Interview with a former health insurance company exec

  1. Interview with a former health insurance company exec
    Full interview at Columbia Journalism Review

    (Trudy Lieberman = interviewer; WP = Wendell Porter, former CIGNA head of corporate communications)

    How do companies manipulate the medical loss ratio?

    They look at expensive claims of workers in small businesses who are insured by the company, and the claims of people in the individual market. If an employer-customer has an employee or two who has a chronic illness or needs expensive care, the claims for the employee will likely trigger a review. Common industry practice is to increase premiums so high that when such accounts come up for renewal, the employer has no choice but to reduce benefits, shop for another carrier, or stop offering benefits entirely. More and more have opted for the last alternative.

    What tactics do they use in the individual market?

    They rescind policies when a review indicates that an individual has filed a lot of expensive claims. They will look for conditions that were not disclosed on the application. Often the policy likely will be canceled and the individual left without coverage. Sometimes people aren't aware that they have a pre-existing condition. It might be listed in the doctor's notes but not discussed with the patient.

    One way to end this practice might be to regulate it out of existence. Can we count on the industry to submit to more stringent regulation?

    The industry says it will accept more regulation, but the evidence is that it flaunts regulation on the books now. Insurers are often cited for violations of many state regulations, and they usually agree to settle with insurance commissioners or the attorney general and pay a fine. Fines are the cost of doing business, and even if the fine is several million dollars, it is inconsequential compared to profits insurers make.

    What can we expect from insurers as this reform discussion continues?

    Until there is actual legislative language, we will see the industry continue to be in favor of reform and portray themselves as coming to the table with solutions. They will try to persuade reporters that the industry has changed this time. They are saying the same things now that they said before. A lot of young reporters weren't around then, and don't know what they said in '93-'94.

    TL: What can we expect from insurers after the bill language appears?

    It's what we won't see--what goes on behind the scenes--that will be most important. The industry conducts what I call duplicitous PR campaigns--one of which I refer to as the charm offensive. They talk about how much they are committed to reform. But, behind the scenes, they are financing efforts to kill elements they are opposed to, or they kill reform entirely. They will work through what they refer to as "third-party advocates"--people and groups that are ideologically aligned with them--and use their PR firms and lobbyists to do that work. These surrogates will reach out to radio and TV talk show hosts and conservative editorial writers. Insurers will also activate their grassroots organizations--their employees, businesses, and political allies--and if their ability to make money in the Medicare program is threatened, they will reach out to senior citizens enrolled in their plans. Activities range from sending industry-written letters and e-mails to lawmakers and the media to flying people to Washington to lobby on their behalf. These are called fly-ins.

    What practices will the industry fight to the death to keep?

    They will fight to keep flexibility to design benefits as they see fit; in other words, low-cost policies that don't cover very much. They will insist on flexibility to continue designing more products that shift the financial burden to consumers. That will enable them to market leaner benefit plans, and it will let them market "voluntary" plans to certain employers that have high employee turnover. These plans don't require financial participation by employers. Insurers want to have the flexibility to continue designing plans that cover less and move further and further away from the concept of insurance to personal responsibility. Insurers want people to have "more skin in the game," and they want to have less.

    What else will they fight strongly for?

    They will fight to keep the ability to base rates on age. That will be a way to keep charging the most to people who are likely to be the sickest. That will enable them to offer cheaper policies to younger and healthier people, and that is the market where the competition will be.

    If there is an individual mandate, how will the industry benefit?

    They have the potential for millions of more health plan enrollees. The ability to have flexible benefit design and base rates on age will allow them to design plans to maximize their profitability.

    Why is the industry so powerful?

    Over the many years, their PACs and individual executives have contributed to many political campaigns. They've hired former members of Congress as lobbyists, such as my former colleague Bill Hoagland, who was a top aide for Senate majority leader Bill Frist and now heads CIGNA's government relations operation. All the companies have independent lobbying firms working for them. Some are close to Democrats and some are close to Republicans.

    Why is the industry scared of a public plan that would look and act like Medicare?

    A public plan could offer the same benefits as a private plan at less costs because it would not have the high administrative costs--which include sales, marketing, and underwriting expenses--associated with most private plans. It would not be under constant pressure from Wall Street to reward shareholders by constantly keeping an eye on the medical loss ratio and earnings per share, another key measure of profitability.

    Are the members of Congress who are most vocally against a public plan aligned with the industry?

    Yes. One of the things they can exploit is to talk about how a government-run plan would wreck the free market system in health care. Many members of Congress believe the free market can still work with health care.

    Can it?

    There's no evidence that it has worked since the Clinton plan failed.
  2. 2 Comments

  3. by   GCTMT
    A couple of years ago I was in Tennessee and saw an ad for a health expedition in the nearby town of Wise, Virginia. Out of curiosity I went and was overwhelmed by what I saw. Hundreds of people were standing in line to get free medical care in animal stalls. Some had camped out the night before in the rain. It was like being in a different country.
    I'm not usually shocked to hear or read stories like this that happen in the U.S. But, this one certainly took me by surprise. Oh well, I guess these folks just aren't worth a damn, so sweeping them under the rug (or in this case "medical care in Animal stalls") is an appropriate way to deal with these peasants.

