Insider pans health insurance sector
BURLINGTON — Wendell Potter might be considered the health insurance industry’s enemy number one.
After leaving his executive position at the insurance giant Cigna in 2008, he has fought relentlessly for equitable U.S. health care reform. Addressing Capitol Hill, often featured in the national media and authoring the recent book “Deadly Spin,” Potter is on the warpath to bring the health insurance industry’s most backhanded motives into the spotlight.
Between presentations at the Vermont Statehouse and Burlington’s City Hall late last week, Potter shared some of his insights with this reporter:
After two decades of work in the health care industry, you left your high-paying job as head of corporate communications for Cigna to become the industry’s biggest whistle blower. What are you doing today?
I am going from state to state talking about what the health insurance industry is up to and I’m returning to my role as a journalist. I’m serving as a news analyst at the Center for Public Integrity.
In 2009, you warned Congress that if it “fails to create a public insurance option to compete with private insurers, the bill it sends to the president might as well be called the Insurance Industry Profit Protection and Enhancement Act.” What’s your take on what happened?
What happened was that Congress did indeed pass a bill that reflected a lot of what the health insurance industry wanted most. There were two things that the industry wanted most:
1.To require Americans who are not eligible for an existing public program like Medicare or Medicaid to buy a private health insurance plan. That was their top objective.
2.To make sure that there was not a public option created by the bill.
They got both. This legislation guarantees that the insurance industry will get billions of dollars in revenue that it otherwise would not have from people who are now (when the legislation goes into effect in 2014) forced to buy insurance.
There are, however, some good consumer protections and new regulations in this legislation. The industry doesn’t like that and they are working behind the scenes in Washington to get lawmakers to repeal the consumer protections.
What tactics did the health care industry use to defeat the public option in the health care bill?
Their involvement wasn’t too visible. They equipped their friends in Congress with talking points to criticize the idea of a public option. They called the legislation a “government takeover” of the health care system. They had their allies use this language because they wanted Americans to believe that a public option would represent a socialistic takeover of the health care system, which it would not.
They basically conducted a well-financed, behind-the-scenes campaign, getting their allies in politics, media and business to scare people away from a public option. And they were successful.
What were the industry’s primary motives?
To preserve profit — there’s no doubt about it. The health insurance industry is dominated by a cartel of very large, for-profit health insurance corporations and their primary mission is to enhance shareholder value.
Could what happened on the national stage also happen to Vermont during this reformation period?
No doubt about it; it will happen here. Vermonters need to be on guard. There will not be a lot of visibility by the health insurance industry. They’ll be funneling a lot of money to their allies to influence the debates in Montpelier and they’ll try to influence elections next year in the state.
What is the main drawback of mandated national health care without a public option?
The main drawback is that we are forced to buy coverage from private companies that care more about their bottom line than the health and well-being of the people of this country.
A public option would not have a profit motive, it would not have to send billions of dollars to Wall Street, it would not have to pay CEOs exorbitant salaries and it would not have high administrative costs.
What tactics should advocates of public health care employ to achieve success?
Advocates of reform have to be very vigilant to pay attention to the insurance industry trying to strip out the consumer protections in the current bill and that the regulations on the industry are not weakened.
A good thing that the law does is that it requires insurance companies to spend at least 80 percent of premiums on medical care. These insurance companies will work with their allies to change that law, so that they can spend even less than 80 percent of our premium dollars on medical care.
There will be an effort to make it possible for insurance companies to continue to sell (insurance plans) that are really junky. The law that was passed requires insurance companies to offer certain benefits. They don’t like that. They want to be able to continue to sell us (plans) that have very limited benefits or have high deductibles. This will cause more Americans to forego health care.
So, consumer advocacy should pay close attention to what the insurance industry and its allies will be doing to weaken the legislation. They and their allies will try to sell us on these changes by telling us that if these changes are not made, our health insurance premiums will go up. People need to understand that the insurance industry and its allies will try to pull the wool over our eyes.
Is Vermont a “hot bed” for health care reform?
It is. What is going on in Vermont is very exciting to a lot of consumer advocates because you’ve got a governor, congressional delegation and state legislators who have expressed a strong interest in a single-payer system, which has been a dream of consumer advocates for many years.
At the same time, the insurance industry and its allies are also watching closely. The industry will spend a lot of money behind the scenes to make sure it doesn’t happen. They’ll send millions of dollars to try to influence elections next year.
So, really, it’s going to be Vermont as the David against the Goliath of the health insurance industry fighting for the single-payer system. It’s going to be a battle of incredible importance to the country.
Professor William Hsiao laid out three recommended options for the future of Vermont health care: 1) a government-run, single-payer system, 2) a public option, 3) his preferred hybrid public-private single-payer plan. Could you please explain these options?
The first option would be similar to the Canadian structure, which is a single-payer system. Option two would be similar to what the congressional Democrats proposed at the federal level. The third option would include a private industry element in terms of administrating health care in Vermont.
Under the hybrid third option, all Vermonters would have insurance coverage and the system would be administered by a private entity that bids on the project every two years. How might the government regulate the sole health insurance company running the show?
In a similar way that the federal government administers the Medicare program out of Washington. Medicare is a public aid financed plan, but the federal government contracts out to private insurers to administer the program.
The federal government periodically puts out a bid for the Medicare program. Several different companies administer the program in different regions of the country.
Under the hybrid system, should Vermonters be wary of any health insurance industry tactics?
Yes, the industry doesn’t like any of these options. Although Blue Cross might support this option, the industry will be against it. They thrive on having a multi-payer system. It is something that has turned out to be incredibly beneficial for Wall Street and they don’t want to endanger that.
Under the hybrid system, most insurance companies would be excluded because one entity would administrate.
I will just caution everybody to be on guard for what will indeed be a huge onslaught of propaganda based on a lot of misinformation.
Central to Hsiao’s report is a uniform payment system with fixed rates for particular medical treatments, procedures, visits and hospital stays. What are the advantages and disadvantages of this system?
It seems like the advantages would certainly outweigh any disadvantages. Health care providers would be able to budget better. They wouldn’t have to worry about getting different payments for the same services. They would be able to count on a reimbursement level that wouldn’t be subject to change and negotiation.
How might this public health care reform impact physicians and medical staff?
I think it will have a very positive impact because there will be a much fairer system of reimbursement.
How do you think a Vermont universal health care system should best be funded?
In a similar way to how it’s funded in most developed countries — through public financing.
Hsiao’s proposed tax would impact some of Vermont’s largest employers, such as IBM, that don’t want to pay the 14.5 percent payroll tax in addition to their existing health care costs. If this version of the plan were adopted, might it drive businesses away from Vermont?
It would not. It would attract businesses. The position IBM is taking is a very selfish position. The industry will use companies like IBM and others to carry their message for them.
IBM is most concerned about the protection of ERISA (Employee Retirement Income Security Act). That gives IBM and other big corporations incredible leniency from government regulations. That’s what’s really at stake here — they don’t want to be subject to state regulation.
What we need to move toward is a system that is not based on getting health coverage in the workplace. People are locked into their jobs (at big companies) because small businesses are increasingly unable to offer such benefits to their employees.
Big corporations benefit greatly from the status quo, so they’ll fight and play shills for the insurance industry due to their own self-interest.
If health care reformation legislation does indeed pass in Vermont, how might this influence the national health care system?
For health care reform to really happen in this country, it will need to first happen at the state level.
Vermont is really leading the way here. Historically, it’s led the way. It was the first state to abolish slavery. Wouldn’t it be interesting if it were the first state to abolish an inequitable and overly expensive health care system?
Reporter Andrew Stein is at email@example.com.