Thursday, November 20, 2008

Senate Testimony: AARP Deceptively Selling Health Insurance to Seniors

Cross posted at The Next Right

Seniors are a key target for scammers and fraudulent sales. It turns out that AARP, the organization supposedly looking out for seniors, has been selling seniors limited benefit health insurance via deceptive marketing. Caught red-handed, AARP has now stopped marketing the plans and is “investigating” its own practices.

“After a Senate inquiry found evidence of deceptive marketing, AARP, the lobby for older Americans, has hired an outside investigator to look into sales of some of its popular health insurance products.

“AARP and UnitedHealth Group, one of the nation’s largest insurers, have voluntarily suspended sales of the policies, which pay fixed cash benefits — often much less than consumers had expected — for selected services.”

AARP which criticizes private insurers for “hard-sell tactics” has been hawking limited benefit plans which gloss over the fact that they are only effective for low-cost procedures. For example, its Medical Advantage plans only cover up to $5,000 for surgeries. AARP’s marketing touts coverage in relation to low-cost surgical procedures. This leaves policy holders high and dry when serious medical needs arise. For example, Lisa Kelly of Texas testified before that Senate Finance Committee:

that she discovered the limits of her AARP policy when she went to the M. D. Anderson Cancer Center in Houston for treatment of leukemia. The hospital demanded a check for $45,000 up front, Ms. Kelly testified.

AARP’s press release on the issue omits any mention of ethical and marketing concerns and fails to mention even a single problem that has pressured it to suspend “marketing and sales of these fixed benefit indemnity products.”

Though AARP, bills itself as “a nonprofit, nonpartisan membership organization”, the New York Times notes AARP is actually:

“a huge business that offers travel services, life and homeowner’s insurance, mutual funds and credit cards. Its operating revenue last year was $1.2 billion, more than 40 percent of which came from royalties, according to its 2007 financial statement.”

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