Reminiscent of New York Rep. Peter King’s recent Homeland Security Committee hearing investigating radical Islam in the Muslim-American community, Friday’s investigation of AARP, called by the oversight and health subcommittees of the House Committee on Ways and Means, have been denounced by Democrats on the committees as a “political witch hunt.”
Some members suggested Republicans were attempting to damage the reputation of the seniors lobbying group at a time when the GOP-controlled House has introduced a series of cuts to entitlement programs that affect older Americans.
“This seems like a reenactment of a play by Arthur Miller called The Crucible,” Rep. Jim McDermott, D-Wash., told AARP Chief Executive Officer A. Barry Rand while he was being questioned on by committee members. “Your sin is that you backed the affordable care act.”
McDermott’s point — made by other committee members during the hearing — was that AARP has been singled out for supporting federal health care reform that passed last spring, while AARP is actually among a slew of nonprofit, tax-exempt organizations that make large revenues and spend large amounts of money lobbying, in particular American Crossroads and the American Action Network.
Rep. Earl Blumenauer, R-Ore., said he didn’t like the term “witch hunt” but referred to “Behind the Veil: The AARP America Doesn’t Know” (.pdf), the report prepared by Reps. Wally Herger, R-Calif., and Dave Reichert, R-Wash., as a “pamphlet” and called it “a little bit goofy.”
“This hearing is politically motivated,” said Rep. John Lewis, D-Ga. “Your report omits that it came from politically available documents. … There is no unveiling that I can see. … The true intent is to harm the reputation of AARP.”
The legitimacy of the report was called into question, in particular by Reps. Charles Rangel, D-N.Y., and Xavier Becerra, D-Calif., who argued that the report was not an official congressional report because it was not peer-reviewed by the House and Ways Committee before it was submitted. It was pointed out that the report has no document number or congressional seal. Herger refused to answer who paid for it.
The report’s broad accusation is that AARP is not using the large amounts of money it receives in royalties from health insurance plans that were affected by the health care bill that it lobbied for to advance the organization’s social mission, and thus should be considered a for-profit organization. Specifically, Rand was questioned about where AARP’s advocacy money goes, why AARP supported the Patient Protection and Affordable Care Act and why there is board member overlap on AARP’s three boards, one which governs AARP’s for-profit arm.
Referencing the report’s objections to AARP sponsoring NASCAR driver Jeff Gordon for a drive to end hunger, Rep. Pete Stark, D-Calif., pointed out that Herger and oversight subcommittee chair Rep. Charles Boustany, R-La., voted against a move for the Feb. 18 bill that would have ended the Pentagon’s partnership with NASCAR. Rep. Bill Pascrell, D-N.J., pointed out that one of the largest organizations with a 501(c)(4) status is a race track and casino in Iowa which he said makes $22 billion a year.
“Even I’ve raised questions about AARP,” Stark said. “They make a tremendous amount of money off the products they market to us. The plans are well-priced and have good features They are not hiding under a veil.”
Reichert defended Herger’s hearing, claiming AARP has not been forthright answering questions related to why they approved the health care plan and how much they stand to gain from it.
In the report, Herger and Reichert consistently compare AARP with for-profit insurance companies, ranking the organization sixth in top-grossing insurance companies in 2009. During the hearing, Herger called out Rand for not answering how much AARP makes from interest on insurance premiums.
“We don’t sell insurance, Mr. Chairman,” Rand said.
He explained that AARP collects royalties, not interest, from insurance premiums. Asked about specific earnings from specific health care products for which AARP lends its name in exchange for royalties, Rand said AARP earns between $60 million and $90 million in interest a year and received between $120 million and $430 million in total royalties from United Health Care.
Herger tried different angles of questioning to make Rand admit that AARP cares about having a large revenue.
“What would happen if you did not have a huge profit?” he asked.
“It would decrease our ability to serve 30 million-plus members,” Rand said.
The report is being submitted to the IRS.