    Call me crazy, but I don't think a persons worth should be measure by their bank account and/or ability to pay for health insurance.

    HR 676 won't solve all our health care problems, but I can't imagine other developed nations having to put up with this kind of nonsense. Animals stalls? Ridiculous.
  4. by   blue note
    The former CIGNA exec, Wendell Porter, was on Bill Moyer's Journal recently. You can watch the video of the interview on the PBS site.

    From the transcript:

    On why he started speaking out:
    WENDELL POTTER: Well, I was beginning to question what I was doing as the industry shifted from selling primarily managed care plans, to what they refer to as consumer-driven plans. And they're really plans that have very high deductibles, meaning that they're shifting a lot of the cost off health care from employers and insurers, insurance companies, to individuals. And a lot of people can't even afford to make their co-payments when they go get care, as a result of this. But it really took a trip back home to Tennessee for me to see exactly what is happening to so many Americans..... I went home, to visit relatives. And I picked up the local newspaper and I saw that a health care expedition was being held a few miles up the road, in Wise, Virginia. And I was intrigued.
    I didn't know what to expect. I just assumed that it would be, you know, like a health-- booths set up and people just getting their blood pressure checked and things like that. But what I saw were doctors who were set up to provide care in animal stalls. Or they'd erected tents, to care for people. I mean, there was no privacy. In some cases-- and I've got some pictures of people being treated on gurneys, on rain-soaked pavement.

    And I saw people lined up, standing in line or sitting in these long, long lines, waiting to get care. People drove from South Carolina and Georgia and Kentucky, Tennessee-- all over the region, because they knew that this was being done. A lot of them heard about it from word of mouth.

    There could have been people and probably were people that I had grown up with. They could have been people who grew up at the house down the road, in the house down the road from me. And that made it real to me.

    It was absolutely stunning. It was like being hit by lightning. It was almost-- what country am I in? I just it just didn't seem to be a possibility that I was in the United States. It was like a lightning bolt had hit me.
    On Michael Moore's "Sicko":
    WENDELL POTTER: I thought that he hit the nail on the head with his movie. But the industry, from the moment that the industry learned that Michael Moore was taking on the health care industry, it was really concerned.

    What were they afraid of?

    WENDELL POTTER: They were afraid that people would believe Michael Moore.

    BILL MOYERS: We obtained a copy of the game plan that was adopted by the industry's trade association, AHIP. And it spells out the industry strategies in gold letters. It says, "Highlight horror stories of government-run systems." What was that about?

    WENDELL POTTER: The industry has always tried to make Americans think that government-run systems are the worst thing that could possibly happen to them, that if you even consider that, you're heading down on the slippery slope towards socialism. So they have used scare tactics for years and years and years, to keep that from happening. If there were a broader program like our Medicare program, it could potentially reduce the profits of these big companies. So that is their biggest concern.

    BILL MOYERS: And there was a political strategy. "Position Sicko as a threat to Democrats' larger agenda." What does that mean?

    WENDELL POTTER: That means that part of the effort to discredit this film was to use lobbyists and their own staff to go onto Capitol Hill and say, "Look, you don't want to believe this movie. You don't want to talk about it. You don't want to endorse it. And if you do, we can make things tough for you."


    WENDELL POTTER: By running ads, commercials in your home district when you're running for reelection, not contributing to your campaigns again, or contributing to your competitor....

    BILL MOYERS: --radicalized Moore, so that his message was discredited because the messenger was seen to be radical.

    WENDELL POTTER: Absolutely. In memos that would go back within the industry-he was never, by the way, mentioned by name in any memos, because we didn't want to inadvertently write something that would wind up in his hands. So the memos would usually-- the subject line would be-- the emails would be, "Hollywood." And as we would do the media training, we would always have someone refer to him as Hollywood entertainer or Hollywood moviemaker Michael Moore....

    BILL MOYERS: So you would actually hear politicians mouth the talking points that had been circulated by the industry to discredit Michael Moore.

    WENDELL POTTER: Absolutely.

    BILL MOYERS: You'd hear ordinary people talking that. And politicians as well, right?

    WENDELL POTTER: Absolutely.

    BILL MOYERS: So your plan worked.

    WENDELL POTTER: It worked beautifully.

    BILL MOYERS: The film was blunted, right?

    WENDELL POTTER: The film was blunted. It--

    BILL MOYERS: Was it true? Did you think it contained a great truth?

    WENDELL POTTER: Absolutely did.
    On a public plan:
    WENDELL POTTER: It will help. It would help. Would it rid it? No, I don't think it would, because of the for-profit structure that is now dominant in this country. But the public plan would do a lot to keep them honest, because it would have to offer a standard benefit plan. It would have to operate more efficiently, as does the Medicare program. It would be structured, I'm certain on a level playing field, so that it wouldn't be unfair advantage to the private insurance companies. But because it could be administered more efficiently, then the private insurers, they would have to operate more efficiently. And that 20 cents in that medical loss ratio we talked about earlier might get narrower. And they don't want that.