Every horrible thing you ever heard about the health insurance industry is true

[Ann]

Wendell Potter on Profits Before Patients

July 31, 2009

Last month, testimony in front of the U.S. Senate Committee on Commerce, Science and Transportation by a former health insurance insider named Wendell Potter made news even before it occurred: CBS NEWS headlined: "Cigna Whistleblower to Testify." After Potter's testimony the industry scrambled to do damage control: "Insurers defend rescissions, take heat for lack of transparency."

[media]http://www.pbs.org/moyers/journal/07312009/flv/potter.flv[/media]

In his first extended television interview since leaving the health insurance industry, Wendell Potter tells Bill Moyers why he left his successful career as the head of Public Relations for CIGNA, one of the nation's largest insurers, and decided to speak out against the industry. "I didn't intend to [speak out], until it became really clear to me that the industry is resorting to the same tactics they've used over the years, and particularly back in the early '90s, when they were leading the effort to kill the Clinton plan."

Potter began his trip from health care spokesperson to reform advocate while back home in Tennessee. Potter attended a "health care expedition," a makeshift health clinic set up at a fairgrounds, and he tells Bill Moyers, "It was absolutely stunning. When I walked through the fairground gates, I saw hundreds of people lined up, in the rain. It was raining that day. Lined up, waiting to get care, in animal stalls. Animal stalls."

Looking back over his long career, Potter sees an industry corrupted by Wall Street expectations and greed. According to Potter, insurers have every incentive to deny coverage — every dollar they don't pay out to a claim is a dollar they can add to their profits, and Wall Street investors demand they pay out less every year. Under these conditions, Potter says, "You don't think about individual people. You think about the numbers, and whether or not you're going to meet Wall Street's expectations."

You can view Wendel Potter's congressional testimony online or read the text.

http://www.pbs.org/moyers/journal/07312009/profile.html

[metalman]

Re: Every horrible thing you ever heard about the health insurance industry is true

bump... this is a must read!

[thriftyandboringinohio]

Re: Every horrible thing you ever heard about the health insurance industry is true

I seems that the only solution to the US health care mess is to kill the private health insurance companies (good riddance!). Every cent they take does nothing to help the patient or the doctor. The US system worked well in the 1960's when it had 3 distinct attributes:

1. Health insurance companies were true mutual insurance companies - non-profits paying modest wages to their employees.

2. Hospitals were owned and operated as non-profits by charities and local governments.

3. The pharmaceutical companies were merely nationally prominent companies making great profits, not multi-national juggernauts struggling for historic profits.

[metalman]

Re: Every horrible thing you ever heard about the health insurance industry is true

I seems that the only solution to the US health care mess is to kill the private health insurance companies (good riddance!). Every cent they take does nothing to help the patient or the doctor. The US system worked well in the 1960's when it had 3 distinct attributes:

1. Health insurance companies were true mutual insurance companies - non-profits paying modest wages to their employees.

2. Hospitals were owned and operated as non-profits by charities and local governments.

3. The pharmaceutical companies were merely nationally prominent companies making great profits, not multi-national juggernauts struggling for historic profits.

thriftyandboringinohio for congress in 2012!!!

[don]

Re: Every horrible thing you ever heard about the health insurance industry is true

A brilliant example of an operational conspiracy* in action.

They happen frequently.

What else would one expect in an oligarchy?

(* not gnomes in a Swiss vault running the world but industry self-interests coordinated for their common good :rolleyes

[sunskyfan]

Re: Every horrible thing you ever heard about the health insurance industry is true

What is amazing to me is that we are only questioning the Wall Street Model as it has impacted health care. It is doing this to everything it touches. If you want to save capitalism and free markets somebody better come up with something new in a hurry. "Socialism" is an effect not a cause.

[jdv]

Re: Every horrible thing you ever heard about the health insurance industry is true

I'm all for getting insurance companies out of health care altogether.

But to share a personal anecdote. I work in IT for a mutual insurance company. One of few insurance companies with an AM Best A+ rating, and I really think we are a very well run company. Now I'm an IT guy and not an insurance wonk, but here's the thing: A mutual company is in theory owned by it's policy holders. Any profits either go as a dividend to policyholders, or more commonly to lower premiums to those policy holders. In some ways, you could call a mutual insurace company a non-profit.

