AARP's tax exemption is as justified as making Costco tax exempt

AARP: Money First, Seniors Second

By Russel Hanson

We've all heard of AARP: that friendly, non-profit organization that just wants to help our seniors? Wrong. While AARP, formerly known as the American Association of Retired Persons, is technically considered a private not-for-profit organization, they were founded in 1958 with a primary mission to sell seniors health insurance. That's right, sell. As in to make money.

Obviously, I have no problem with people or businesses selling things; the more products and services on the market, the more selection and the more competition. The free-market system has allowed us to become one of the greatest nations in the history of mankind. But when an organization's primary mission is to sell a product (in this case health care insurance) and spends tons of money on lobbying and political contributions, it should not be eligible for tax-exempt status.

Many Republicans in the 112^th Congress recognize this. In fact, in April, Reps. Wally Herger and Dave Reichert released a report entitled "Behind the Veil: The AARP America Doesn't Know" to address the reality that AARP has violated their 501(c)(4) tax-exempt status. As to why it took this long for people to wake up to this fact, who knows? But as least some have seen the light.

The report points out that AARP makes its money primarily from insurance industry royalties, which accounted for nearly 46% of their revenue in 2009, whereas membership dues accounted for a measly 17%. It is highly unlikely that AARP would be such a political behemoth (and bully) if not for these royalties.

What many AARP members don't know is that their money is often being spent on lobbying and political contributions, primarily on Democratic causes. AARP claims that they do "not endorse candidates for public office ormake contributions to either political campaigns or candidates." Of course, because that would be illegal. But its employees do make such contributions. According to Open Secrets, from 2007-2008, AARP employees contributed to twenty federal candidates, 16 of whom were Democrats. Only $550 went to Republican presidential nominee John McCain, while Barack Obama received $30,901. AARP employees also contributed $496,169 to state candidates in 2008.

In addition, in 2009 and 2010, the years in which the roiling debate over health care took place, AARP spent over $43 million on lobbying. In 2010, it directly employed sixty-five lobbyists (and six indirectly) through firms including Quinn Gillespie & Assoc and Williams & Jensen.

AARP is a political juggernaut, and it knows how to toss its weight around. As a result, few dare to challenge the organization. That is why AARP has been allowed to masquerade as a non-profit organization for so long, dodging taxes and hiding its true purpose: to sell insurance.

AARP's political clout helped get Obamacare signed into law. Though initially somewhat quiet, at least publicly, AARP's spokespeople ended up strongly and vocally backing the legislation. After the Senate passed it, the CEO of AARP, A. Barry Rand, said in a press statement that "[p]assage of the Senate health care reform bill clears the way for Congress to enact legislation in the coming weeks that will protect and strengthen Medicare, ensure millions more Americans can get affordable health coverage and sharply curtail discriminatory insurance company practices that keep those most in need out of the system."

This is yet another untruth from AARP. The CEO claims that ObamaCare "will strengthen and protect Medicare." But what he and AARP never mention is that Obamacare cuts nearly $530 billion from Medicare. This is odd, given that AARP claims that its primary mission is to protect seniors' best interests. But ObamaCare amounts to a massive shift of health care funding away from seniors already covered by federal health plans to new non-senior recipients who may now be eligible for coverage under the law.

This certainly does not benefit seniors, so why would AARP support it? Because it financially benefits AARP.

According to the report by Reps Herger and Reichert, "AARP's stated concern about insurance industry practices as the basis for endorsing the health care law directly conflicts with its financial dependence on these same insurance companies and the profits it stands to make from resulting changes to the way seniors will get their health benefits." The report points out that Medicare Advantage will be cut severely and result in fewer benefits for seniors and higher premiums. In addition, as a result of ObamaCare, a projected 4.9 million fewer seniors will be enrolled in Medicare Advantage.

How does this help seniors? It doesn't. In fact, it does the exact opposite: seniors will get less care and will pay more for it. How does it help AARP? These seniors who need insurance will have to turn to the only other available option: Medigap, a private supplemental health insurance plan you can buy from AARP. It's a good thing they're looking out for you, seniors!

That is only one of the ways in which AARP benefits while seniors suffer from Obamacare. The report details several others.

This chicanery says nothing of the scare tactics and propaganda that AARP is pushing on seniors against the Republican budget authored by Rep. Paul Ryan. In one shameful television ad, AARP impliess that Republicans want to cut Social Security and Medicare. "You've worked hard your entire life," the ad says as melancholy music plays in the background. "Paid your dues, raised a family. You've earned a little peace of mind. Now, some in Congress want to make harmful cuts to Medicare and Social Security, cutting your benefits so Washington can pay its bills." The voiceover goes on as seniors look forlornly into the camera. It is obvious that AARP is referring to the Paul Ryan budget, since that is the only high-profile plan yet that attempts to reform Medicare. After all, the Democrats haven't passed a budget at all for nearly two years.

Unlike the ObamaCare plan, which AARP supported, Paul Ryan's budget, The Path to Prosperity, does not cut change Medicare at all for people over fifty-five. It does not even touch Social Security. So it the AARP ad on is entirely misleading. What the Paul Ryan plan does is reform Medicare (which otherwise will be bankrupt in thirteen years) so that future generations won't have to worry about whether or not they will be receiving health care benefits for a program they will be paying taxes for. It helps make the program solvent once again.

Those are the dirty little secrets of AARP, an organization with a penchant for liberalism and a strong tendency to gravitate toward profits instead of the well-being of seniors. Of course, a profit motive is fine so long as AARP pays taxes befitting its true nature -- i.e., not as a non-profit senior advocacy group, but as a corporation bent on churning up big profits.