Old Money
Georges, Christopher
Old Money Why the mighty AARP spends as much furnishing its OBceass it does On programs to help the elderly by Christopher Georges The American Association of Retired Persons (AARP) receives...
...AARP’s legendary lobbying arm, which absorbs about $18 million of its budget, includes a team of 18 lobbyists and researchers in its policy shop, the Public Policy Institute...
...For most of the organization’s 34 years, the media and AARP members have accepted that trust at face value...
...They permeate the whole organization,” Carlson says...
...For every policy sold, AARP receives a 4 percent administrative allowance simply for collecting the premium and passing it on to Prudential...
...Board members and about 250 other toplevel volunteers scattered throughout the country enjoy expense accounts, free travel, and other perks that were worth about $11 million in 1990 alone...
...The world according to AARP Why should you care...
...even the stairwells are wallpapered and carpeted...
...Another advised calling the Jewish Council for the Aging...
...He even threw in some job-training advice: “You’I1 need a resumk...
...Another consulting firm, Synectics of Cambridge, Massachusetts, was called in to instruct AARE’ employees on how to better provide input on projects and set priorities in the office...
...Medigup insurance reform...
...and, of course, the opportunity to save money on health insurance, prescription drugs, and other products sold by AARP...
...That’d mean, hmmm, millions of dollars saved every year by the federal government-probably a bigger help to America’s older people than the AARP will ever be...
...Its direct mail operation is so massive that AARP sends more than 1 percent of the entire nation’s nonprofit third-class mail...
...His salary is $200,000-not in the Aramony stratosphere, but at the high end of the spectnim of nonprofit executives’ salaries...
...The whole Washington operation is simply geared toward making money...
...Several others Suggested enrolling in an AARP job search workshop and seminar-for a fee of $35...
...alone it’s worth millions of dollars, since direct mail solicitations are the cornerstone of its fortunes...
...Unhappy with AARP’s position on catastrophic care legislation, Ruhig spoke out publicly against the lobby...
...AARP can keep on peddling those products and living as baroquely as it likes -just as long as it drops the charitable cover and pays its taxes like other American businesses...
...Its 33-million-name list is the heart of AARP’s financial empire...
...There’s another reasonable option...
...It is, of course, an important and useful service, but while AARP spends about $2.8 million to run it, it also collects an $8 fee from most of the 450,000 enrollees...
...In a way, those phone calls distill what’s wrong with AARP, one of America’s largest and most influential nonprofit organizations: In its brochures, it’s dedicated to helping seniors work, play, and wield power...
...Prescription drug prices: After congressional hearings in 1990 found that drug companies were overcharging Medicare for pharmaceuticals, legislation was introduced to force lower fees...
...AARP officials say they are unsure how many consultants are hired each year, but insiders place the number in the hundreds...
...There’s a heavy-duty orientation to the commercial side and they didn’t want anyone to come in and sabotage it...
...But while there are nearly 4,000 local AARP chapters across the nation, each with its own elected leadership, members have little voice in setting AARP policy...
...National health insurance: Instead of endorsing any of the nearly one dozen plans introduced in Congress, AARP recently released a preliminary draft of its own health insurance plan, one it claims is best for all Americans, not just the elderly...
...Research assistance was provided by Greg Bologna...
...AARP’s lead lobbyist, John Rother, describes his team’s lobbying style as “low key,” presenting carefully researched data rather than holding press conferences or issuing “damning reAARP has in past years been charged with neglecting the elderly poor in favor of the well-to-do, who are more likely to buy its services...
...AARP’s real forte is helping its members on Capitol Hill...
...In each case, callers were told that no such programs exist...
...AARP pays out nearly $2 million annually in lawyers’ fees, which is more than it devotes to all but four of its more than a dozen elderly assistance programs...
...members to become more active in the local chapter...
...insider...
...With respect to the last program, what AARP neglects to mention in its public financial records is that it also charges members $35 to enroll in such courses...
...But even if you’re not an AARP card-carrier, you’re paying for the organization’s extravagance anyway, because AARP receives, in addition to its federal grants, a federal subsidy equivalent to nearly $20 million a year...
...As for the old furniture, it now sits idle in a Virginia warehouse rented at AARP expense...
...The losers were, of course, the drug sellers, who’d see their profit-margins diminish...
...Every year, nearly $10 nillion is doled out to an army of consultants brought in to write public opinion polls, newsletter copy, and radio scripts and to perform other odd jobs, like providing “media training” to top-level volunteers preparing for radio and television appearances...
