Deadly Spin

Wendell Potter, “Deadly Spin: An Insurance Company Insider Speaks Out On How Corporate PR is Killing Health Care And Deceiving Americans”, Bloomsbury Press, 2010, 251 Pgs.

In 2008 Wendell Potter left his CIGNA insurance PR executive position because he could no longer stomach the practices and mis-information of the health care industry—the same mis-information he had been tasked with creating. In June 2009, Wendell Potter testified before a Senate panel on health care reform and explained how health insurers make promises they have no intention of keeping, how they flout regulations designed to protect consumers, and how they skew the political debate with multibillion-dollar PR campaigns. This is a must read book: knowing how to decode spin is as important as basic literacy and numeracy in today’s media world.

My Notes:

Pg. 1: Wendell Potter was a senior public relations executive for two decades with two of the largest for-profit health insurance companies in the U.S.—Humana and CIGNA. He reveals that he had contributed to the erroneous belief that the U.S. has the best health system in world. In fact, the U.S. ranks 47th in life expectancy at birth, behind Bosnia and 54th behind Bangladesh in “fairness,” a measure of the extent to which the best care is available equally throughout a country. And if you believe that the health care reform bill Obama signed into law in March 2010 was a government takeover of the health care system, “my former colleagues and I earned every penny of our handsome salaries—not to mention our bonuses.”

Pg. 49: Edward Bernays developed many of the more insidious PR methods of presenting dis-information to the public. One of his biggest clients was American Tobacco Company in the 1920’s. This company was determined to expand by tapping the potential of the women’s market. Bernays began to tout cigarettes as a low-calorie alternative to sweets. He orchestrated a campaign that equated cigarettes with slenderness, grace, and beauty. He enlisted third-party experts to warn against the adverse effects of desserts, in terms of both weight gain and tooth decay, and to declare that cigarettes were a great alternative and could do everything from clean your teeth to make you a better dancer.

Pg 72: The average cost of a family health insurance policy was $12,106 in 2007; by 2009 it had increased to $13,375. The average income for a minimum-wage employee, meanwhile, was just $11,500 in 2009.

Pg. 73: The for-profit insurers that now dominate the industry routinely dump policyholders who are less profitable or who get sick. One method is called rescission, the common but until recently largely unknown practice of retroactively canceling policyholders with large medical bills. For example: a self-employed scrap metal hauler had his policy retroactively canceled after he underwent a procedure to clear blockages in his arteries. The insurer claimed that when he’d applied for coverage, he’d failed to disclose that he had suffered from heartburn in the past. Blue Cross told him he would be responsible for paying $130,000 in medical bills. The congressional investigation into the rescission practices of just three insurers revealed that they had canceled nearly twenty thousand policies retroactively over a five-year period after going back to look at the original applications of policyholders who were under-going expensive care. Rescinding those policies enabled the companies to avoid paying three hundred million dollars in claims. The three companies investigated were: Well Point, United Health Group, and Assurant Health. (It took an act of congress to stop this in 2010).

Purging is another method insurers use to get rid of enrollees they no longer want. They dump small businesses when some of their employees’ medical claims turn out to be greater than the insurance companies’ underwriters expects. All it takes is one illness or accident among employees at a small business to prompt a hike of the next years' premium so high that the employer has to cut benefits, shop for another carrier, or stop offering coverage. Small businesses offering coverage to their employees has fallen from 61 percent in 1993 to 38 percent in 2009. Aetna was so aggressive in getting rid of accounts it no longer wanted after a string of acquisitions in the 1990s that it shed eight million enrollees over the course of a few years.

Pg. 121: MLR (Medical Loss Ratio): measures the percentage of premium dollars that go to medical care vs overhead and profits. An MLR of 90 percent, for example, means the insurer spent 90 cents of every premium dollar on medical care. Since 1993 the average MLR in America has dropped from 95 percent to around 80 percent (good news for the shareholders). Rescinding individual policies, purging small-business customers, denying claims, cheating doctors, pushing new mothers and breast cancer patients out of the hospital prematurely, and shifting costs to consumers are the ways insurance companies cut their medical expenses and keep their MLRs from inching up.

