In The Health Care Oligopoly and the Real Weight of the AMA, I highlighted Congressional testimony by Wendell Potter, the former head of public relations for health insurance giant, Cigna. Mr. Potter's comments were devastating in their very direct exposure and condemnation of standard insurance industry practices, which he made clear were focused on making a profit at the expense of providing quality health care to people who need it.
On July 10th, he sat down for an in-depth interview with veteran journalist Bill Moyers, and expanded on the points he discussed on Capitol Hill. It's a lengthy - but utterly gripping - conversation. Mr. Potter left Cigna after seeing firsthand the number of people - some of whom had traveled for hours - who came to a rural health care exhibition in Virginia for treatment they couldn't otherwise afford.
Anything but a disgruntled employee, Mr. Potter was happy, well-paid and well-regarded at Cigna, where he worked for 15 years and rose through the ranks. But when he saw the insurance industry gear up to block efforts to reform America's dysfunctional health insurance system, his memories of the exhibition in Virginia would no longer let him remain neutral. In his interview with Mr. Moyers, he matter-of-factly delivers a searing indictment of the perverse incentives that run-rampant throughout the health insurance industry.
The entire conversation can be viewed at the PBS website, here, and the full transcript is here. It is a lengthy interview, and while I strongly recommend viewing or reading it in its entirety - it is both infuriating and enlightening - highlights and clips are below. Please be sure to check it out.
On the role of so-called "centrist Democrats" in defeating reform:
MOYERS: This is fascinating. You know, "Build awareness among centrist Democratic policy organizations--"
POTTER: Right.
MOYERS: "--including the Democratic Leadership Council."
POTTER: Absolutely.
MOYERS: Then it says, "Message to Democratic insiders. Embracing [filmmaker Michael] Moore is one-way ticket back to minority party status."
POTTER: Yeah.
MOYERS: Now, that's exactly what they did, didn't they? They--
POTTER: Absolutely.
MOYERS: --radicalized Moore, so that his message was discredited because the messenger was seen to be radical.
On Michael Moore's movie Sicko, which examines the inequities of the health insurance system in America:
MOYERS: Was it [Sicko] true? Did you think it contained a great truth?
POTTER: Absolutely did.
MOYERS: What was it?
POTTER: That we shouldn't fear government involvement in our health care system. That there is an appropriate role for government, and it's been proven in the countries that were in that movie.
On the ideological approach to health care taken by many conservative politicians:
MOYERS: I have a memo, from Frank Luntz. I have a memo written by Frank Luntz. He's the Republican strategist who we discovered, in the spring, has written the script for opponents of health care reform. "First," he says, "you have to pretend to support it. Then use phrases like, "government takeover," "delayed care is denied care," "consequences of rationing," "bureaucrats, not doctors prescribing medicine." That was a memo, by Frank Luntz, to the opponents of health care reform in this debate. Now watch this clip.
POTTER: Well, they are ideologically aligned with the industry. They want to believe that the free market system can and should work in this country, like it does in other industries. So they don't understand from an insider's perspective like I have, what that actually means, and the consequences of that to Americans. They parrot those comments, without really realizing what the real situation is.
On the revolving door between Washington and special interests:
MOYERS: Why is the industry so powerful on both sides of the aisle?
POTTER: Well, money and relationships, ideology. The relationships-- an insurance company can hire and does hire many different lobbying firms. And they hire firms that are predominantly Republican and predominantly Democrat. And they do this because they know they need to reach influential members of Congress like Max Baucus. So there are people who used to work for Max Baucus who are in lobbying firms or on the staff of companies like Cigna or the association itself.
MOYERS: Yeah, I just read the other day, in The Washington Post, that Max Baucus's staff met with a group of lobbyists. Two of them had been Baucus's former chiefs of staff.
POTTER: Right.
On the threat to profits represented by a public health insurance option:
MOYERS: Why is public insurance, a public option, so fiercely opposed by the industry?
