86 percent of AARP members support the Medicare rebate rule that AARP opposes

Eighty-six percent of AARP members support the administration’s proposed rule to reform the rebate system in Medicare Part D, according to a nationwide Morning Consult survey commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA). Despite overwhelming support from their membership, AARP continues to oppose the rebate rule while receiving hundreds of millions of dollars in revenue from insurance companies every year.

In Medicare Part D, insurers and pharmacy benefit managers (PBMs) negotiate significant rebates on medicines, but often don’t share those savings with seniors directly. The rule proposed by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) would change this by ensuring the rebates negotiated with biopharmaceutical companies are entirely passed through to seniors at the pharmacy counter.

Even after being told it may increase premiums by $3 to $6 per month, the vast majority of AARP members -- 73% -- support the proposed rule since savings at the pharmacy counter would more than offset premium increases. For example, a senior with diabetes taking five medicines, including insulin, could save nearly $900 a year, according to Avalere Health.

In comments submitted on the rebate rule (see here and here), AARP consistently opposes it, echoing concerns raised by insurance companies, from whom AARP has received the vast majority of their revenue in recent years. Eighty-five percent of AARP members say they are disappointed in AARP for siding with insurers in opposition to the rebate rule, according to the new survey.

“We are fighting to lower costs for seniors by forcing insurance companies and middlemen to share negotiated savings at the pharmacy counter,” said PhRMA executive vice president of public affairs Robert Zirkelbach. “Yet AARP is choosing to stand with insurance companies rather than their own members. It begs the question: Who is AARP really fighting for?”

The new advertisements will be featured in print, digital and social channels in Washington, D.C., and select states. The first print advertisement highlights AARP members’ support for rebate reform and AARP’s alignment with insurance companies in opposition to it.

View the new print advertisement here.

Key facts about AARP’s relationship with insurance companies:

• Since 2010, AARP has made more than $4.5 billion in royalties and investment income as a result of their relationship with insurance companies. AARP consolidated financial statements available here: 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017.
• Additionally, according to a news report, “A review of AARP’s financial statements shows that since 2010, AARP has made more than $4.5 billion in income from…health insurance plans and generating investment income from plan premiums.”
• Additional news reports note that, “Much of AARP’s revenue comes from its connection to United Healthcare Group (UHG). While AARP collected $301 million in membership dues in 2017, the organization took in about $627 million in royalties from UHG.”
• According to a 2011 Congressional report, “United is AARP’s largest business partner. As part of the United and AARP business agreement all three of the Medicare insurance product lines are marketed under the AARP brand name.” This same report further found that “State insurance rate filings show that, in 2010, AARP retained 4.95% of seniors’ premiums for every Medigap policy sold under its name.”
• A news report quoted a former AARP executive as saying that, “The new arrangement with insurance companies creates a tremendous number of potential conflicts for AARP.”