Follow the Money ............

I tore up my AARP membership when I realized that one of their much-vaunted programs relative to car insurance was ripping me off.

For those outside these United States or who hail from Lake Havasu City and, come to think about it that’s pretty much the same thing, AARP stands for “American Association of Retired Persons”.

This “worthy” bunch is supposed to lobby on behalf of the senior citizenry in this country and therefore their support for the Pelosi bill on healthcare was and is puzzling to many. To so many in fact, that literally hundreds of thousands of equally frustrated seniors lobbied the AARP offices by ‘phone and email and put teeth into their objections by canceling their subscriptions too.

Why the health reform endorsement by AARP when it is very clear that the bill, if passed in anything like its current form, will severely impact Medicare which most seniors rely on to a greater or lesser extent?

Well here’s the dirty little secret.

AARP collects royalties on "Medigap ," a privately purchased insurance coverage that helps pay some of the health-care costs that Medicare doesn't cover.

However, seniors have the option of joining Medicare Advantage plans, allowing them to use Medicare funds to purchase private insurance plans that offer extra benefits and lower copayments than the Original Medicare Plan. An estimated 10.2 million seniors have enrolled in Medicare Advantage.

When seniors enroll in Medicare Advantage plans, they often drop Medigap policies because Medigap plans won't pay deductibles, copayments or other cost-sharing under the Medicare health plan. The switch slashes Medigap revenues - and simultaneously impacts AARP royalties from Medigap insurance.

However, Section 1161 of the House bill would slash payments to Medicare Advantage health plans used by 20 percent of seniors and cause them to lose some benefits, including vision and dental coverage.

According to the Galen Institute, one of the leading health-care policy organizations in the country, AARP saw that it would lose revenue if it didn't stop the Medicare Advantage programs.

The Galen Institute says the House bill would dramatically cut money out of Medicare Advantage programs, forcing people to need the Medigap policies that are such a big cash cow for the AARP. The legislation would kill competition that the AARP has with these Medicare Advantage programs, and it boosts the number of people who need the Medigap insurance because Medicare is going to become an even more deficient program than it is now.

According to the AARP website, the group promises seniors it will be a "voice in Washington and in your state, representing you on issues like Medicare, Social Security and consumer safety."

But the majority of the money AARP collects doesn't come from its annual $16 membership dues.

According to AARP's 2008 consolidated financial statements, the group received nearly $653 million in royalties from private insurance companies that sold products referred by AARP in 2008. It also received an additional $120 million for the ads placed in its publications.

By contrast, AARP collected $249 million in membership dues last year.

And now, as Paul Harvey used to put it, you know the rest of the story.