At first look, one might not think that the health insurance industry has much in common with the tobacco industry. After all, one sells a product that kills people and the other sells a product nominally aimed at putting people back together. But when it comes to deceitful public relations techniques, the health insurance industry has been learning well from Big Tobacco, which employed a panoply of shady but highly successful public relations tactics to fend off changes to its business for generations.
One of the things I said in my testimony before the Senate Commerce Committee on June 24 is that the health insurance industry engages in duplicitous public relations campaigns to influence public opinion and the debate on health care reform. By that I mean there are campaigns they want you to you know about, and those they don't.
When you hear insurance company executives talk about how much they support health care reform and can be counted on by the President and Congress to be there for them, that's the campaign they want you to be aware of. I call it their PR charm offensive.
When you read or hear someone other than an insurance company executive -- including members of Congress -- trash some aspect of reform the industry doesn't like, such as the creation of a public health insurance option, there's a better-than-even chance that person is shilling for the industry. That's the PR campaign the industry doesn't want you to know about.
The public relations and lobbying firms that work for the industry plan and carry out those deception-based campaigns, and supply the shills with talking points. One of many tactics they use is to get people who are ideologically in sync with the industry's agenda to turn those talking points into letters to the editor.
An example of a letter that contained many of the industry's messages appeared in the June 27 edition of the New York Times.
The writer, Pete Petersen, identified as an employee benefits consultant for small employers, took issue with a June 20 Times editorial, which noted that, like Medicare, "a public (health insurance) plan would have lower administrative expenses than private plans."
Mr. Petersen claimed that the Medicare program is a poor example of an efficient government program, because it is administered by the private sector. While it is true that the government contracts with private companies to handle claims, the reason Medicare has such low administrative costs is because it does not have the unnecessary overhead expenses private insurers have, such as costs associated with sales, marketing and underwriting.
Mr. Peterson also wrote that Medicaid, Champus and state CHIPs "that are administered by federal, state and municipal authorities" average 26 percent in administrative costs. What he did not mention is that in many if not most cases, those authorities have turned those programs over to the insurance industry to run. Private insurers' involvement in those programs is much greater than in the Medicare program. That helps explain why they have higher administrative costs.
Mr. Peterson also claimed that, according to a 2006 PricewaterhouseCoopers study, "86 cents of every premium dollar goes directly toward paying for medical services." What he does not disclose is that America's Health Insurance Plans, the insurance industry's biggest trade and lobbying group, commissioned that study. A 2008 study by PricewaterhouseCoopers that was not paid for by the insurance industry tells a different and more revealing story. That study reveals that the percentage of premium dollars going to pay for medical care has fallen from more than 95 percent to slightly more than 80 percent since 1993.
For another great example of how the insurance industry uses its allies to flood newspapers with letters to the editor, read Trudy Lieberman's April blog post for Columbia Journalism Review. She discloses how an alert editorial page editor at the North Andover, Massachusetts Eagle-Tribune caught the industry red-handed.