Obama's False Friends of Health Reform

I'm hoping President Obama realizes that some of the folks who've been currying favor with him are not, as they claim, bringing "solutions" to the health care reform table. Most Americans -- especially those who voted for him -- want nothing to do with the kind of "reforms" they are peddling.

If you watched the president's televised Q&A on ABC last Wednesday night, you probably noticed that one of the people in the audience was Ron Williams, the chairman and CEO of Aetna, Inc., the nation's third largest health insurer, and currently one of the most profitable. But there are a few things that you should know about Williams.

Back in the '90s, Aetna set out on an acquisition binge in its quest to become the biggest health insurer in the country. It got there by the end of the decade after spending billion of dollars for several competitors. By 1999 it had 21 million health plan members, the most any insurer had ever had at the time.

But, as often happens after buying sprees, Aetna soon came down with a bad case of buyers' remorse. As it turned out, some of the customers it had paid top price for were not as profitable as Wall Street analysts and the big institutional investors who owned most of Aetna's stock expected. When they took a closer look at what Aetna had bought, investors started deserting the company in droves. As a result, the company found its stock price in a free fall.

As the Wall Street Journal reported on August 13, 2004, Aetna's pretax profits as a percentage of revenues began falling dramatically after peaking at about 12 percent in 1998. By 2001 the company was a basket case as far as Wall Street was concerned. It had to do something, and fast.

Probably the most important thing it did to turn itself around was recruit Williams from rival WellPoint, the ambitious for-profit company that was gobbling up Blue Cross and Blue Shield plans from coast to coast.

As the Journal reported, Williams promptly ordered a $20 million revamp of Aetna's data systems. Health care analyst Joshua Raskin told the Journal that the new system that emerged from that investment, which Aetna dubbed the Executive Management Information System (EMIS for short), was "the single largest driver of the Aetna turnaround." Why? Because it helped Aetna "identify and dump unprofitable corporate accounts." How did it do the dumping? By jacking up premiums to unaffordable levels.

By the time the dumping -- or purging, as it is frequently called in the industry -- was done, Aetna had shed eight million of its 21 million members. It shrank so much that by the time it emerged from the Ron Williams-led turnaround, it had fewer members than when the company started out on its multi-billion dollar buying binge.

While Aetna was shedding those eight million men, women and children, by the way, it also reportedly shed 15,000 of its employees. Wall Street likes it when insurers dump employees, too, because the workers who don't get the ax have to assume the responsibilities of their laid-off colleagues. That theoretically boosts productivity, which Wall Street likes. And reducing the payroll leaves more money for profits.

The health insurance industry and its allies are working hard right now to convince you that the creation of a public insurance option would put a government bureaucrat between you and your doctor. As the 2004 Wall Street Journal article makes it clear, however, EMIS was at its heart a system that put corporate bureaucrats between people and their doctors. Here's what it saId:

Mr. Williams says EMIS helps him ferret out creeping costs so Aetna can react quickly. Sitting in his first-floor office in Hartford overlooking the Aetna parking lot, he taps on his keyboard to see whether some of the health insurer's members are visiting emergency rooms too much for nonemergency reasons, such as for the flu or a sprained ankle.

Did that send a chill up your spine like it did mine? And know this, if Aetna's CEO can keep an eye on your trips to the doctor, so can the CEOs of all the other big insurers.

The insurance industry claims that this time it really and truly supports legislation to reduce the number of people without insurance, that they've changed so much since 1994 -- when they said the same thing but did everything they could behind the scenes to kill reform -- that you can and should believe them now.

The next time you hear someone from the industry talking about how much they are committed to reform, remember that just a few years ago, the CEO of one of the biggest health insurers was the mastermind behind a business strategy that cost thousands of workers their jobs and millions of other people their insurance coverage. That's the real "solution" the industry is bringing to the table -- and the kind of reform Wall Street can really get behind.

Ron Williams has been richly rewarded by Aetna's board of directors for leading the company back to a level of profitability suitable to Wall Street. They tapped him to succeed Jack Rowe as CEO when Rowe retired in 2006. And they rewarded him with compensation totaling nearly $65 million over the past two years.

