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AARP ENDORSEMENT OF REFORM MAY BE FINANCIALLY MOTIVATED

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The nation's largest seniors' group threw its endorsement to the leading Democratic health-care bills because, its leaders say, "we wanted to make a clear statement to our members that these are two good bills."

But the fine print of the health plan proposed by Sen. George Mitchell, D-Maine, suggests that the high-minded rhetoric of the American Association of Retired Persons papers over the bottom line.Tucked away in the 1,443-page Mitchell health-care bill is a sweetener that the senior citizens' lobby may have found irresistible: A clause that largely exempts mail-order pharmaceutical firms from the stringent cost controls contained in a prescription drug benefit for the elderly. Not coincidentally, AARP currently owns a stake in one of America's oldest and largest mail-order prescription drug companies.

If the Mitchell bill becomes law, this clause could mean extra wealth for what's already become a cash cow for America's largest advocacy group.

"It certainly appears to line the pockets of the AARP leadership," a senior Republican health care staffer said. "It's flabbergasting how blatant this is, how a special interest benefits from the Clinton/Mitchell bill."

Officials at AARP vehemently deny that their endorsement of the Mitchell plan (the group also endorsed a similar plan in the House proposed by Majority Leader Richard Gephardt, D-Mo.) had anything to do with financial interest.

"At no time in this debate, or any previous debate, have we ever gone up (to Congress) and said that this would be good (for business)," a senior AARP lobbyist told our associate Jan Moller. "The board (of directors) looks at what's good for the members, not what's going to be good for the organization from a proprietary standpoint." Mitchell's office did not comment in time for this column.

The prescription drug rift illustrates a fundamental paradox within AARP: While its political clout is drawn from its 33 million members, much of its funding comes from affiliated businesses like mail-order drugs. Membership dues accounted for less than one-third of AARP's $455 million operating revenue in 1993, with the rest of its income deriving from a variety of investments and business interests.

Although AARP does not own the prescription drug business, called Retired Persons Services Inc., it receives a royalty of 1 percent of all revenues in exchange for endorsing its products. AARP's leadership also appoints four of the eight members of RPS's board of directors. RPS officials would not divulge its total revenues, but according to AARP's annual report, the association took in more than $30 million in royalties last year from all sources.

If the Mitchell bill is good medicine for the general public and the health care system, it will also be a shot in the arm for AARP.