The Ultimate Irony: Health Care Industry Adopts Big Tobacco's PR Tactics

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.

Wendell Potter is the Senior Fellow on Health Care for the Center for Media and Democracy in Madison, Wisconsin.


Sheldon - You're the one bringing doctors, nurses, etc into it. I don't see anyone else doing that. My guess is that you want (for whatever reason) to shift the debate from being about the insurance industry (which everyone tends to hate) to being about doctors and nurses (which everyone tends to like). Let's keep the focus on the insurance industry as the topic. My suspicion is that health care workers (ie. people actually treating us) are as much the victim as patients. Wendel - Thanks for speaking out. I especially love hearing about the dirty tricks and tactics the PR industry uses when a client gets desperate. I'd love more information about how to spot these tactics - so, as US citizens, we can be more conscious and informed participants in the debate.

Keep up the good work. You and the founder of united patients of America have a lot in common. She was on the receiving end, you were on the other. Perhaps together you can make the difference.

The U.S. Department of Health and Human Services reported in the latest HHS Agency Financial Report (Nov 2008) that the contracted insurance companies for Medicare, Medicare Advantage, Medicaid and SCHIP made $50 Billion in improper payments (overpayments) to health care providers in one year. See The improper payments result from the complexity of health care billing and payment rules. They also are caused by fraudulent behavior by some doctors, hospitals, labs, and equipment providers billing for services not provided. The federal and state governments do not process health care claims themselves but contract with companies like BC/BS, Aetna, Amerigroup and many others to enforce government rules and pay claims. For the most part, these are the same insurance companies that handle health insurance claims for most Americans. If the insurance companies make such massive errors with our tax dollars, what mistakes do they make with our health care premium dollars? For a list of Medicare payers and their error rates, see When calculating administrative costs for Medicare, Medicaid and SCHIP, be sure to add in the cost of improper payments. When you do, you will get a much higher percentage of premium dollars than previously calculated. The latest FBI Financial Crimes Report in 2007 estimated that 3 percent to 10 percent of total health care spending is attributable to fraud, overpayments, coordination of benefits and subrogation errors. This means that up to $260 billion a year in associated costs are due to health care fraud. Yet the government only assigned enough staff to recover about $1 billion. See Why does the government do such a poor job in managing health care dollars? After listening to Wendell Potter's interview on Bill Moyers Journal, I suspect it's due to the political power of the health care industry. Why do journalists do such a poor job of reporting the theft of our tax dollars and insurance premiums? I don't know! Reducing improper payments and fraud will provide enough money to ensure all Americans have health insurance without raising taxes. It will also eliminate the difference in health care inflation and overall inflation. Most importantly, it will provide enough money to increase the payments to honest providers without raising the overall cost of health care. If you agree, let your Congressperson know what you think. Only democracy can overcome lobbyists.

Thank you for your wonderful work for honesty and integrity in healthcare reform! Here is some more information--it's a sorry system all around: SENATORS WHO SIGNED LETTER OPPOSING PUBLIC HEALTH PLAN TOOK $17.7 MILLION IN CAMPAIGN CASH FROM HEALTH CARE/INSURANCE INDUSTRIES Quoted from the article: "The Senators have collectively taken $17.7 million from insurance and health care interests, according to data analyzed at the Center for Responsive Politics website, That amounts to nearly $2 million per Senator over their careers. “Americans want a government that is responsive to our needs, not a Congress that listens to its donors from the insurance and health care industry,” commented David Donnelly, national campaigns director of Public Campaign Action Fund. “These Senators appear to be carrying water for their donors at the expense of advancing health care reform.” All nine Senators sit on the Senate Finance Committee, which is actively engaged in debating health care reform. The nine signers include Senators Chuck Grassley (R-Iowa), Orrin Hatch (R-Utah), Jon Kyl (R-Ariz.), Jim Bunning (R-Ky.), Mike Crapo (R-Idaho), Pat Roberts (R-Kan.), John Ensign (R-Nev.), Mike Enzi (R-Wyo.), and John Cornyn (R-Texas). Senator Olympia Snowe (R-Maine) was the committee’s only Republican Senator not to sign. Sen. Snowe has taken $1.1 million from the same interests, less than all but two of the signers." TAKE ACTION: 1. Send your free fax to Obama and to your Senators and Representatives. Here’s a quick and easy way to fax them: <a href=""></a> 2. ASK President Obama to support Single Payer reform and to look at the billions in savings that would occur with Single Payer reform. Ask him to insist that the Congressional Budget Office evaluate the finances of the Single Payer plans.</i> People are dying because of our current healthcare system. Single payer reform is a human right! In addition to the faxes in #1 above, please: COMMENT HERE: AND HERE: CALL AND FAX: Phone: Comments: 202-456-1111;
Switchboard: 202-456-1414; FAX: 202-456-2461 Comment, call, and fax every day! 3. ASK your Senators to support and co-sponsor S 703, The American Health Security Act. ASK your Representatives to support and co-sponsor HR 676, The United States National Health Insurance Act. (83 Representatives have signed on as co-sponsors so far). Let your Senators and Representatives know the bottom line: • VOTE FOR SINGLE PAYER AND WE WILL VOTE FOR YOU. • OPPOSE SINGLE PAYER AND WE WILL OPPOSE YOU, AND WORK FOR YOUR DEFEAT IN THE NEXT ELECTION. You can find your legislators’ contact information here: <a href=""></a>

