UnitedHealth paid AARP $9B to sell Medicare products
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AARP received $9 billion in royalties from UnitedHealthcare last year as part of an agreement to continue selling AARP-branded Medicare products, according to updated financial statements recently posted on the advocacy group's website.
Why it matters: The disclosure sheds more light on a partnership dating to the 1990s between the nation's biggest health insurer and the largest seniors' group, which has nearly 38 million members age 50 and older.
- Critics have questioned whether there's a conflict in AARP lobbying on Medicare issues while it collects large sums from firms selling to Medicare patients.
Driving the news: AARP said it restructured and extended an existing agreement with UnitedHealthcare last year for an additional 12 years, collecting a one-time royalty payment just over $9 billion.
- The balance of deferred revenue stood at $8.72 billion as of Dec. 31.
- An AARP spokesperson said the arrangement was made through a subsidiary, AARP Services Inc. (ASI), that's managed separately and has no input on AARP's policymaking.
- AARP has loaned its name to other insurance and health-related products, including life insurance and long-term care plans.
What they're saying: The restructured agreement with UnitedHealthcare changed monthly royalties to one fixed upfront payment that "strengthens AARP's long-term capacity to deliver on our social mission and advocacy work for older Americans," said the spokesperson, Sarah Lovenheim.
- She said the subsidiary continues to review all Medicare products carrying the AARP name, ensuring they meet standards for quality and value.
- UnitedHealthcare, in a statement, said it's "very pleased" with the first year under the updated agreement, which it said "provides us with the agility to quickly adapt and respond to the evolving needs of seniors."
Between the lines: UnitedHealthcare and its parent UnitedHealth Group have taken the full force of public outrage over insurers' roles in coverage denials and rising costs — criticism UnitedHealth say is misguided.
- Earlier this year, the company confirmed that the Justice Department was investigating its Medicare billing practices, and warned that rising medical costs would drag down earnings.