So since we are not worried about inflating our stock price with profits, we should be able to destroy the competition in terms of rates for our insureds, right? I'm not speaking specifically about Health Insurance, but across the board. But the reality is that we don't. Our competitors are able to price at the same level as we are.

Which leads me to believe, that while insurance companies may be easy to vilify, the reality is that most of the time they are not gouging as much as popular belief would indicate.

[metalman]

Re: Every horrible thing you ever heard about the health insurance industry is true

What is amazing to me is that we are only questioning the Wall Street Model as it has impacted health care. It is doing this to everything it touches. If you want to save capitalism and free markets somebody better come up with something new in a hurry. "Socialism" is an effect not a cause.

1 in 1000 get that!!!

[flintlock]

Re: Every horrible thing you ever heard about the health insurance industry is true

I'm all for getting insurance companies out of health care altogether.

But to share a personal anecdote. I work in IT for a mutual insurance company. One of few insurance companies with an AM Best A+ rating, and I really think we are a very well run company. Now I'm an IT guy and not an insurance wonk, but here's the thing: A mutual company is in theory owned by it's policy holders. Any profits either go as a dividend to policyholders, or more commonly to lower premiums to those policy holders. In some ways, you could call a mutual insurace company a non-profit.

So since we are not worried about inflating our stock price with profits, we should be able to destroy the competition in terms of rates for our insureds, right? I'm not speaking specifically about Health Insurance, but across the board. But the reality is that we don't. Our competitors are able to price at the same level as we are.

Which leads me to believe, that while insurance companies may be easy to vilify, the reality is that most of the time they are not gouging as much as popular belief would indicate.

Probably true, but my experience with business is that companies tend to be as efficient as they HAVE TO BE. The mutual companies may simply determine the market price and then work off that. Throw in some higher salaries, better employee benefits, a few extra private jets, etc and they can show no profit at the same prices.

[flintlock]

Re: Every horrible thing you ever heard about the health insurance industry is true

What is amazing to me is that we are only questioning the Wall Street Model as it has impacted health care. It is doing this to everything it touches. If you want to save capitalism and free markets somebody better come up with something new in a hurry. "Socialism" is an effect not a cause.

You know I was thinking the same thing as I watched that. This is just the way of Wall Street corporations. It's nothing unique to health care.

And definitely, Socialism is what you get as a result. But the "have your cake and eat it too" crowd don't want to hear that.

[FRED]

Re: Every horrible thing you ever heard about the health insurance industry is true

[Roughneck]

Re: Every horrible thing you ever heard about the health insurance industry is true

Gee, that must be why medicaid and medicare are in such good shape. I wonder if they will run national health insurance as good as Amtrack?

[LorenS]

Re: Every horrible thing you ever heard about the health insurance industry is true

My bet is that a simple change to the income tax code would solve more problems than government sponsored health care, at least for most people.

I'm not against welfare for the poor, but the problems experienced by the middle class seem to me to be a result of poorly thought out tax codes.

It's the tax code that makes it nearly impossible for me to shop for and select MY OWN INSURANCE (or to save up and cover expenses myself should I feel the deisre).

Reform means getting rid of the source of the corruption, not rewarding those who caused it with more power.

[Ghent12]

Re: Every horrible thing you ever heard about the health insurance industry is true

There is a third option, but due to government policy over decades it has been made generally untenable. You could (A) pay the doctor.

[Roughneck]

Re: Every horrible thing you ever heard about the health insurance industry is true

The administartion claims the need for health care reform is so we can provide insurance to the "40 million" people who don't have care. Of that almost 10 million are illegals. Another 10 are people who can afford insurance but don't buy it. So if you want to provide health care to the 20 or so million people who want insurance but can't afford it why not just expand medicaid to include these people? Obama has given the answer. He has said we must reform the SYSTEM because cost increases will threaten the federal budget down the road. Now how do you think the government will cut costs in a system based on fee for service? They will provide less services. Got a rare form of cancer with a low survivability rate sorry the medical advisory board says you are SOL. Oh but at your age you can probably live another 10 years with prostate cancer. I'm a little disapointed that the usual conspiracy theorists are so caught up in hating the insurance companies that they dont see this.