...While it includes a few “Canadian-style” features like universal long-term care coverage, the plan is, first and foremost, a “play-or-pay” model that calls for employers to provide insurance to employees or pay into a public fund...
...Office lights are guided by motion sensors...
...That’s always a good first step...
...Overseeing the empire today is executive director Horace Deets, a former Jesuit priest who joined AARP in 1975...
...In fact, the organization has in many respects evolved into a giant merchandising company that taxpayers subsidize to the tune of millions of dollars...
...Ted Ruhig, who served several terms as an officer of AARP’s Carmichael, California, chapter, was a regional director of AARP’s voter education drive in 1989...
...The Washington Post’s architecture critic described it last year as “a knockdown surprise, a classical package whose odd vigor is at once apparitional and relentless...
...A close look at the mammoth nonprofit’s Washington command central offers a fair amount of evidence to back Fine’s charge...
...Everett suggested calling the Department of Labos (the agency that pays AARP $52 million to run one of the programs) for help...
...Total costs for furnishings and equipment came to $29 million in 1990...
...Fellow lobbyists refer to the structure as the “Taj Mahal...
...In 1990, for example, AARP spent about as much on office furniture and equipment as it did on programs to help its 33 million elderly members...
...The reform legislation, which called for a fairer system for seniors but a less profitable one for insurance providers, won the hearty support of all seniors groups-except, according to congressional aides involved in enacting the legislation, AARP...
...It’s no more than a big business,” grumbles Virginia Fine, who until last year was an officer of a California AARP chapter...
...More and more congressional aides and lobbyists, however, now credit AARP with placing greater emphasis on issues like low-income housing, as well as reemphasizing long-time causes like age discrimination, Soports...
...With more than 5 million policy holders, it’s the largest of its type...
...Back in Washington, the 1,100 paid staffers are apparently not enough to get the job done at AARPcentral...
...If I could, I’d walk into AARP and immediately shift the money around,” Kurt Vondran, a lobbyist with the National Council on Senior Citizens, says enviously, thinking of the services and programs that could be created with that glorious $300 million budget...
...And sell it does...
...A few weeks later, he received a letter from the Washington headquarters thanking him for his years of service to AARP and dismissing him from his leadership post...
...If the profitmaking impulse occasionally affects AARP’s lobbying efforts, it also sustains the group’s flagship publication, Modern Maturity, which the organization considers a crucial tool in its mission to educate seniors...
...Employer-based programs have received criticism from other elderly groups because they do less for seniors than Canadian-style systems...
...It doesn’t have to start functioning as a nonprofit, running programs on behalf of the seniors it’s chartered to serve...
...Instead, what you’ll find on, say, the page opposite the health column is a full-page ad for the organization’s insurance plan...
...AARP, in fact, retains two sets of lawyers: an in-house counsel and a team of lawyers from the New York firm of Miller, Singer, Raives, and Branden...
...PhotoNennifer J. Peabody The lobby’s lobby: AARP’s swank new digs The respoke-wasn’t much better when similar inquiries were made to the Washington headquarters about its MedicaidMedicare assistance program and the Financial Information Program (offering advice on money-related topics...
...If you’re over 50, odds are you’re a member: More than half the over-50 population has paid the $5 dues to belong...
...discounts from car rental companies, major hotel chains, airlines, and on American Express travel packages...
...In the past, members attempting to assert their own opinions on political issues have faced the wrath of the Washington office...
...One of the organization’s most popular assistance programs is its 55lAlive driving education course for seniors...
...AARP has a penchant for charging members for services...
...Busier, apparently, are the organization’s lawyers...
...and provide them with the chance to both volunteer their services and benefit from the volunteer work of others...
...Christopher Georges is an editor of The Washington Monthly...
...Leaders of local AARP chapters across the country also charge that the national office, despite its bulging bankrolls, does little to support them beyond printing pamphlets and offering moral encouragement...
...In 1990, after investigations into Medigap insurance (policies designed to offer seniors coverage in areas not covered by Medicare), Congress, convinced that insurance sellers were swindling many seniors into buying protection they didn’t need or already had, moved to clean up the mess...
...The United Way: Come to think of it, the comparison doesn’t end there...
...Perhaps the most conspicuous symbol of AARP’s use of resources is its new 10-story Washington headquarters...
...Also, they say, internal calculations showed that moving the old furniture to the new building would have cost just as much as the new decor...
