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AARP

AARP

601 E Street N.W.
Washington, D.C. 20049
U.S.A.
(202)434-2277
(800)424-3410
Fax:(202)434-2588
Web site: http://www.aarp.org

Nonprofit Organization
Incorporated: 1947 as National Retired Teachers Association
Employees: 1,700
SICs: 8600 Services, Membership Organizations

AARP(The American Association of Retired Persons)is a not-for-profit association with 33 million members, a membership second only to the Catholic Church in the United States. This gives its publication Modern Maturity a colossal circulation. Fortune polls found it to be the most influential lobby on Capitol Hill; the group spent $35 million lobbying in 1995. Although it sells health insurance, among other things, the organization is considered a nonprofit group and receives many tax breaks and federal grants ($86 million in 1997). Its economic influence goes far beyond its membership revenues, administrative allowances, and commissions on product offerings, which include various types of insurance and financial products, and its pharmacy service, which controls ten percent of the mail-order market. Investigative journalist Dale Van Atta estimated that the total revenue for AARP and its partners in 1994 was $5.6 billion.

1940s Origins

Even AARP detractors credit California educator Dr. Ethyl Percy Andrus as one of the truly great women of recent American history, as Dale Van Atta put it. Andrus had become the first female high school principal in the state of California, and upon her retirement she became interested in the poverty of her fellow retired teachers trying to live on tiny pensions.

Andrus founded the National Retired Teachers Association (NRTA) in 1947. She started a nursing home for teachers but was unable to find health insurance for them until joining forces with Leonard Davis, who had succeeded in securing this for a group of retired New York teachers. Their first policy went into effect in 1956; within a year the number of subscribers had leapt from 5,000 to 15,000. The policies were highly profitable, pulling in $75,000 in premiums per month and laying out only $25,000 in claims. The Continental Casualty Company, which had developed an insurance plan to be sold by mail, found the NRTA members to be reliable customers.

In 1958 Andrus and Davis created the American Association of Retired Persons to share the insurance benefits the NRTA had gained with the general retired population. Davis provided the $50,000 of start-up capital. The company publication, Modern Maturity, consumed much of this capital but proved an effective marketing tool, touting an invitation to security in the organizations health insurance plans. A company publication, the Bulletin, described the groups lobbying efforts. Thousands of volunteers also worked to promote the offerings of AARP/Colonial Penn.

Rocking the Drug World in the 1960s

Andrus and Davis started an early mail-order pharmacy, the AARP Drug Buying Service, in 1959, to help older persons manage the high cost of filling prescriptions. In fact, Andrus and pioneer drug discounter Herbert Haft, who briefly ran the service, testified at congressional hearings on high pharmaceutical prices. Established pharmacists tried to ban the drug program stores and in some cases boycotted its distributors. Pharmacists groups, who resented the fact that neither AARP nor Retired Persons Services, Inc. (RPS) paid taxes on their sales, continued to provide opposition based on safety, community, and service issues.

John McHugh took over the drug service in 1962 and managed it for 30 years. Upon his retirement, it employed 250 pharmacists and filled eight million prescriptions per year. Besides price, privacy and convenience were key selling points. A line of generic products was added. The companys catalog expanded to include sundries, which eventually generated 40 percent of its sales. The service operated as a separate nonprofit organization, Retired Persons Services, Inc., not owned or controlled by AARP. Van Atta reported its sales as $440 million in 1993, with a one percent commission on gross sales payable to AARP.

Media Scrutiny in the 1970s

In 1963 Davis bought 750,000 policies from Continental and set up a holding company, the Colonial Penn Group. According to Morris, Colonial Penns revenues grew from $46 million to $445 million between 1967 and 1976, thanks to NRTA/AARP members, which provided most of its health insurance revenues. This made Colonial Penn the most profitable company in the United States, according to Forbes magazine. At the same time, Consumer Reports published a highly critical review of Colonial Penns service to AARP members. A U.S. Postal Service investigation into the organizations use of nonprofit mailings ensued. The post office, in fact, recommended that criminal federal prosecutors bring charges against AARP and Colonial Penn for fraud. Charles Morris and Dale Van Atta reported, however, that Leonard Davis had been expunged from official AARP histories because of his questionable reputation. In fact, he lost his insurance license in 1965 in a New York bribery scandal. Andrus died in 1967, the year the Age Discrimination in Employment Act was passed.

In 1978, after being fired by Davis, Executive Director Harriet Miller (who eventually became mayor of Santa Barbara, California) filed a $4 million suit leveling many of the same charges, contending that control of the organization rested in the hands of Colonial Penn. A 60 Minutes exposé demoralized AARP workers, members, and volunteers, and Davis left the organization in February 1979. AARP settled Millers suit for $480,000 and began inviting competitive bids for its insurance business in 1981. Prudential Insurance Co. won the contract and devoted a staff of 4,500 to the project.

