A New Age For Aarp

William Novelli had a hell of a week. Last Monday at the White House, President George W. Bush personally thanked him and AARP, the huge organization of seniors Novelli heads, for endorsing a Republican bill to add prescription-drug coverage to Medicare. On Tuesday, at a New Hampshire debate sponsored by AARP, top Democratic presidential candidates ripped the organization's leadership for its support of the legislation, which they say will undermine Medicare and threaten the health of millions of seniors. On Wednesday, as hundreds of AARP members called and e-mailed to complain about the organization's stance, a busload of angry seniors showed up outside AARP's swanky Washington, D.C., headquarters to burn their membership cards. While the flames flickered in the damp November chill, Novelli, an intense 62-year-old, sat in his 10th-floor office and calmly responded to the charge, voiced by critics, that AARP is under the influence of the health-insurance and drug industries, which also favor the GOP bill. "It's bulls--t," he told NEWSWEEK. Early Saturday morning, awash in thousands of messages from furious members, Novelli--who had cocaptained the lacrosse team at the University of Pennsylvania--tasted victory when, after a bitter all-night session, the House passed the bill 220 to 215.

This is definitely not your grandparents' AARP. Perhaps best known over the years for the myriad discounts and services it offers to members, the 45-year-old nonpartisan organization has put itself at the center of a no-holds-barred bipartisan battle on Capitol Hill. And that's fine with Novelli. "I don't lose any sleep over this," he says. "I think we're doing the right thing." With a mailing list of 35 million people 50 and up, AARP is able to shape opinion on issues that matter to seniors. But under the leadership of Novelli (who got the top job in June 2001) and his team of marketing and policy experts, it is clearly changing the way it operates. "I don't want to say that AARP is new. We're building on the past," says Novelli. "But I think we're more aggressive, I think we're stronger."

Throwing its weight--not to mention a $7 million ad campaign--behind the Republicans' Medicare plan is a high-profile and controversial move. But it's just part of a larger effort by AARP leadership to update the organization and expand its influence. Since Novelli took charge, AARP has increased from 23 to 53 state offices; overhauled its publications, closing one (My Generation) while revamping and renaming others, and launched a new membership drive featuring the slogan "AARP: The power to make it better." All of that meshes well with the 1998 decision to banish the word "retired" from its name. The familiar letters AARP, once an acronym for "American Association of Retired Persons," are now just letters, a pure brand. The moves are largely intended to appeal to millions of elusive baby boomers (the oldest are now 57) who are so not interested in being labeled "seniors." Hence the headline on the latest issue of AARP The Magazine, which features model Lauren Hutton on the cover: sixty is the new thirty.

It remains to be seen whether, as Novelli hopes, taking such a strong position on the prescription-drug bill will attract the new boomer members AARP needs to maintain its influence. "People want us to speak out on their behalf," says Novelli, a marketing guru, "and boomers are like that, they like that collective voice." If the hundreds of angry messages posted on AARP's Web site in response to the Medicare bill are any indication, he may need some new members. "I am out of AARP," starts one typical post. "I'll look for another, better group to represent me." Reads another: "Why! Why! Why! did you sell out your members? Our membership is canceled." By the weekend about 1,000 people had quit in protest. That's a drop in the bucket for AARP, but the outcry that accompanies the resignations is a public-relations nightmare and could damage the organization's longstanding credibility.

Adding drug coverage to Medicare has been a top priority of AARP for years. It has also become a crucial part of the Bush domestic agenda heading into the re-election campaign: during the House debate, the president, returning from Britain, lobbied for the bill in calls from Air Force One. Novelli thinks the Republican plan, estimated to cost $400 billion, is better than nothing. As AARP says in the full-page newspaper ads it began running last week, the bill, which could pass the Senate before Thanksgiving, is "far from perfect." But "it does a lot more good than it does harm," says Novelli. "We need to get it into place now and then build on it." AARP and the bill's sponsors say it will help millions of low-income seniors and those with high drug costs.

Opponents of the legislation, including Senate Democratic leader Tom Daschle and presidential candidate Howard Dean, say it would lead to the privatization of Medicare and increase drug spending for millions of seniors while doing nothing about the rising cost of prescription drugs. Critics also say AARP has a conflict of interest because its for-profit arm, AARP Services, Inc., makes millions in royalties ($123 million last year) from the sale of health insurance, and could profit from passage of the bill. (AARP says there is "a wall" between it's for-profit and nonprofit divisions and that it could lose money under the bill owing to increased competition.)

Some longtime AARP observers say the current controversy reminds them of 1988, when the organization endorsed a bill that expanded Medicare to include coverage of catastrophic health costs. In 1989, a year after it was passed, the House voted 360 to 66 to repeal the costly legislation. Then, as now, AARP was said to be out of touch with its membership, who ultimately rejected the additional costs. One former national AARP senior staffer, who asked not to be named, says the catastrophic-coverage experience triggered a quiet period during the 1990s when the organization took few vocal political stands. "I think it really scared a lot of people there and they were reluctant to get out front on issues because of it," the staffer says. Says California Rep. Lois Capps, a Democrat who quit AARP to protest its Medicare stance: "It's been common knowledge here that AARP does not like to take partisan stands."

Now that it has taken a stand, another former AARP executive, Glen Coocher, is surprised and intrigued. "I am absolutely convinced that this is a decision made strategically to try to dispel the feeling in Congress that AARP was dominated by liberal staff," says Coocher, AARP's northeast regional manager for programs and advocacy from 1990 to 2000. "There were a lot of committed, progressive, social activists working at AARP."

Novelli himself has a long record as a social--and political--activist. After working for the Peace Corps, he spent most of 1972 as an in-house adman for Richard Nixon's re-election campaign. He retired in 1990 from Porter/Novelli, the public-relations firm he cofounded; served four years as executive vice president of CARE, the international relief agency, followed by four years as president of the Campaign for Tobacco-Free Kids. There, he waged daily war against the tobacco industry. Though he readily lists the many differences between Tobacco-Free Kids and AARP, he has clearly brought a combatant's spirit to his new job. "Our business here has to be more nuanced," he says. "Nonetheless, there are times when you have to take a stance, and we have done that on Medicare."

While the firestorm over the prescription-drug bill presents plenty of short-term challenges for Novelli and AARP, the long-term challenges are no less daunting. The trick is to attract the fiftysomethings without alienating the older members. One Novelli innovation has been to produce three different editions of AARP The Magazine, one for ages 45 to 59, one for sixtysomethings and one for 70 and up. "They're trying like crazy to appeal to the younger end of the spectrum," says marketing consultant Kurt Medina, of Medina Associates, who has been tracking AARP for years. Medina likes the boomer version. "There's sex in it. They never even used that word before." Another strategy is to conduct regular focus groups with members to test new slogans and services. "When I first came here," says Hugh Delehanty, editor in chief of AARP Publications, "marketing was a dirty word." Novelli changed all that.

It will take more than marketing to convince congressional Democrats and unhappy AARP members (and former members) that the organization hasn't abandoned its traditional nonpartisan role. For Novelli, the solution is to be committed to causes on both sides of the political aisle--as long as they're in the best interest of seniors. "Six months from now," he says, "we'll be fighting like hell for Social Security and the Republicans are going to be mad at us." Spoken like a marketing man--and lacrosse player--who loves a good brawl.