PS to Medicare Advantage and to the AARP

Some additions and corrections to the piece I wrote 7/18/08 about Medicare Advantage (MA) insurance taking a hit from Congress:

For one thing I blamed media for not being on top of this, when in fact it was the private insurers such as Humana that should have been alerting everybody - most of all their own subscribers. But I, a Humana subscriber, still haven't heard from these folks about what happened in Congress or what it means to subscribers. That's pretty disheartening.

I also blamed AARP for instigating a massive panic attack among oldsters who were led to believe their medical services were at risk. In doing so, I implied that AARP did not sell MA.

A reader corrected me on that one and caused me to spend hours of research on the AARP and what it sells. Turns out AARP does offer an MA plan, but you have to know what you want and you have to aggressively search to find it. Meanwhile their other types of insurance are shoved at members from every angle. I suspect that the best profit for AARP isn't in MA but in Medicare Supplement (or Medigap) insurance.

AARP makes clear in its advertising of health and other types of insurance that it is not an insurer - as though AARP is merely offering these plans as a favor to members.

However, if you sort through the AARP financial statement offered in pdf format at this link you can read there - Note 3, page 12 (and in another place) how AARP sells insurance without underwriting it: It collects premiums, skims off a part of the profit, and remits to insurance underwriters.

On that same page it reports a haul for AARP of $497,635,000 for this part of its business. Compare that with membership dues bringing in $297,353,000. Note, too, that AARP has divided itself into various branches, some of which are not of the non-profit variety.