New Offerings in the 1980s

In 1983 Davis retired from Colonial Penn. A couple of years later, the company, which had lost AARPs health insurance contract, sued its former partner for not allowing competitors to advertise in Modern Maturity.

The NRTA and AARP had merged officially in 1982. The membership age was lowered from 55 to 50, allowing for a larger pool of potential members. South Carolina native Horace Deets, a former Catholic priest, became chief executive of AARP in 1988. The organization lobbied to standardize Medigap coverage in the late 1980s, which Smart Money reported had the effect of drying up competition.

AARP tried putting together a federal credit union, which was vigorously opposed by other bankers. AARP Federal failed within two years, since it decided not to open any regional branches, and senior citizens proved wary of placing transactions without speaking to tellers in person. Van Atta reported that the AARP Travel Service was another seemingly logical marketing concept that soon failed. In the mid-1990s an offering of a simplified cellular phone, the Roadphone, fell apart when the provider, ASCNet, went bankrupt. Van Atta noted that AARP initially refused to compensate members for the $200 phones but relented after an intense public outcry.

Battling for Boomers in the 1990s

AARP fought another publicity battle when Republican Senator Alan Simpson attacked the organizations tax exempt status in congressional hearings. Deets characterized these proceedings as an absolute witch hunt. At the same time, articles in National Review, Fortune, and others lamented an intergenerational inequity in the Social Security system. They observed that the current generation of retirees would reap many more benefits from the money-losing program than their children ever wouldthe funds simply were not there to support them. As Simpson put it, Do any of you care a crap about your grandchildren? Chrysler Chairman Lee Iacocca delivered much the same message at the 1992 AARP convention.

AARP still faces the challenge of capturing the Baby Boomer generation, something it must do to survive as natural attrition trims two million people a year from its rolls. It has tried marketing tactics such as sending alternate magazine covers to younger (less than 60 years old) members and even has considered changing the publications name from Modern Maturity to something more appealing to the more hip and independent group demographic. In fact, at least one analyst urged the organization to change its own name to something more positive as well. One of its own ads implored: Forget for a moment that the word retired is in our name. In 1998 the group began using the acronym AARP (pronounced to rhyme with harp) as its official name. Direct Marketing writer James Rosenfield summed up the organizations image problem: Experiencing adolescence in the 50s was a mite different from adolescence in the 60s. Were two decades ever more in contrast?

Company Perspectives:

AARP is the nations leading organization for people age 50 and older. It serves their needs and interests through information and education, advocacy, and community services which are provided by a network of local chapters and experienced volunteers throughout the country. The organization also offers members a wide range of special benefits and services, including Modern Maturity magazine and the monthly Bulletin.

As politicians and providers tossed about solutions for the impending Medicare crisis, some observers criticized AARP for impeding the debate. Bill Clintons universal health care plan, for example, foundered without AARP support. Critics accused the organization of using scare tactics on its elderly members and, generally, campaigning for liberal causes that primarily would benefit its relatively affluent population.

In 1996 AARP test-marketed a retail drug program administered through Arizona-based PCS (Pharmaceutical Card System). The organization decided to cancel its group health insurance contract with Prudential in 1997. United HealthCare, Metropolitan Life, and ITT Hartford won the right to administer the $4 billion program.

While few discount the influence of this venerable organization, AARP faces serious threats to existence in the next century. Although the U.S. elderly population was expected to double by 2040, the children of Woodstock have values different from those of the children of the Depression. Perception is reality in lobbying and marketing; the group is trying to maintain the appearance of power and prestige while at the same time staying relevant and credible with its varied membership constituency.

Principal Divisions

NRTA.

Principal Operating Units

Information and Education (AARP Andrus Foundation); Community Service; Advocacy; Member Services.

Further Reading

Besack, Mike, AARP Gets Ready for the Boomers, Workforce, December 1997, pp. 27-28.

Birnbaum, Jeffrey H., Washingtons Power 25, Fortune, December 8, 1997, pp. 144-52.

____, Washingtons Second Most Powerful Man, Fortune, May 12,1997, pp. 122-26.

Finger, Anne L., What This Man Wants, You May Get, Medical Economics, February 23, 1998, pp. 177-91.

Geist, Bill, Surviving Your AARP Attack; A Boomer Will Turn 50 Every Eight Seconds, and the Ugly Reminder Is Sure To Follow, Washington Post, January 26, 1999, p. Z12.

Gupta, Dipak K., et. al., Group Utility in the Micro Motivation of Collective Action: The Case of Membership in the AARP, Journal of Economic Behavior and Organization, February 1997, pp. 301-20.

