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Washington • AARP lobbied for the new health care law and now it stands to profit, House Republican lawmakers charged Wednesday as they called for the IRS to investigate whether the powerful interest group representing older Americans should be stripped of its federal tax exemption.
Three veteran GOP representatives released a report that estimates the seniors lobby could make an additional $1 billion over 10 years on health insurance plans whose sales are expected to pick up under the new law. They also questioned seven-figure compensation for some AARP executives.
"Based on the available evidence, substantial questions remain about whether AARP should maintain its tax-exempt status," said the report, released by Reps. Wally Herger of California, Charles Boustany of Louisiana and Dave Reichert of Washington.
AARP said profit had nothing to do with its support for President Barack Obama's health care overhaul, which expands coverage to nearly all Americans, which is a long-standing goal of the organization.
"We are very disappointed in the report and reject its conclusions," said AARP President Lee Hammond. "AARP is no more an insurance company than we are an online travel company ... the royalties we receive allow us to keep member dues low."
The three Republican lawmakers are members of the influential Ways and Means Committee, which writes tax law.
Scoffing at the report, Rep. Sander Levin of Michigan, the senior Ways and Means Democrat, called it a "witch hunt" to punish supporters of Obama's law.
The dual nature of AARP has raised questions before.
The business side of the organization runs money-making enterprises. The most lucrative involves "branding" a series of health insurance plans for seniors and older adults with the AARP name, akin to the Good Housekeeping seal of approval.
The public policy side is a civic organization that acts as a watchdog over Social Security and Medicare, representing 37million members and consumers generally. Boards overseeing the business and tax-exempt social policy branches have overlapping directors.
Royalties from licensing the use of AARP's name earned $657 million for the organization in 2009, or nearly half its total revenue, according to publicly available records. Health insurance plans accounted for most of that.
"During this investigation it became very clear that despite its privileged tax-exempt status, in many cases, AARP represents a for-profit entity, in fact, an insurance company," Boustany said.