Something rare happened this week in Washington. AARP, the mammoth retiree organization, struck out on an issue it had been advocating for years.

The Mighty Casey of special interest groups whiffed in its effort to force companies to provide the same level of benefits for retirees regardless of their age. 

On Monday, March 24, the Supreme Court declined to hear a case that centered on whether the Equal Employment Opportunity Commission can allow companies to offer less medical coverage to retirees who qualify for Medicare than they do to retirees  younger than 65.

The EEOC wrote the rule in 2003 in response to a 2000 decision by the 3rd Circuit Court of Appeals in Philadelphia stating companies that coordinate retiree coverage with Medicare violate federal age discrimination laws.

AARP filed suit against the EEOC rule. That led to several years of litigation. During that time, the Supreme Court ruled on a separate case dealing with the authority of agencies to interpret statutes.

In June, the court effectively reversed itself and upheld the EEOC rule. Now the Supreme Court has stiff-armed AARP’s appeal, ending the legal process.

Business groups hailed the Supreme Court’s lack of action. “Retirees and employer benefit plan sponsors can breathe a little easier,” said James Klein, president of the American Benefits Council, in a statement.

The court found persuasive the argument that businesses and the EEOC make in favor of wrapping retiree benefits around Medicare: Employers might reduce or abandon health care coverage for all retirees if they can’t offer less coverage to their post-65 population and depend on Medicare to make up the difference.

AARP called that approach a double standard.

“By allowing employers to reduce or even eliminate health benefits for retirees when they reach age 65, this rule essentially shifts the costs of all retiree health care onto the backs of older retirees,” said David Certner, AARP legislative policy director.

Don’t look for Congress to jump in and try to clarify the legislative intent of age discrimination legislation to prohibit companies from using a Medicare carve-out.

Although Democratic majorities on Capitol Hill have been eager to push back against court rulings (e.g., a bill to overturn the Supreme Court decision in the Lilly Ledbetter age discrimination case), their ardor is likely to be diminished this time because unions joined business advocates in siding with the EEOC.

Although they opposed AARP in this battle, unions and business have joined AARP in a strange-bedfellow alliance called Divided We Fail, a national advocacy campaign designed to force congressional—and presidential—candidates to deal with health care and entitlement issues.

AARP acknowledges the legal setback it suffered in the Supreme Court this week. But it remains hopeful about setting the election agenda.

The EEOC rule “is an unfortunate byproduct of the bigger problem, which is skyrocketing health care costs,” said Jim Dau, an AARP spokesman. “We’re keeping our eyes on the big picture. Affordable health care and financial security are closely linked.”