Machan, Tibor R., AARP Turns Extortion into a Group Activity, Arizona Republic, April 10, 1998, p. B7.

McAllister, Bill, AARP Alters Name to Reflect Reality, Washington Post, November 18, 1998, p. A25.

McArdle, Thomas, Golden Oldies, National Review, September 11, 1995.

Moore, Wayne, and Monica Kolasa, AARPs Legal Services Network: Expanding Legal Services, Wake Forest Law Review, Summer 1997, pp. 503-44.

Morris, Charles R., The AARP: Americas Most Powerful Lobby and the Clash of Generations, New York: Times Books, 1996.

Rosenfield, James R., AARP: Slaying the Mail-Order Insurance Dragon, Direct Marketing, May 1997, pp. 42-44.

____, Boomers and Branding: The Agonies of AARP, Direct Marketing, August 1998, pp. 60-62.

Smith, Lee, Rebelling Against the Tyranny of the Old, Fortune, March 22, 1993.

Van Atta, Dale, Trust Betrayed: Inside the AARP, Washington, DC: Regnery Publishing, 1998.

Waldrum, Shirley B., and H. Geral Niemira, Age Diversity in the Workplace, Employment Relations Today, Winter 1997, pp. 67-73.

Walker, Sam, Congress May Bite Hand that Feeds Members, Christian Science Monitor, June 28, 1995.

Frederick C. Ingram

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AARP

AARP

AARP, formerly known as the American Association of Retired Persons, is the nation's leading organization for people age fifty and older. Founded in 1958 by retired educator Dr. Ethel Percy Andrus, it is a nonprofit, nonpartisan association dedicated to shaping and enriching the experience of aging for its members and all Americans. It serves its 32 million members' needs and interests through information and education, research, advocacy, and community services, all of which are provided by a network of local chapters and experienced volunteers throughout the country. Through its publications, web site, and forums, AARP informs members and the public about consumer issues, economic security, work, health, and independent living issues. AARP also engages in legislative, judicial, and consumer advocacy in these areas. It offers members a wide range of special benefits and services, including Modern Maturity magazine and the monthly AARP Bulletin.

Robin E. Mockenhaupt

(see also: Aging of Population; Gerontology; Life Expectancy and Life Tables; National Institute on Aging )

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AARP

AARP, a nonprofit, nonpartisan national organization dedicated to "enriching the experience of aging" ; membership is open to people age 50 or older. Founded in 1958 by Ethel Percy Andrus as American Association of Retired Persons, AARP now has over 30 million members, enabling it to act as a powerful advocate for older Americans on public policy issues such as social security and health care. AARP also distributes information on topics of interest to its members, sponsors community-service programs, and provides various services to its members. It publishes Modern Maturity and My Generation magazines and a members' bulletin.

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AARP

AARP American Association of Retired Persons

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AARP

AARP

Definition

AARP is the largest non-profit advocacy organization in the United States for people age 50 and older.

Description

AARP, formerly the American Association of Retired Persons, is the largest advocacy organization in the United States for seniors, with 39 million members as of 2008. Since every member receives a subscription to AARP The Magazine, the publication has the highest circulation of any magazine in the U.S. The organization is an advocate for the rights of Americans age 50 and older, primarily through its intense and wide-reaching lobbying efforts at the federal and state levels. It also is also a leader in providing health and life insurance, financial services, travel services, employer and employee services, and even entertainment services to its members. Once thought of as an organization that the elderly join when they retire at age 65, the organization has transformed itself to emphasize the youthful side of older adults, starting with officially changing its name to AARP in 1998, getting rid of the word “retired” which the organization's research found was a turnoff to many older Americans. It also renamed its official magazine from Modern Maturity to AARP The Magazine. In 2000, AARP began a five-year $100 million effort to reshape its image and brand-name to attract a new generation of members: the 78 million baby boomers born between 1946 and 1965. The first wave of “boomers” turned 50 in 1996, the age at which people become eligible for membership. The median age of members is 65 and slightly more than half of members are women. As of 2008, annual membership dues were $12.50.

AARP's re-imaging included an advertising campaign that featured younger mature adults, often engaged in physical activities such as tennis, golf, and adventure travel. Its advertising focused on nearly all of the major print, radio, television, and internet outlets, including Time, BusinessWeek, Fortune, the Washington Post, National Public Radio (NPR), CNN, and AOL-Time Warner. The AARP magazine began featuring younger mature celebrities on its covers and in its feature articles, including Jamie Lee Curtis, Elton John, Jack Nicholson, Caroline Kennedy, and Paul McCartney, who as a Beatle recorded “When I'm Sixty-Four” for the groundbreaking “Sgt. Pepper's Lonely Hearts Club Band” album in 1967. AARP also launched a direct mail campaign in which everyone in the U.S. who turns 50 gets a membership application, often arriving on the person's birthday.

