Prominent Insurance Executive Denounces Big Money

Former medical director of Oregon’s largest insurer has a few choice words for the health insurance industry at large
The Lund Report

August 18, 2009 -- I’ve been inside our health industry as the medical director for Oregon’s largest commercial insurer and have seen what happens when big money is involved, and public policy is crucial to future profits.

I can honestly tell you that the resources spent on influencing the public are enormous, and the information is inevitably biased to the interests of its source -- be that an insurance company, a hospital system or a professional association.

When Wendell Potter, who was in charge of corporate communications for CIGNA, appeared on the Bill Moyers’ Journal (PBS, July 10) he quoted Dante to explain his decision to leave the company and speak out: "The hottest places in hell are reserved for those who, in times of moral crisis, maintain neutrality."

When President Obama appeared on national television with representatives from “big PhARMA,” hospitals and health plans, they talked about their “voluntary” agreement to control costs. As the president’s plan unfolded, these special interest groups rapidly backpedaled on what they meant when they agreed to support his reform proposal. They want us to trust them, but they only want legislation without teeth that could really bite.
 
Wendell Potter told us about the strategy employed by America’s Health Insurance Plans (AHIP), the industry trade group, to make us fear change. They talk about a “government takeover” or “socialized medicine” because they know many people shudder when they hear those words. AHIP’s strategy has been to “highlight horror stories of government-run systems.”
 
Now the public option in President Obama’s plan is being singled out. Why? Because it poses the biggest threat to the profitability of insurance companies, hospitals and medical practices – as well as pharmaceutical and medical device manufacturers. They’d rather have us spend more money to expand the current system to cover the uninsured without threatening present levels of payment and over-use of products and services.  
 
Millions of dollars are being spent every week by health insurers and others to convince you to fear change, using cherry-picked horror stories about long lines and delayed care in Canada and England to inflame your fears of “socialized medicine.”
 
France’s healthcare system, which only comprises 6 percent of its GDP, is rated among the best liked in the world by its citizens (not an uncritical lot, as a group), and by Americans who’ve needed care in France. England’s National Health Service has created a successful balance of its people’s health, quality, access and cost.
 
Recently an online posting captured my own thoughts when a woman wrote, “I’d rather some faceless government bureaucrat ration my care than a faceless bureaucrat at an insurance company.”
 
Even though I’m among those bureaucrats, I have to agree. If a government official isn’t doing what we feel is right, we can find ways to make our voices heard.  Try that with the CEO of a large private insurer. Even your employer can’t hope to have a very meaningful influence on decisions, at a high enough level to matter. The largest employers, with rare exceptions, have a tough time doing that.
 
Most of the messages from the industry reflect their desire to cast themselves in the best possible light, and to decrease your desire for change—either by making you fear it, or by falsely assuring you it’s really not needed (except for more money to feed what we have). Exceptions, such as the web education effort by Regence, “What does it really cost,” and a few others, are nice to see, but they do more to prove the rule than to give real reason to be reassured.
 
Money talks in business, and healthcare long ago became a “business,” where good financial performance breeds inertia, and poor performance brings ideas to find more revenue by providing more services—rather than aggressive use of proven strategies to improve quality and thereby reduce overall costs. Money especially talks in the insurance business, and health insurance behaves mostly like insurance in general, cheery advertising notwithstanding.
 
So, when you see the messages our industry wants you to see -- on TV and the newspapers --  ask yourself what’s behind them – what are their motives?  
 
No one’s going to bring you “socialized medicine” with providers employed by government in our lifetimes --- of that you may be confident—unless we get so broke that it’s the only remaining option in the face of an even more massive lack of access to care.
 
But unless we create strong public-type options, and have the ability to comparison shop, we won’t be able to turn the tide and slow down the quickening pace of rising healthcare costs.  
 
Tell your representatives in Congress you’re not afraid of a strong “public” option, that you don’t believe good end-of-life care means “euthanasia for the sick,” and that you don’t believe the bunk being put forth by some people in our industry. 

And if you haven’t already seen the Bill Moyers’ essay on the influence of industry money in health and other public policy, click here. It’s well worth your while. 

Dr. Don Thieman now works for an Oregon nonprofit health plan that serves indigent members.

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Comments

That "largest commercial insurer" is Regence BlueCross BlueShield of Oregon, where I was the corporate medical director, retiring in 2004.