(Rowe, by the way, was paid $22.2 million in 2005, his last full year as CEO. He played a big role in hawking the high-deductible plans that Aetna and the other big insurers are now trying to push us all into. He claimed that Americans enrolled in managed care plans have been too sheltered from the real costs of health care and that we need to have more "skin in the game," by which he meant that we should have to pay a lot more out of our own pockets when we go to the doctor and pick up our prescriptions, even if we have health insurance. The median family income in the United States is just $50,000, which means that most of us already have a lot more skin in the game than Dr. Rowe and Ron Williams will ever need to.)

The insurance industry's two biggest lobbying groups -- America's Health Insurance Plans (AHIP) and the Blue Cross and Blue Shield Association of America -- warned members of Congress in a joint letter a few days ago that the creation of a public insurance option would unravel the country's employer-based system.

As they say where I come from, that dog won't hunt.

It is the insurance company executives -- in their never-ending quest to meet Wall Street's profit expectations -- who are doing the unraveling by purging employers whose workers have the audacity to file claims when they get sick or injured.

A final point about Ron Williams: Not only are he and his fellow CEOs trying to kill the idea of a public health insurance option -- a central part of candidate Obama's health care proposal -- but he is the leading advocate of an idea Obama rejected and which differentiated his proposal from Hillary Clinton's -- the imposition on all of us of an "individual mandate." Many insurance executives were wary of such a mandate because they don't like the government mandating anything, especially those pesky state mandates that force them to include certain benefits in the policies they sell. Advocates of an individual mandate eventually brought the skeptics, including many of AHIP's board members, around to their way thinking by persuading them that insurers could make billions more in profits if every American had to buy an insurance policy from them. Now you know the real reason behind AHIP's shift from neutrality on the issue to full-fledged support. It's all about the money.

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


FINALLY!! Someone unafraid to reveal the truth about the money-driven medicine business a.k.a. health care industry. It's shameful. Also, I read the CNN article about your efforts to address the misinformation some groups are spreading in their TV commercials relating Canada's health care failures to Obama's plan for health care reform. The first time I saw the ad, I started screaming at the screen. What a scare tactic! Keep up the excellent knowledge sharing on your blog. Thank you!

Mr. Potter, I know it has become very popular to make disparaging remarks about health insurance plans. However, I find your comments to be unbalanced at best. Rarely, do we hear about the good deeds of a health plan such as the work of their diligent nurse case managers and disease management nurses who assist members in meeting their health care goals. This often involves helping members navigate through an often complex and confusing health care system. Members are often assisted with health care needs as they transition through levels of care, including home health care, durable medical equipment arrangements and specialty consultations. Quality departments of these maligned health plans, spend much time and money on member health initiatives promoting preventive screenings, monitoring the quality of care of practitioners and health delivery organizations, credentialing practitioners, along with collecting their member's opinions about health plan performance, just to name a few. And in response to your chills, health plans not only monitor over-utilization of services, such as ER visits but, also under-utilization of services. The cost of health care is increasing every year and many preventable medical errors continue to occur, costing patients and their families dearly in setbacks to recovery and additional anguish, sometimes resulting in death. The cost of these errors is astronomical. I for one, believe that healthcare reform is going to need all parties at the table for a solution. One final note: I had a very good friend a few years ago who found herself in an untenable situation. After working a good portion of her lifetime as legal secretary, she was diagnosed with rheumatoid arthritis and breast cancer. She became disabled due to the progression of her disease. She eventually was going to lose her health plan (this plan by the way, covered her after her COBRA coverage should have ended) She had already lost her home having to move in with a family member. She applied for Social Security Disability and was immediately denied. I am told this is common when applying for SS disability. However, being a legal secretary, she was meticulous with her paperwork and kept copies of the paperwork each time she applied and carefully organized these documents for those who would be required to review them. To her frustration, she was required to send in her meticulous documentation (which included her medical records) on three different occasions because someone with Social Security had misplaced them. Finally, after her long struggle, she was approved about two weeks before she died. I can't help but wonder if this is the kind of thing we can look forward to with a public health plan. I sure hope not. Some documents to back up a few of my statements here: http://www.iom.edu/Object.File/Master/4/117/ToErr-8pager.pdf http://www.commonwealthfund.org/Content/Publications/In-the-Literature/2005/May/Five-Years-After--To-Err-Is-Human---What-Have-We-Learned.aspx http://www.ncqa.org/