Please read this article: “The Health Care Chamber of Horrors: Choose Your Bureaucrat!” Quoted from the article: "Well, government is not the only place where bureaucrats work. They are ubiquitous in those wonderful companies we pay to bring us our health insurance policies. . . . "Consider this mini-chamber of horrors, culled from a recent and highly dramatic House hearing chaired by Rep. Henry Waxman of California. Robin Beaton, 59, found out last June she had an aggressive form of breast cancer and needed surgery -- immediately. But just days before her double mastectomy, she found out that her insurance provider would not cover the procedure. (In the industry, they call it "rescission.") . . . "And Peggy Raddatz testified on behalf of her late brother, who was diagnosed with stage four non-Hodgkin's type lymphoma. In the midst of his chemotherapy treatment, his coverage was cancelled and he was not able to receive the stem cell transplant needed to save his life. . . . "These are but a few of the thousands of people who thought their premiums entitled them to be treated. And if you think these are extraordinary cases, consider this: "BLUE CROSS OF CALIFORNIA, A SUBSIDIARY OF WELLPOINT, ENCOURAGED EMPLOYEES THROUGH PERFORMANCE EVALUATIONS TO CANCEL THE HEALTH INSURANCE POLICIES OF INDIVIDUALS WITH EXPENSIVE ILLNESSES. . One Blue Cross employee earned a perfect score of "5" for "exceptional performance" on an evaluation that noted the employee's role in dropping thousands of policyholders and avoiding nearly $10 million worth of medical care. "Blue Cross of California and two other insurers saved more than $300 million in medical claims by canceling more than 20,000 sick policyholders over a five-year period. Only a single-payer approach to healthcare reform will end the inhumanity of our failed healthcare insurance system, where profits are more important than patients’ health, and where people die because of it.

I've run into a talking point from friends that I'd like to find out the truth on. They like to say, "Countries with public health care -- such as Canada, England and some countries in southeast Asia -- are trying to get rid of their public systems because it doesn't work." This seems counter to the interviews with citizens of those countries who say their health care system is fine. Is this a blatant lie, or are they twisting the results of some bogus poll?

I wanted to thank you for your interview with Bill Moyers, letting us know what we are up against if Healthcare Reform is going to take place. I was one of those that didn't bother to see Sicko because of the negative publicity. Now, I know that Michael Moore hit the nail on the head based on what you told Bill Moyers and will be renting it right away. Thanks again for all the work you are doing. I'm glad you became motivated to make a difference.

Dear Mr. Potter, Thank you so much for coming forth. The lack of health care has been ruling our decisions in my family for the past 9 years. We even quit our jobs and my husband went back to school ,at the age of 50, to get a masters in math. He just finished and now the job market is crazy. Oh well. We need people like you in America. We work hard at being advocates for health care( DNC, Health Care reform groups, etc.) but the government doesn't listen. Americans are so busy trying to survive day to day that action isn't taken. I have sent your PBS interview to every one I know. It made a difference. Again thank you for what you have done. It took courage and conviction. Sincerely, Tina Campbell - North Carolina