POTTER: The industry doesn't want to have any competitor. In fact, over the course of the last few years, has been shrinking the number of competitors through a lot of acquisitions and mergers. So first of all, they don't want any more competition period. They certainly don't want it from a government plan that might be operating more efficiently than they are, that they operate. The Medicare program that we have here is a government-run program that has administrative expenses that are like three percent or so.
MOYERS: Compared to the industry's--
POTTER: They spend about 20 cents of every premium dollar on overhead, which is administrative expense or profit. So they don't want to compete against a more efficient competitor.
On the pressure exerted on insurance firms by Wall Street to deny coverage in order to boost profits.
MOYERS: You told Congress that the industry has hijacked our health care system and turned it into a giant ATM for Wall Street. You said, "I saw how they confuse their customers and dump the sick, all so they can satisfy their Wall Street investors." How do they satisfy their Wall Street investors?
POTTER: Well, there's a measure of profitability that investors look to, and it's called a medical loss ratio. And it's unique to the health insurance industry. And by medical loss ratio, I mean that it's a measure that tells investors or anyone else how much of a premium dollar is used by the insurance company to actually pay medical claims. And that has been shrinking, over the years, since the industry's been dominated by, or become dominated by for-profit insurance companies. Back in the early '90s, or back during the time that the Clinton plan was being debated, 95 cents out of every dollar was sent, you know, on average was used by the insurance companies to pay claims. Last year, it was down to just slightly above 80 percent.
So, investors want that to keep shrinking. And if they see that an insurance company has not done what they think meets their expectations with the medical loss ratio, they'll punish them. Investors will start leaving in droves.
I've seen a company stock price fall 20 percent in a single day, when it did not meet Wall Street's expectations with this medical loss ratio. For example, if one company's medical loss ratio was 77.9 percent, for example, in one quarter, and the next quarter, it was 78.2 percent. It seems like a small movement. But investors will think that's ridiculous. And it's horrible.
MOYERS: That they're spending more money for medical claims.
POTTER: Yeah.
MOYERS: And less money on profits?
POTTER: Exactly. And they think that this company has not done a good job of managing medical expenses. It has not denied enough claims. It has not kicked enough people off the rolls. And that's what-- that is what happens, what these companies do, to make sure that they satisfy Wall Street's expectations with the medical loss ratio.
On the ludicrous talking point that today's health care system is free of bureaucracy:
MOYERS: You know, there's an irony, because you hear the companies and their trade groups talking about how we don't want a public option that would put a bureaucrat between a patient and his doctor. But you've just described a situation in which a CEO is actually between a doctor and the patient,
POTTER: It's true. And that same thing happened, in the Nataline Sarkisyan case. You had a corporate bureaucrat making a decision on coverage. So, they are trying to make you worry. And fear a government bureaucrat being between you and your doctor. What you have now is a corporate bureaucrat between you and your doctor.
MOYERS: Whose motive is profit. Understandably, naturally, profit.
POTTER: Right.
On what likely tactics from the health insurance industry as reform legislation makes its way through Congress:
MOYERS: In other words, if the industry is able to kill reform, or the Democrats and the Republicans can't agree on a proposal, that's what the industry really wants.
POTTER: Exactly. And it happened in '93 and '94. And just about every time there has been significant legislation before Congress, the industry has been able to kill it. Yeah, the status quo works for them. They don't like to have any regulation forced on them or laws forced on them. They don't want to have any competition from the federal government, or any additional regulation from the federal government. They say they will accept it. But the behavior is that they will not-- you know, they'll not do anything after say this plan fails.
Say nothing happens. They're saying now what they did in '93, '94. "We think pre-existing conditions is a bad thing," for example. Let's watch and see if they really take the initiative to do anything constructive. I bet you won't see it. They didn't then.
MOYERS: Well, on the basis of the past performance, and on the basis of your own experience in the industry, can we believe them when they say they will do these things voluntarily?