KEY TERMS

Adventure travel —Travel in which the traveler takes an active rather than passive role, such as hiking, cycling, mountain climbing, or white water rafting.

Baby boomers —Also called boomers, anyone born between 1946 and 1965.

AARP was founded in 1958 by Ethel Percy Andrus, a retired high school principal. The organization evolved from the National Retired Teachers Association (NRTA), which Andrus founded in 1947 to promote the philosophy of remaining a productive member of society after retirement, and in response to the need of retired teachers for health insurance. At that time, private health insurance was almost impossible for older Americans to obtain. It was not until 1965 that the federal government established the Medicare program, which provides health benefits to persons age 65 and older. Andrus approached dozens of insurance companies until she found one willing to insure older persons. She then developed other benefits and programs, including a discount mail order pharmacy service. Over the years NRTA heard from thousands of others who wanted to know how they could obtain insurance and other NRTA benefits without being retired teachers. After ten years, Andrus decided to create a new organization, the American Association of Retired Persons, open to all Americans, according to AARP's Website. Today, NRTA is a division within AARP. Even people younger than age 50 can join as “associate” members.

As of 2008, AARP offered a wide range of benefits to members, including:

  • Automobile and homeowners insurance
  • Life insurance
  • Long-term health care insurance
  • Travel programs, tours, cruises, and discounts
  • Eye health services
  • Investment programs
  • Credit card services
  • An American Automobile Association-style motoring plan
  • A legal services network
  • Driver safety program
  • Free tax counseling
  • Volunteer community service programs
  • A work-training program for low-income members age 55 and older

Viewpoints

Many baby boomers, obsessed with staying young, do not want to be associated with what they perceive to be an organization for shuffleboard-playing grandparents in Florida, according to an April 11, 2006, article in the New York Times. “For starters, baby boomers are farther from retirement. Where 84 percent of current retirees had retired by age 64, according to a survey sponsored by the Society of Actuaries last fall (2005), just 32 percent of boomers expect to do so now. They also tend to be more physically fit, more adept with technology and less respectful of authority than their parents were at their age. And they are more likely to have young children,” wrote the article's author, Fran Hawthorne. Several authors and others question whether AARP can connect with the philosophy, lifestyles, and attitudes of many baby boomers. One of those critics is Ken Dychtwald, author of seven books on aging. Another is author and Harvard professor Robert Putnam, who believes baby boomers are not inclined to join organizations, especially ones that emphasize age. Many baby boomers agree and believe that AARP's philosophy is often at odds with their own philosophies of emphasizing youthfulness over aging. Many baby boomers don't want to be reminded that they are aging and want to slow or even reverse the aging process as much as they can.

Resources

BOOKS

Dychtwalk, Ken, and Daniel J. Kadlec. The Power Years: A User's Guide to the Rest of Your Life. Hoboken, NJ: Wiley, 2005.

Hochadel, MaryAnne. The AARP Guide to Pills: Essential Information on More Than 1,200 Prescription & Nonprescription Medications, Including Generics, Side Effects & Drug Interactions. New York: Sterling, 2007.

Palermo, Michael T. AARP Crash Course in Estate Planning, Updated Edition: The Essential Guide to Wills, Trusts, and Your Personal Legacy. New York: Sterling, 2008.

Perrin, Rosemarie. An AARP Guide: Living with Diabetes: Everything You Need to Know to Safeguard Your Health and Take Control of Your Life. New York: Sterling, 2007.

PERIODICALS

Donnelly, Sally B. “Growing Younger.” Time (December 18, 2006): A13.

Hawthorne, Fran. “AARP's Invite Presents a Wrinkle for Some.” New York Times (April 11, 2006): N/A.

Kuehner-Hebert, Katie. “Banks Find Partner in AARP to Meet Elderly Clients' Needs.” American Banker (October 27, 2006): 1.

Loomis, Carol J. “AARP Skews Younger.” Fortune (May 15, 2006): 36.

Panko, Ron. “The Power of Numbers: Aetna and UnitedHealth's Contracts with AARP and Its 39 Million Members are Reshaping Individual Health-Care.” Best's Review (November 2007): 88(3).

Paoletta, Michael. “Old People Rock: AARP Plans a Multiplatform Music Campaign.” Billboard (June 10, 2006): 8.

ORGANIZATIONS

AARP, 601 E St., N.W., Washington, DC, 20049, (888) 687–2277, http://www.aarp.org.

Ken R. Wells

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