After a Senate inquiry found evidence that AARP has deceptively marketed certain limited-benefit health insurance plans, the lobbying group has taken the plans off the market and hired an independent investigator.
The plans in question are offered by UnitedHealth Group through AARP and aimed at people ages 50 to 64. Although they have names like AARP Medical Advantage, Essential Plus and Hospital Indemnity Plan, they cap the amount that the insurance pays for medical services and do not provide catastrophic coverage for members.
The payment caps for high-cost procedures may be far less than what members will actually have to pay. For example, one of the Medical Advantage plans will pay no more than $5,000 for surgical procedures that may cost two or three times that amount. To sell the plans, the marketing materials focus instead on coverage for lower-cost procedures.
"In fact," said Sen. Charles E. Grassley (R-IA), the senior Republican on the Senate Finance Committee, "there's no basic protection against high medical costs. The products may leave consumers seriously in debt if they need intensive medical care. "
Bonnie Burns, an insurance counselor at California Health Advocates, an education and advocacy group, told The New York Times that "[t]hese limited-benefit policies have been a problem for many years. Uninsured people buy them thinking they are equivalent to major medical coverage, but they are not."
The UnitedHealth Group plans have about one million members. Although AARP is best known as a powerful voice in Washington, D.C., for retirees, it also relies on its respected name to sell various kinds of insurance as well as travel services, mutual funds and credit cards. The organization's operating revenue last year was $1.2 billion.
The investigation into the health plans will be conducted by Elizabeth Rowe Costle, the insurance commissioner of Vermont from 1992 to 2003, when Howard Dean was governor.
For an in-depth Senior Journal article on the controversy, click here.
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