POTTER: I don't think you can. I think that they will implement things that make them more efficient. And that enhance shareholder value. And if what they do contributes to that, maybe so. But now, they do say, they are in favor of an individual mandate. They want us all to be insured.
MOYERS: For the government to require every one of us to have some policy.
POTTER: Exactly. And that sounds great. It is an important thing that everyone be enrolled in some kind of a benefit plan. They don't want a public plan. They want all the uninsured to have to be enrolled in a private insurance plan. They want - they see those 50 million people as potentially 50 million new customers. So they're in favor of that. They see this as a way to essentially lock them into the system, and ensure their profitability in the future. The strategy is as it was in 1993 and '94, to conduct this charm offensive on the surface.
But behind the scenes, to use front groups and third-party advocates and ideological allies. And those on Capitol Hill who are aligned with them, philosophically, to do the dirty work. To demean and scare people about a government-run plan, try to make people not even remember that Medicare, their Medicare program, is a government-run plan that has operated a lot more efficiently.
And also, the people who are enrolled in our Medicare plan like it better. The satisfaction ratings are higher in our Medicare program, a government-run program, than in private insurance. But they don't want you to remember that or to know that, and they want to scare you into thinking that through the anecdotes they tell you, that any government-run system, particularly those in Canada, and U.K., and France that the people are very unhappy.
And that these people will have to wait in long lines to get care, or wait a long time to get care. I'd like to take them down to Wise County. I'd like the president to come down to Wise County, and see some real lines of Americans, standing in line to get their care.
On July 10th, he sat down for an in-depth interview with veteran journalist Bill Moyers, and expanded on the points he discussed on Capitol Hill. It's a lengthy - but utterly gripping - conversation. Mr. Potter left Cigna after seeing firsthand the number of people - some of whom had traveled for hours - who came to a rural health care exhibition in Virginia for treatment they couldn't otherwise afford.
Anything but a disgruntled employee, Mr. Potter was happy, well-paid and well-regarded at Cigna, where he worked for 15 years and rose through the ranks. But when he saw the insurance industry gear up to block efforts to reform America's dysfunctional health insurance system, his memories of the exhibition in Virginia would no longer let him remain neutral. In his interview with Mr. Moyers, he matter-of-factly delivers a searing indictment of the perverse incentives that run-rampant throughout the health insurance industry.
The entire conversation can be viewed at the PBS website, here, and the full transcript is here. It is a lengthy interview, and while I strongly recommend viewing or reading it in its entirety - it is both infuriating and enlightening - highlights and clips are below. Please be sure to check it out.
On the role of so-called "centrist Democrats" in defeating reform:
MOYERS: This is fascinating. You know, "Build awareness among centrist Democratic policy organizations--"
POTTER: Right.
MOYERS: "--including the Democratic Leadership Council."
POTTER: Absolutely.
MOYERS: Then it says, "Message to Democratic insiders. Embracing [filmmaker Michael] Moore is one-way ticket back to minority party status."
POTTER: Yeah.
MOYERS: Now, that's exactly what they did, didn't they? They--
POTTER: Absolutely.
MOYERS: --radicalized Moore, so that his message was discredited because the messenger was seen to be radical.
On Michael Moore's movie Sicko, which examines the inequities of the health insurance system in America:
MOYERS: Was it [Sicko] true? Did you think it contained a great truth?
POTTER: Absolutely did.
MOYERS: What was it?
POTTER: That we shouldn't fear government involvement in our health care system. That there is an appropriate role for government, and it's been proven in the countries that were in that movie.
On the ideological approach to health care taken by many conservative politicians:
MOYERS: I have a memo, from Frank Luntz. I have a memo written by Frank Luntz. He's the Republican strategist who we discovered, in the spring, has written the script for opponents of health care reform. "First," he says, "you have to pretend to support it. Then use phrases like, "government takeover," "delayed care is denied care," "consequences of rationing," "bureaucrats, not doctors prescribing medicine." That was a memo, by Frank Luntz, to the opponents of health care reform in this debate. Now watch this clip.
