Fortney Pete Stark, California, Chairman
Subcommittee of Health
Lloyd Doggett, Texas
Mike Thompson, California
Xavier Becerra, California
Earl Pomeroy, North Dakota
Ron Kind, Wisconsin
Earl Blumenauer, Oregon
Bill Pascrell, Jr., New Jersey
Shelley Berkley, Nevada
Wally Herger, California, Ranking Member
Sam Johnson, Texas
Paul Ryan, Wisconsin
Devin Nunes, California
Ginny Brown-Waite, Florida
Charles B. Rangel, New York, Chairman
Committee on Ways and Means
Janice Mays, Chief Counsel and Staff Director
Cybele Bjorklund, Subcommittee Staff Director
Jon Traub, Minority Staff Director
Dan Elling, Subcommittee Minority, Staff Director
Congress of the United States
House of Representatives
Committee on Ways and Means
Washington, DC 20515
Subcommittee on Health
December 9, 2009
Mr. A. Barry Rand
Chief Executive Officer
601 E Street, NW
Washington, DC 20049
Dear Mr. Rand:
Thank you for your response to our letter of October 22nd regarding AARP's position on proposed health care legislation. We also sincerely appreciated the opportunity to meet with several AARP representatives last month and the offer they made at the meeting to continue the dialogue and to assist us in getting answers to our questions. In order to help us gain a better understanding of AARP's role as both a membership organization and endorser of insurance products, we request a written response to the following questions.
1. How are royalties structured for each Medigap policy sold versus each Medicare Advantage policy sold? Are royalties a percentage of the premium or a flat fee? What was the amount of royalties earned, both in total and on a per enrollee basis, in each of the past 8 years, for 1) all AARP-branded Medigap policies and 2) all AARP-branded Medicare Advantage policies?
2. Are financial contracts and royalty arrangements with insurance carriers negotiated with AARP, Inc., the AARP Insurance Plan, or both?
3. Does AARP, Inc., or any of its entities, receive royalties based on health products for which the premiums are not collected directly by AARP Insurance Plan? If so, please list the product type and amount of royalties received for each product.
4. In each of the past 8 years, what was the average length of time premium funds were held by AARP entities before remittance to the carriers? What was the average amount of "float" held by AARP entities at any given time in each of the past 8 years? What do AARP entities do with the premiums being held? Does AARP, Inc., or any of its entities benefit financially from holding this money and, if so, how? What is the average daily amount of assets being held by the Trust in 2009?
5. Please provide us with a list of the members who currently sit on the board of the AARP Insurance Plan, AARP Services, Inc., and AARP Financial, Inc. Please indicate which Board Members of AARP, Inc., or any AARP related entities also are employed by or on the Board of an insurance company.
6. Does the AARP Insurance Plan receive differential royalties for renewals compared to first year enrollees? If so, please describe the difference.
7. Please explain the purpose of AARP Andrus Insurance Fund LLC, which was created in 2007 and is run by a former AARP, Inc. employee, and whose only client is AARP, Inc.
8. Does the AARP Insurance Plan receive any bonus or additional payment from insurance carriers over and above standard royalties for attaining certain enrollment or reenrollment goals? If so, please detail the nature of such agreements. Does the compensation, including bonus payments, of AARP's staff vary depending on whether enrollment or reenrollment goals are met?
9. Does AARP, Inc., o~ any of its entities have a financial relationship with the American Medical Association? If so, please describe the relationship in detail, including how much money AARP, Inc., or any of its entities receives from AMA.
10. How many health insurance policies were processed by the AARP Insurance Plan in each of the past 8 years? Please provide the number of each policy type sold.
11. Please provide us with all tax returns for AARP, Inc., the AARP Insurance Plan, AARP Services, and AARP Financial Services for each of the past 3 years.
12. Does AARP, Inc., or any of its entities segregate royalty revenue from Medicare Advantage and Medigap to ensure such funds are not used by AARP, Inc., for lobbying purposes? If so, how?
13. What percentage of royalty revenues are used for charitable activities? Please delineate the activity funded and the associated funding for each of the past 8 years.
14. Does AARP, Inc., or any of its entities employ, contract, or coordinate with agents and brokers for any of the Medicare-related insurance products endorsed by AARP, Inc.?
15. How much have AARP, Inc., and its entities spent in television, radio, and print advertisements for AARP-branded insurance products in each of the past 8 years? Do AARP, Inc., and its entities pay fair market rates for these advertisements?
16. AARP royalty revenue was $178,279,000 in 2001 and $652,701,000 in 2008. AARP has indicated the increased royalty revenue is used to provide greater benefits to AARP members. Please describe, in detail, the added benefits that AARP members received in 2008 that they did not receive in 2001, with dollar amounts associated with each benefit.
17. Please provide a list of the 10 most highly compensated employees at AARP, Inc., and at each of the affiliated entities, by salary and total compensation (including compensation from any AARP-affiliated organization), for each of the past 8 years. Please include employee name and title.
18. Has any AARP or AARP-affiliated employee had a conversation about the possibility of AARP, Inc., or any of its entities, lending the AARP brand name to an insurance carrier selling insurance products in a new Exchange as described in the health bills moving through Congress? If so, please provide details of these discussions and all related materials including, but not limited to, meeting memos, notes, and presentations.
19. Has any AARP or AARP-affiliated employee had a conversation about how AARP, Inc., or any of its entities, might benefit financially if the health bills moving through Congress were to become law? If so, please provide details of these discussions and all related materials including, but not limited to, meeting memos, notes, and presentations.
20. Please provide the total number of employees at AARP, Inc., for each year from 2001 to 2009. Additionally, please provide the number of staff in the Social Impact Group (including Government Relations, Advocacy, and the Divided We Fail campaign) and the Policy and Strategy Group for each year from 2001 to 2009. If AARP's organizational structure has changed since 2001, please provide the staff totals for the predecessor departments.
21. How did the Board of Directors at AARP, Inc., determine the fair market value for contracts with insurance providers? Please provide details of these discussions and all related materials including, but not limited to, meeting memos, notes, and presentations.
22. Please provide a detailed list of all grants received by AARP, Inc., or any affiliated entity for the last 8 years, including dollar amounts awarded.
23. Please provide a detailed list of all grants and or contracts for the last five years that have been awarded by AARP, Inc., or any affiliated entity, to any board member, a relative of any board member, or any company of which the board or family member is a member.
Again, your ongoing willingness to help us better understand AARP's operations is appreciated. Additionally, attached to this letter is a list of AARP affiliated entities that 'are referenced in the letter. Please respond to these questions by December 18, 2009. Thank you in advance for your cooperation with this request.
Ranking Member, Health Subcommittee
Member of Congress
David G. Reichert
Member of Congress
Jennie Chin Hansen
AARP Board of Directors
AARP Affiliated Entities
AARP Global Network, LLC
AARP Real Estate Trust
AARP Services, Inc.
AARP Financial, Inc.
AARP Andrus Insurance Fund, LLC
AARP Insurance Plan Trust
Legal Counsel for the Elderly