AARP Benefits Financially From Medicare Prescription Drug Benefit

Armen Hareyan's picture
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Medicare Prescription Drug Benefit

Some advocateshave expressed concern over the commercial success of AARP-brandedMedicare prescription drug plans, administered by UnitedHealthcare Services, the Philadelphia Inquirer reports. AARP's Medicare drug plans account for the No. 1 selling planin the nation -- the AARP MedicareRX Preferred -- and two others in the topfive, though they "often cost hundreds of dollars" more annually thanthe lowest-priced competing plans, according to the Inquirer. Thethree plans trump the sales of any other brand of drug plans, including thosemarketed by UnitedHealthcare that do not carry the AARP name.

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According to the Inquirer, "While its cachet comes fromadvocacy, AARP is also an entrepreneurial juggernaut that profits from theMedicare drug benefit it helped pass." However, Judith Stein, executivedirector of the Center for Medicare Advocacy, said she is concerned about AARP'sdual role as an advocate and commercial enterprise. Stein said, "Theprivatization of Medicare in general is a very bad thing and a good thing forthe companies that are making a huge profit. When one of those companies isbenefited by the AARP brand, I think it's a conflict."

Experts attribute the success of AARP's plans to appeal of the brand and thetrust consumers have in the organization. "It's peace of mind. That's whyAARP/United is able to get a premium," according to Richard Stefanacci,director of the Center for Medicare Medication Management at the University of the Sciences in Philadelphia. The Inquirer reports, "Asthe Dec. 31 deadline approaches for Medicare members to change plans or signup, many seniors are choosing AARP to cut through the clutter of a confoundingmarketplace." The not-for-profit reached $1 billion in revenue last yearand expects to see $4.4 billion in sales over the next seven years from newdeals with Aetna and UnitedHealthcare (Stark, PhiladelphiaInquirer, 12/20).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.

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