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Originally published March 30, 2011 at 8:12 PM | Page modified March 31, 2011 at 8:20 AM

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Reichert claims AARP had hidden motive to back health-care overhaul

Did AARP, the nation's leading advocacy group for older Americans, fight for last year's federal health-care law to the detriment of its members? Guilty, according to U.S. Rep. Dave Reichert and his fellow House Republicans — and they contend AARP had a motive.

Seattle Times Washington Bureau

WASHINGTON — Did AARP, the nation's leading advocacy group for older Americans, fight for last year's federal health-care law to the detriment of its members?

Guilty, according to U.S. Rep. Dave Reichert and his fellow House Republicans — and they contend AARP had a motive.

On Wednesday, three members of the House Committee on Ways and Means released a report detailing what they called troubling conflicts over the nonprofit group's multimillion-dollar foray into for-profit insurance businesses.

Titled "Behind the Veil: The AARP America Doesn't Know," the report takes aim at possibly stripping AARP of tax-exempt status. The organization was one of the most vocal supporters of the Affordable Care Act, which Republicans are attempting to repeal.

But AARP said profit had nothing to do with its support for President Obama's health-care overhaul, which matched the group's long-standing goal of expanding coverage to nearly all Americans.

Reichert and other Republicans have previously criticized AARP's insurance ventures, under which commercial carriers sell Medicare Advantage, Medigap and other insurance products with AARP's imprimatur in exchange for royalties.

The new 34-page report purports to document how AARP stands to reap "a financial windfall" of more than $1 billion over the next decade as a result of the new health-care law.

For instance, according to the report, UnitedHealthcare has nearly 10 million members in its AARP-branded medigap, Medicare Advantage and Part D prescription drug plans. That ranks UnitedHealthcare as the largest player in the Medicare insurance market, ahead of Humana and WellPoint.

"We are very disappointed in the report and reject its conclusions," said AARP President Lee Hammond. "AARP is no more an insurance company than we are an online-travel company. ... The royalties we receive allow us to keep member dues low."

Speaking at a news conference, Reichert said it puzzled him long before the passage of the health-care law why AARP would endorse the legislation, which included $500 billion in cuts to Medicare spending while expanding coverage to millions of uninsured people.

The explanation, he contends, is that AARP had a hidden financial motive.

Reichert noted that he worked as a homicide investigator for 14 years and as King County sheriff for eight years. He said "the law-enforcement officer" in him was outraged that AARP was possibly misusing its tax-exempt charter.

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Republicans want the Internal Revenue Service to look into the matter. AARP operates a nonprofit public-policy unit and a for-profit, taxable subsidiary. AARP's 2009 revenues totaled $1.4 billion, 46 percent of which came from licensing its name on insurance products.

The Republicans theorized that AARP supported the reform bill despite the inclusion of $155 billion in cuts to private Medicare Advantage plans over 10 years because it stood to profit if enrollees switched to AARP-branded Medigap coverage.

But AARP licenses its name on Medicare Advantage plans as well. It has said cutting extra taxpayer subsidies for Medicare Advantage enrollees — which amounted to an average of 14 percent more in 2009 than for seniors covered under traditional Medicare offered through the government — would put the whole program on sounder financial footing.

In the past, AARP angered Democrats when it supported former President George W. Bush in creating a Medicare prescription-drug benefit offered through private insurers rather than through the government. After that program was launched, the plan sponsored by AARP became the most popular in the nation.

The Associated Press contributed to this story.

Kyung Song: 202-662-7455 or ksong@seattletimes.com

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