Pg. 134: The Clinton health plan was defeated by the specter—conjured up by the insurance industry—f government bureaucrats coming between them and their doctors. What Americans got instead was private insurance companies doing exactly the same thing.

Pg. 139: In 2007, the CEOs at the ten largest publicly traded health insurance companies collected a combined total compensation of $118.6 million—an average of $11.9 million each.

Pg. 144: The lack of affordable, quality coverage has meant that many Americans with medical needs are driven to financial ruin. Medical debt was a key reason for 62 percent of personal bankruptcy filings in 2007. In 2008, there were 1.07 million household bankruptcies. The lack of insurance coverage will contribute to the deaths of about 45,000 people in 2010 according to Harvard Medical School researchers.

Pg. 193: From 2007 to mid-2009, insurance and HMO political contributions and lobbying expenses totaled $586 million.

Pg. 233: All of the tactics used by the oil, beverage, and banking industries to influence lawmakers at every level of government were pulled straight from the cigarette makers’ playbook: Distract people from the real problem; generate fear; split communities with rhetoric, pitting one group against another; encourage people to doubt scientific conclusions; question whether there really is a problem; and say one thing in public while working secretly to do the opposite. This has become common practice in the corporate world which includes the health industry. Remember: always look behind any public argument to see how your emotions are being manipulated; and count on it, they are.

Pg. 235: Today, we have arrived at a precarious moment. The number of credible news organizations, particularly newspapers, is declining. Americans are confronted daily with the daunting and growing challenge of deciphering truth from spin. Accurate news may someday become available only to those who are willing and able to pay for it. Spin, of course, will remain freely available. In May 2008 the U.S. BLS showed 50,690 reporter/correspondent jobs in the country, with a mean annual income of $44,030. Correspondingly, there were 240,610 jobs for public relations specialists, with a mean annual income of $58,960.

Addenda:

Note: In 1883 the Chancellor of Germany, Otto von Bismarck, ordained the world’s first compulsory sickness insurance as part of his political effort to develop a strong working class as the foundation of a strong Germany. He also went on to create the world’s first social security retirement system in 1889. One of the main reasons this was all done by the conservative government was to keep the working class from joining true socialist and labor movements of the day. Similar health care systems followed in Austria in 1888 and in Hungary in 1891. After their success was evident, another round of reform brought compulsory sickness insurance to Norway in 1909, Serbia and England in 1911, Russia in 1912, and the Netherlands in 1913.

Managed Care Health Plans. Richard Nixon began the process to change American health care from its longstanding not-for-profit business principles into a for-profit model that would be driven by the insurance industry. In 1973, Congress passed the Health Maintenance Organization Act, which encouraged rapid growth of HMOs, the first form of managed care. Because many managed care health plans are provided by for-profit companies, their cost-control efforts created widespread perception that they were more interested in saving money than providing health care.

Consumer Driven Health Care (CDHC) refers to third tier health insurance plans beginning in 1996 when the Republican-led Congres passed legislation creating a pilot project to encourage Americns to open medical savings accounts. These developed into Reimbursement Arrangements (HRAs), or similar medical payment products to pay routine health care expenses directly, while a high-deductible health insurance policy protects the insured from catastrophic medical expenses. High-deductible policies cost less, but If the balance on this account runs out, the user then pays claims just like under a regular deductible. Users keep any unused balance or "rollover" at the end of the year to increase future balances, or to invest for future expenses. Critics contend that these plans are just shifting the cost of health care onto the patients. People with chronic illnesses, such as diabetes, will be hurt, because with a deductible of $3,000 to $4,000, such people will never be able to save anything in their savings accounts