Profit, greed and advocacy of one's self interest is hardly within the exclusive domain of insurers. There are millions of individual economic interests in health care, in the private and public sectors, aspiring to make more money than last year, in accordance with the "game". It is a mistake not to recognize that government does not have its own "greedy" interests and the unique power to impose the rules to serve those ends. Think an individual can change Medicare and you must be on drugs. The Oregon Health Plan by example has perhaps spent in excess of $20 billion dollars in its duration, and added its own incremental payroll, administrative costs, and the like, without a twit of critical and independent assessment of what happened with this grand experiment. Where is the interest by our State government in openly and independent evaluation this huge investment? Too hot for too many people with hands all over its originating architecture which will be vigorously rationalized to the death. I believe in the conceptual merit of a public plan, but it must be on a level playing field to make the theory of "competition" a sensible challenge. That means as a starter those sponsored by a public plan must pay on "par" with the private sector in some fashion. I was told by one hospital CFO that Oregon Medicaid was now paying his hospital about 15 cents on the dollar charged. Why do we need to rely on hearsay such as this as opposed to flat out knowing what the discount prices are for our "public" plan? None of this can really happen as "par" would devastate the economics of existing public programs... and most of us know that. But that is all part of the tapestry of our past acts. I will up your sentiments with my own, by suggesting that if we are to make a large scale commitment to universal coverage, traditionally underwritten health insurance, as even the "left" seems willing to assure, doesn't make a lot of sense. Risk selection, reserves, and the like are questionable...the heart of what insurance is. Perhaps a public plan and the Kaisers, Blue Crosses, Providences etc, need to compete on "administrative services only" basis...as would occur within the realm of a large self funded employer. Perhaps the supply and personal incomes of providers must be regulated, if we are to have symmetry with a highly regulated benefit and financing system? If a public plan is to succeed, it will need to exercise far more economic leverage on status quo than administrative costs.

To sgregg's thoughtful and pointed comments: I agree with most of what you say. The profit motive is nearly everywhere in health care, most of all in the "for profit" sector but only as a matter of degree, not principle. While Wall Street forces a focus on quarterly profits, the "nonprofit" sector focuses on annual net profit, or "margin," or "contribution to reserves." While Wall Street is associated with eight and nine figure payouts to executives, "nonprofits" have "only" million dollar salaries for the CEO and senior VP level folks at large organizations. Subspecialty physicians have "only" half million dollar incomes as a target. And it is true, to think one can easily influence the policies of a government health plan as an individual requires hallucinogenic drugs, as you suggest. But we do have the vote, as the election of President Obama reflects. And we do have the evidence of public satisfaction with some important "government" health programs in other countries--setting aside the cherry-picked horror stories I mentioned in the article. This comment from a U.S. citizen on a recent blog posting is illustrative: From "Carol" to "Lisa": "And no, we do NOT have "by far the best health care in the world." I lived in France for 12 years, and even though I was not a legal resident for six of those years, I got the best health care I ever had in my life. Maybe I couldn't afford the kind of great health care YOU can afford, Lisa Daha. But in France, I got the great health care people here only dream of. And cheap. Even at full price, when I was not a legal resident, everything there costs a quarter of what it costs here. Free first class care for everyone in France is a reality. I guess you think I'm living in a fantasy, eh? Um, no. I lived in France, and paid taxes that paid for my health care. It was so worth it. It was not more expensive than paying taxes and paying for private health insurance over here. It was actually cheaper in the long run. Plus, everyone else benefited from my taxes when I wasn't in medical need. In France I was my "brother's keeper." Sound familiar? Call that socialist?" Here's the link: http://baselinescenario.com/2009/07/27/health-insurance-innovation/#comments

This is bizarre conversation, difficult to put in order. Medicare is a "fantastic deal" for the beneficiary as the beneficiary usually receives multiples of personal value over what one puts into the program over a working lifetime. Benefits in general are a far better deal for members, especially when considering downstream costs, than improved compensation. Indeed it is why vested interests fiercely fight to protect them. Certainly the provider industry benefits from this position. Problem is the underlying economics do not work. It is a reach for me to argue that more entitlement because "we like" various public programs that have "fuzzy financing" is an acid test for policy-making. It is my silly observation that we are likely twice as expensive as others because the collective "take-out" on a healthcare position by position basis is far greater than the nation being compared to. If we advocate interest in replicating another's superior system, it is difficult that this can be done without replicating what is paid out to the system participants. Perhaps 90% of health care costs can be attributed to someone's take home pay. Excessive executive salaries are annoying but such correction does not engage the far greater impact of what the others in much greater numbers are compensated. Perhaps there should be a comparable call for publishing the personal incomes of physicians in the United States vs. England? Would nurse incomes at Legacy stand the test of comparison to their counterparts in London or Germany? System preference aside, it is the consequences of policy and strategy on industry compensation that is the core issue. Being "profit" or "non-profit" does not materially differentiate the overriding shared motive of making more than last year. Strategic choice is whether you want to regulate these incomes or engineer a more workable free market design. It is my impression, that nation does not like either without so much softening that their impact would be totally sabotaged. In my view to make this a matter of evil insurance companies is to cheapen the understanding of the problem....keep in mind I have never worked for an insurance company, and am not their advocate.