...Of course, Vondran’s wishes aside, AARP doesn’t have to chuck the mahogany bookcases, the boxpacking consultants, the $1 1 million executive perks, or the selling obsession...
...Washington keeps a tight grip on the selection of both regional and state leaders...
...State directors, area vice presidents, and state coordinators are all appointed by AARP’s Washington-based executive committee...
...Of the approximately $30 million spent assisting the elderly in 1991, $4 million went to coordinate programs such as educational forums and diet and exercise activities, $4 million was spent on the biennial convention, and $3.7 million was devoted to “education of older workers Another example of AARP’s emphasis on profits over service occurred last year when chapter officer Virginia Fine of the Sacramento, California, AARP asked AARP’s national office for a list of all AARP members in her region in an attempt to encourage and employers in matters of obtaining employment . . . keeping employment and retirement planning...
...As a result, elderly advocates question AARP’s motives in eschewing any of the proposed Canadianstyle plans, noting that an employer-based model, unlike nationalized health care, would allow AARP’s $100 million insurance-selling enterprise to survive...
...Yet some congressional AARP watchers M l argue that the lobby has been conspicuously silent in several recent battles over bills designed to assist the elderly that could, coincidentally, also threaten AARP’s financial empire...
...It’s little wonder he was impressed: The structure, crowned with a medieval-style turret, boasts a stateofthe-art radio and TV broadcast studio, a fitness center, and a beautifully appointed marble lobby...
...Of course, AARP’s nonprofit status also grants it something money can’t buy-the trust of millions of older Americans: trust to represent their interests in Washington, to sell them worthy products, and to use their dues and fees in their best interest...
...Even people here wonder if it’s proper for a nonprofit for the elderly to be housed this way,” says one AARP insider...
...Of course, Modern Maturity doesn’t run articles that outright endorse any of AARP’s products or services...
...AARP’s only role in selling the policies is as a middleman: AARP’s partner, Prudential Insurance, offers the policies, which are promoted through AARP publications and direct mail solicitations...
...Eventually she and other local leaders petitioned the state attorney general to force AARP to release the names...
...Competing products and services almost never appear in the magazine...
...Former AARP executive director Jack Carlson, who was fied after a 15-week tenure in 1987 following a dispute with the board of directors, explains that the lawyers’ roles range from overseeing the business enterprises to monitoring committee meetings...
...The bill aimed not only to save the government billions of dollars, but also to help people insured through Medicare, who often faced out-of-pocket costs of 50 cents to a dollar per prescription, limits on the types of medications covered, and in some cases restrictions on the number of times they could refill those prescriptions...
...sell them products and offer them discounts on other goods and services...
...So disorganized were local chapters that when phone inquiries were made regarding three of AARP’s most vaunted volunteer programs (legal aid services, MedicareIMedicaid advice, and a widow support service), only about a third of the offices contacted had any idea that the promams exist...
...Still, the decor is chump change compared to the $43 million spent on salaries for the 1,100 headquarters employees...
...Elder hostile From the headquarters to the magazine, AARP seems a lot more of a business than a charity or grassroots lobby...
...Hot for profit While the Washington crowd enjoys the riches of the organization, the level of support that flows back to members is rather paltry...
...The amount Synectics received is unknown, but it was enough to prompt the firm to set up a satellite office in Alexandria to serve AARP...
...Last year, AARP profited nearly $100 million from this business alone...
...AARP refused to release the list, saying it was confidential...
...Deets reports to a 15-member board of directors and six national officers-all of whom are unpaid volunteers with roles limited mostly to making ceremonial appearances at functions representing AARP, attending conventions, and sitting on various committees that oversee AARP’s commercial enterprises...
...Why the hesitancy from Washington...
...Capitol crimes Of course, direct services to the elderly aren’t AARP’s only game, as officials there are quick to tell you...
...Leased for about $16 million a year, the 500,000-square-foot building is one of Washington’s most alluring...
...cial Security, and consumer-related issues...
...A recent phone call to AARP’s Washington, D.C., headquarters to inquire about enrollment in the programs led to the following: The caller, after unsuccessfully attempting to explain the programs to two befuddled receptionists, was bounced to Jack Everett, an official in the organization’s Senior Employment Office, who cheerfully explained that AARP offers no federally funded job placement or training programs...
...Sure, we wished AARP would have supported it, but they weren’t involved,” says a senior Senate staff aide instrumental in the bill’s enactment...
...The scant support shows...
