Charles Krupa/AP Photo
We still don’t know quite why the assassin of Brian Thompson targeted the CEO of UnitedHealthcare. But it’s hardly a secret that UnitedHealthcare has the worst record among all large insurers in denying necessary medical care to its subscribers.
The data confirm what far too many patients experience. In 2023, UnitedHealth’s denial rate of claims was 32 percent, compared to an industry average of 16 percent. Nonprofits had a far better record than for-profits.
I had assumed that UnitedHealth’s business model was to lowball premiums and then more than make up the profit by denying claims. But it’s even worse than that.
In Massachusetts, where I live, a supplemental Medicare policy from UnitedHealth costs $251 a month. An identical policy from Blue Cross, which has the state’s best record in not denying care, costs $212.
Why on earth would consumers buy such a flawed insurance product? It helps if they are captive customers, steered to UnitedHealth by a trusted source.
That would be AARP.
AARP has just under 38 million members. But AARP is basically an insurance marketing scheme masquerading as an advocacy group for the elderly.
For 27 years, UnitedHealth has been the co-branded choice of AARP. If you are looking for a supplemental policy to conventional Medicare, or a Medicare Advantage product, or a Medicare drug insurance policy, AARP will steer you to UnitedHealth. And only to UnitedHealth.
The reason is shameful. UnitedHealth kicks back 4.95 percent of premium income from AARP subscribers to AARP. And the numbers are staggering. According to AARP’s audited financial report, AARP made $289.3 million from member dues, but $1.134 billion from kickbacks from insurers, of which the lion’s share, $905 million, was from health insurers. AARP delicately refers to these as royalties.
And somehow, because it is a nonprofit, AARP manages to avoid income taxes on this kickback income. Despite Congress’s efforts over the years to make nonprofits pay taxes on commercial income, AARP paid only about $3 million in federal income taxes on “royalties” of well over a billion.
In its role as supposed advocate for the elderly, in 2003 AARP lobbied heavily in favor of George W. Bush’s misbranded and badly flawed “Medicare Part D”—the private insurance company drug insurance policies blessed by the federal government. Part D was mainly a way for UnitedHealth and others to make even more money and AARP to reap more kickbacks.
Over the years, AARP has been sued by members a number of times for its conflict of interest in promoting an inferior insurance product. The suits typically argue that were it not for the kickback, the premium would be lower. Credulous judges have thrown out the suits on the grounds that the premium rates had been duly approved by regulators, that premiums would not necessarily have been lower, and that the purchasers were consenting adults.
It’s not as if AARP is unaware of how unhappy its members are with the treatment they get from UnitedHealth. AARP sponsors a discussion forum for members, called its Online Community, and the comments are thick with scathing accounts of UnitedHealth claims denials and bewilderment that AARP would sponsor such a product.
AARP has issued no statement since the murder of UnitedHealth’s CEO. I placed several phone calls and emails to AARP’s media relations department, but they don’t want to talk to me. They also seem to be ghosting appalled members.
Among the other insidious things about AARP’s conflicted role is that it crowds out much-needed genuine organizations to advocate for seniors. One such worthwhile group, the National Committee to Preserve Social Security and Medicare, has an annual budget of about $8 million, compared to AARP’s more than $1.3 billion.
Two good things might come out of the current spotlight on UnitedHealth (and no, I don’t condone the murder). Bad publicity, and pressure from the membership, might cause AARP to dump UnitedHealth in favor of a less rapacious insurance carrier, or at least to offer members an evaluated choice. But don’t hold your breath. There is just too much money on the table.
More importantly, this disgrace should remind Democrats of the importance of defending traditional Medicare and making it harder for Trump and Elon Musk to trash Medicare in favor of private insurance products and billionaire tax cuts.
