AARP Uses Bad Study To Rewrite Biden’s Legacy, Line Its Pockets

A study recently released by the AARP, formerly the American Association of Retired Persons, attempts to rebut claims by “critics” of Joe Biden’s Inflation (Reduction) Act (IRA) “that the law will lead to higher costs for enrollees.” It frequently cites numbers like “94 percent” to give the impression that most, if not all, seniors will see savings from the law. 

But as with most things related to the AARP, the headline amounts to less than meets the eye. In reality, 1) most seniors won’t benefit from one of the law’s main provisions, meaning they will suffer from higher costs, not lower ones, 2) the cost of the IRA has come in substantially higher than advertised, and 3) AARP and its paymasters will benefit financially from the IRA — which might explain why the organization “forgot” to mention items 1) and 2).

Small Fraction of Seniors Benefit

AARP examined the effects of the new catastrophic cap on expenses for the Medicare Part D prescription drug benefit, which as of last year limits the amount a beneficiary will have to pay at the pharmacy counter. The report’s summary notes, “94 percent of all Part D enrollees expected to reach the new $2,000 out-of-pocket cap in 2025 will have lower total [i.e., premiums plus cost sharing] out-of-pocket costs, averaging $2,474 in savings” (emphasis mine).

Note the phrase I highlighted in italics. How many seniors will actually benefit from this out-of-pocket cap on their drug costs? The answers vary, but there’s a consistent theme.

For instance, an October 2021 study concluded that between 3.1 million and 3.5 million Medicare beneficiaries would benefit from a $2,000 cap on out-of-pocket drug costs.

A February 2024 study by the (liberal) Kaiser Family Foundation found that, in 2021, some 1.5 million beneficiaries would have benefited from a $2,000 drug spending cap. Since the first full year of the Part D benefit in 2007, a total of nearly 6.8 million beneficiaries had at least one year where their out-of-pocket drug costs exceeded $2,000, meaning they could benefit from the IRA provision at some point in their lives.

A January 2025 simulation by the Department of Health and Human Services (HHS) under the outgoing Biden administration estimated that 11.3 million Medicare beneficiaries will hit the $2,000 out-of-pocket spending cap this year. However, many (5.2 million) of these beneficiaries are low-income individuals who already receive additional federal cost-sharing subsidies; the more relevant number of beneficiaries receiving the most assistance from the out-of-pocket cap is 6.1 million.

With the HHS report noting 54 million total Part D enrollees, the sources above all indicate that nowhere near a majority of beneficiaries will see any savings from the out-of-pocket cap. Instead, depending on the accuracy of the above estimates, roughly 90 percent of Medicare enrollees will pay higher prescription drug premiums in any given year, to allow a small group to benefit.

Propaganda Campaign

That policy is justifiable on some levels. Those seniors who do have high drug costs often have astronomical ones, in the tens of thousands of dollars. Most politicians and analysts, including this one, support some type of catastrophic cap on Medicare drug spending, even if they differ on where to set that cap and how to structure Part D generally.

But AARP isn’t trying to present a balanced discussion of costs and benefits; it’s just flat-out shilling for Joe Biden and his flawed law. Consider this sentence buried in the study: “The current analysis found that 94 percent of the more than one million Part D enrollees who are projected to reach the new $2,000 out-of-pocket spending cap will have lower total (i.e., premiums plus cost sharing) out-of-pocket costs in 2025.”

Even as it advertises the “94 percent” figure, the “more than one million” number means that, by AARP’s own analysis, more than 94 percent of beneficiaries (i.e., roughly 52-53 million of the 54 million Part D enrollees) will not benefit from the out-of-pocket cap. These individuals by definition will have higher out-of-pocket costs because they will pay higher premiums to fund a catastrophic spending cap they will not reach. It’s a truly Orwellian approach: Claim virtually all beneficiaries will benefit when virtually none will.

And AARP apparently plans to take that approach on the road. With a state-by-state breakdown of the supposed “share of Part D enrollees estimated to benefit” from the IRA, the organization doubtless plans on pumping this (mis-)information out to its state affiliates so it can get local papers to publicize the study promoting all the purported benefits of Joe Biden’s law.

Misleading Assertions

It gets better. The study claims that “the Congressional Budget Office estimates that, once fully implemented, the prescription drug-related provisions in the 2022 law [i.e., the IRA] will reduce Part D enrollee and program spending by billions of dollars. In effect, the costs associated with increasing the generosity of Part D coverage will be more than offset by savings from lower prescription drug prices.” To support this claim, the AARP paper cites a February 2023 CBO presentation where the budget gnomes estimated that federal Part D spending will decline by $17 billion in 2031.

But AARP does not mention events subsequent to that presentation — namely, a document that CBO issued just last October. In that letter, CBO estimated that 1) higher-than-expected bids by insurers offering prescription drug coverage “will result in an increase in federal spending of $10 billion to $20 billion in calendar year 2025, compared with our earlier projections,” and 2) a “temporary” premium stabilization project (read: bailout) for Medicare Part D will cost $5 billion in 2025 alone, with its status in future years yet to be determined.

In other words, if the trends CBO outlined only a few months ago continue, much, if not all, of the IRA’s supposed long-term savings within Medicare Part D will evaporate. CBO hasn’t come out and said that outright, but it’s a clear possibility.

Did AARP mention any of these new CBO conclusions when bragging about the IRA’s supposed savings in its paper? Not a chance. Nor did it respond to my repeated requests for comment as to why it omitted a material, if decidedly adverse, development in the estimated cost of the IRA. For an organization that claims others should be more transparent in their business dealings, AARP sure doesn’t want to come clean about why it wouldn’t acknowledge recent concerns about the IRA’s fiscal effects. Is it me the AARP is afraid of, the facts, or both?

Follow the Money

Why would AARP go to such misleading lengths to try to promote this Biden boondoggle? Apart from its general leftist politics, it has strong financial incentives to do so. As I have previously outlined in these pages and in work for American Commitment, AARP makes billions of dollars selling products from UnitedHealth Group, the nation’s largest insurer. And insurers made out like bandits in the IRA — the new “negotiations” (read: price controls) on pharmaceuticals help pad their bottom lines, as does the extension of enhanced Obamacare subsidies in the law, paid for by raiding the Medicare program.

AARP always claims that policy, not politics, dictates its stances. But when the organization’s tax filing with the IRS admits that “gross revenue of AARP and its affiliates … are considered in employee compensation,” and royalties, primarily but not exclusively from UnitedHealth, constitute over 60 percent of the organization’s revenue — and growing — each and every AARP employee has thousands of reasons to toe the UnitedHealth line, in the form of their paychecks.

AARP can say whatever it wants, but it can’t make seniors paying higher premiums think they are “beneficiaries” of the IRA when they aren’t. And it can’t claim to be an “independent advocacy organization” when the bulk of its revenue comes from companies like UnitedHealth.