...One office suggested calling Elder Temps, a privately run job-placement firm...
...Many chapters hold bake sales or fundraisers to scrape up money for meetings or events...
...Again, full support came from almost every seniors group except-you guessed it...
...He is described as a low-key leader who travels frequently and who views his mission as decentralization of AARP and ”intergenerational expansion” (that is, recruiting younger members...
...Nor was expense spared in furnishing the thing...
...In real life, however, helping itself seems to be Job One...
...A survey of recent issues showed that on average more than a third of the advertising inches promoted AARP-sponsored products or services offered by its discount partners...
...AARP describes its mission as threefold: to lobby on behalf of seniors...
...And while articles offering advice on how to wisely invest money don’t make specific mention of AARP’s investment service (and of course omit mention of other plans, no matter how highly rated), they do appear close to ads for AARP’s Scudder investment plan...
...As expected, chief among AARP’s causes are averting cuts in benefits for the elderly, protection of pensions, and various health care initiatives...
...But one senior-level aide to a congressman who sponsored the measure disagrees...
...They met with us and gave some suggestions, but most of these were on how to soften the bill...
...There are layers of people here, many of whom have little or nothing to do,” says one D.C...
...In fact, about one in every 10 pages featured an ad pushing an AARP product...
...He also offered other ideas, like, “Try the phone book under the senior citizens section,” and suggested cclntacting the National Council on Senior Citizens, another, smaller advocacy group for older Americans...
...But a peek at AARP’s finances and lobbying efforts suggests that this trust may not always be wellearned...
...You might think some of AARP’s members would get wise to self-promotion like this and do something about it...
...The two lead attorneys, Alfred Miller and Lloyd Singer, have been closely associated with AARP since 197 1, when the firm was formed specifically to provide legal counsel to the organization...
...So protective of this list is AARP that its bylaws call for expulsion or suspension of any member who releases “a complete or partial list of members” without written permission from .AARP’s president...
...And last July, as staffers prepared to move from the old AARP building to the new headquarters, more hired guns were ushered in-in this case to help train employees in how to pack their belongings into boxes for moving...
...Similar inquiries at AARP offices in major cities in 16 states turned up like responses: Only six of the offices were aware that these programs even exist, although AARP literature boasts that they’re offered at 108 sites across the nation...
...AARP officials today insist that they fully backed the legislation...
...While the magazine is filled with innocuous service pieces, there is a seamier side to the publication: its thinly masked mission to promote AARP’s business enterprises...
...Everett’s not alone...
...For their $5 investment, members get an assortment of goodies: a subscription to Modern Maturity, AARP’s bimonthly magazine (far and away America’s largest, with a circulation five times that of Time...
...Last spring, AARP paid nearly $2 million to a consulting firm to run an in-house workshop called “communicating with co-workers...
...Occasionally we have to terminate people,” Rother explains, “although it’s not a pleasant thing to do...
...AARP’s nine business enterprises sustain a cash flow of about $10 billion annually and revenues of nearly $300 million, with the greatest portion coming from AARP’s centerpiece enterprise: group health insurance...
...Dozens of mahogany bookcases costing $1,800 each, for example, are built in throughout, and stainedglass windows adorn every floor...
...Add to this the $100 million it collects each year in membership dues and the interest on about $50 million from Treasury bills, and total annual revenues add up to about 10 times the take of the United Way...
...But inquiries about purchasing health insurance and prescription drugs were handled promptly...
...AARP’s mail-order pharmacy, one of the nation’s largest, brings the organization about $3 million per year...
...Old Money Why the mighty AARP spends as much furnishing its OBceass it does On programs to help the elderly by Christopher Georges The American Association of Retired Persons (AARP) receives approximately $75 million annually from the federal government to run a pajr of job training and placement programs for older Americanstwo of the largest of theis kind...
...AARP officials defend the costs, saying that they sought to construct a building that would last for years to come...
...AARP devoted about $30 million last year, and just $14 million in 1990, to programs aimed at directly assisting the elderly-a pittance compared to the funds it lavished on itself...
...While Rother insists that AARP worked hard to enact the bill, Hill staffers close to the legislation again disagree...
...They wouldn’t write a piece on a trip to the Second Coming unless it was operated by American Express tours,” says Leonard Hansen, a New Orleans-based syndicated columnist on elderly affairs...
...Next to the Catholic Church, it’s the largest membership organization in America...
Vol. 24 • June 1992 • No. 6