REP. JOHN BOEHNER: The forthcoming plan from Democratic leaders will make health care more expensive, limit treatments, ration care, and put bureaucrats in charge of medical decisions rather than patients and doctors.MOYERS: Why do politicians puppet messages like that?
SEN. MITCH McCONNELL: Americans need to realize that when someone says "government option," what could really occur is a government takeover that soon could lead to government bureaucrats denying and delaying care, and telling Americans what kind of care they can have.
SEN. JON KYL: Washington run healthcare would diminish access to quality care, leading to denials, shortages and long delays for treatment.
REP. JOE WILSON: How will a government run health plan not lead to the same rationing of care that we have seen in other countries?
REP. TOM PRICE: We don't want to put the government, we don't want to put bureaucrats between a doctor and a patient.
POTTER: Well, they are ideologically aligned with the industry. They want to believe that the free market system can and should work in this country, like it does in other industries. So they don't understand from an insider's perspective like I have, what that actually means, and the consequences of that to Americans. They parrot those comments, without really realizing what the real situation is.
On the revolving door between Washington and special interests:
MOYERS: Why is the industry so powerful on both sides of the aisle?
POTTER: Well, money and relationships, ideology. The relationships-- an insurance company can hire and does hire many different lobbying firms. And they hire firms that are predominantly Republican and predominantly Democrat. And they do this because they know they need to reach influential members of Congress like Max Baucus. So there are people who used to work for Max Baucus who are in lobbying firms or on the staff of companies like Cigna or the association itself.
MOYERS: Yeah, I just read the other day, in The Washington Post, that Max Baucus's staff met with a group of lobbyists. Two of them had been Baucus's former chiefs of staff.
POTTER: Right.
On the threat to profits represented by a public health insurance option:
MOYERS: Why is public insurance, a public option, so fiercely opposed by the industry?
POTTER: The industry doesn't want to have any competitor. In fact, over the course of the last few years, has been shrinking the number of competitors through a lot of acquisitions and mergers. So first of all, they don't want any more competition period. They certainly don't want it from a government plan that might be operating more efficiently than they are, that they operate. The Medicare program that we have here is a government-run program that has administrative expenses that are like three percent or so.
MOYERS: Compared to the industry's--
POTTER: They spend about 20 cents of every premium dollar on overhead, which is administrative expense or profit. So they don't want to compete against a more efficient competitor.
On the pressure exerted on insurance firms by Wall Street to deny coverage in order to boost profits.
MOYERS: You told Congress that the industry has hijacked our health care system and turned it into a giant ATM for Wall Street. You said, "I saw how they confuse their customers and dump the sick, all so they can satisfy their Wall Street investors." How do they satisfy their Wall Street investors?
POTTER: Well, there's a measure of profitability that investors look to, and it's called a medical loss ratio. And it's unique to the health insurance industry. And by medical loss ratio, I mean that it's a measure that tells investors or anyone else how much of a premium dollar is used by the insurance company to actually pay medical claims. And that has been shrinking, over the years, since the industry's been dominated by, or become dominated by for-profit insurance companies. Back in the early '90s, or back during the time that the Clinton plan was being debated, 95 cents out of every dollar was sent, you know, on average was used by the insurance companies to pay claims. Last year, it was down to just slightly above 80 percent.
So, investors want that to keep shrinking. And if they see that an insurance company has not done what they think meets their expectations with the medical loss ratio, they'll punish them. Investors will start leaving in droves.
I've seen a company stock price fall 20 percent in a single day, when it did not meet Wall Street's expectations with this medical loss ratio. For example, if one company's medical loss ratio was 77.9 percent, for example, in one quarter, and the next quarter, it was 78.2 percent. It seems like a small movement. But investors will think that's ridiculous. And it's horrible.
MOYERS: That they're spending more money for medical claims.
POTTER: Yeah.
MOYERS: And less money on profits?
