared to standard plans.

Marketing practices for these plans include offering significant incentives like prepaid debit cards for non-medical expenses to seniors, particularly low-income beneficiaries, which may encourage enrollment in plans that restrict access to care while resulting in higher denial rates. The partnership between AARP and UnitedHealthcare positions AARP more as a marketing entity benefitting financially from Medicare programs rather than an independent advocate, with additional relevance due to AARP's active lobbying aligned with certain policy positions related to healthcare funding and reforms.

Proposed regulatory reforms include capping or banning endorsement royalties from taxpayer-funded health programs, restructuring Medicare payments for SNPs to tie reimbursement to improved outcomes, and eliminating the use of non-health-related incentives in plan marketing to ensure seniors select plans based on health benefits. The article argues that AARP’s current funding from Medicare is unnecessary, given its substantial revenue from membership dues, and that congressional action is warranted to address what it describes as a rent-seeking model that diverts taxpayer funds without delivering direct healthcare services or assuming risk.