POTTER: Exactly. And they think that this company has not done a good job of managing medical expenses. It has not denied enough claims. It has not kicked enough people off the rolls. And that's what-- that is what happens, what these companies do, to make sure that they satisfy Wall Street's expectations with the medical loss ratio.
On the ludicrous talking point that today's health care system is free of bureaucracy:
MOYERS: You know, there's an irony, because you hear the companies and their trade groups talking about how we don't want a public option that would put a bureaucrat between a patient and his doctor. But you've just described a situation in which a CEO is actually between a doctor and the patient,
POTTER: It's true. And that same thing happened, in the Nataline Sarkisyan case. You had a corporate bureaucrat making a decision on coverage. So, they are trying to make you worry. And fear a government bureaucrat being between you and your doctor. What you have now is a corporate bureaucrat between you and your doctor.
MOYERS: Whose motive is profit. Understandably, naturally, profit.
POTTER: Right.
On what likely tactics from the health insurance industry as reform legislation makes its way through Congress:
MOYERS: In other words, if the industry is able to kill reform, or the Democrats and the Republicans can't agree on a proposal, that's what the industry really wants.
POTTER: Exactly. And it happened in '93 and '94. And just about every time there has been significant legislation before Congress, the industry has been able to kill it. Yeah, the status quo works for them. They don't like to have any regulation forced on them or laws forced on them. They don't want to have any competition from the federal government, or any additional regulation from the federal government. They say they will accept it. But the behavior is that they will not-- you know, they'll not do anything after say this plan fails.
Say nothing happens. They're saying now what they did in '93, '94. "We think pre-existing conditions is a bad thing," for example. Let's watch and see if they really take the initiative to do anything constructive. I bet you won't see it. They didn't then.
MOYERS: Well, on the basis of the past performance, and on the basis of your own experience in the industry, can we believe them when they say they will do these things voluntarily?
POTTER: I don't think you can. I think that they will implement things that make them more efficient. And that enhance shareholder value. And if what they do contributes to that, maybe so. But now, they do say, they are in favor of an individual mandate. They want us all to be insured.
MOYERS: For the government to require every one of us to have some policy.
POTTER: Exactly. And that sounds great. It is an important thing that everyone be enrolled in some kind of a benefit plan. They don't want a public plan. They want all the uninsured to have to be enrolled in a private insurance plan. They want - they see those 50 million people as potentially 50 million new customers. So they're in favor of that. They see this as a way to essentially lock them into the system, and ensure their profitability in the future. The strategy is as it was in 1993 and '94, to conduct this charm offensive on the surface.
But behind the scenes, to use front groups and third-party advocates and ideological allies. And those on Capitol Hill who are aligned with them, philosophically, to do the dirty work. To demean and scare people about a government-run plan, try to make people not even remember that Medicare, their Medicare program, is a government-run plan that has operated a lot more efficiently.
And also, the people who are enrolled in our Medicare plan like it better. The satisfaction ratings are higher in our Medicare program, a government-run program, than in private insurance. But they don't want you to remember that or to know that, and they want to scare you into thinking that through the anecdotes they tell you, that any government-run system, particularly those in Canada, and U.K., and France that the people are very unhappy.
And that these people will have to wait in long lines to get care, or wait a long time to get care. I'd like to take them down to Wise County. I'd like the president to come down to Wise County, and see some real lines of Americans, standing in line to get their care.
2 comments:
He was also on Democracy Now! for the full time today. Sounds like this interview covered similar topics.
Great blog btw. Been reading it for a few months and really enjoy the research you bring into your posts.
-jakub
[going global]
Hi Jakub,
Thanks for your comment - I'm glad you're finding my blog worthwhile!
There's an interesting quote in the full transcript of the Moyers interview, in which Mr. Potter states pretty plainly that he is trying to avoid "the hottest circle of hell" described in Dante's "Inferno" as being reserved for those who remain neutral in times of strife. He really seems almost compelled to get it all out there, and I'm glad he has a conscience.
Best,
Paul
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