You said: "I can't help but wonder if this is the kind of thing we can look forward to with a public health plan. I sure hope not." Why wonder about it???? If it really is that bad, people will OPT for the CHOICE of one of the wonderful plans offered by private insurance companies and make the CHOICE to leave the public plan.

"I can't help but wonder if this is the kind of thing we can look forward to with a public health plan. I sure hope not." This is what already happens in the system we have now. That's the point! If we had universal, non profit health insurance in this country your friend would not have gone through this ordeal in the first place. I really don't understand how it is that you don't see that.

Thank you, thank you, thank you for exposing the unconscionable actions of the hypocritical health industry Bureaucrats. I worked for Aetna for over 25 years and as my career progressed I saw more and more behavior that was not only unethical, but worse - immoral. The number crunchers meet every month to review medical costs in every state, regions of the state, and cities. They use the information to re-work coverage limits, often resulting in a previously covered condition being "phased out" for the coming year. They sure know how to play "The Street" through private, non-public meetings with investors and analysts (can you say RICO?????). Actual projections of medical costs and medical trends are hidden by actuarial games. The finance officers are expert at hiding true results. If a detailed, thorough, independent federal investigation of these bastards isn't conducted - and not just Aetna but the WellPoint’s, Cigna's, Humana's, et al - the American people will still get the same old song and dance year after year. If anything, medical coverage has gotten worse over the past 10 years as the ability of these people to manipulate more and more sophisticated databases leads to more negative changes in what people think they are getting for their benefits. They’re already gearing up for an all out assault on the proposals for national health coverage….. just wait and see what they do. If you think they were bad when the Clinton’s were in office, you’ll be amazed at the soft spoken but vicious attacks that are already “in the can” and ready to be released. Watch out America!

Anonymous who speaks about Cigna and Aetna is SO accurate. Please fellow Americans, take off your blindfolds. Don't you understand that you cannot believe EVERYTHING that you read and see in the news? I know that you are afraid of big changes. Who isn't? But letting yourself be manipulated by those who have the most to lose if we adopt a system that provides care for all is not patriotic. Don't you see that FEAR (false evidence appearing real) is being used to trick you? I expect greedy, corporate entities to fight healthcare reform because they stand to lose so much power and even more $. But I really was expecting my fellow Americans to not side with them or buy into their fear tactics. Please, please, please open your eyes!!!!

Let me tell you and your readers about a private life and health insurance company located in Senator Charles Grassley's home state of Iowa. Back in 1972-1973, that company would not "touch me with a ten-foot colonoscope" with respect to selling me any health insurance product, but would sell me life insurance at grossly inflated rates. That same company would issue my wife a limited benefit health insurance product, but with her kidney condition weaseled out even no company would underwrite her for life insurance because of her polycystic kidney disease. That company was American Republic Insurance Company, headquarters in Des Moine Iowa. In my opinion, that company deserves to be "crowded out" of existence, Senator Chuck Grassley not withstanding. One year later when the policy was to be replaced, the company agent, in exasperation, told me of an article that appeared in one of their company publications in which the underwriters were chortling over how "cute and clever" they were in that it would issue health insurance for a skydiver but not life insurance! Remember those videos from the Michael Moore movie, "The Smartest Guy in the Room" in which ENRON energy traders were giggling with glee over how they enjoyed robbing their grandmothers? If the f-word Republicans succeed in blocking any public insurance option, then, at the very least, a Federal Emergency Review and Adjudication Board be setup that could provide expedited reviews and reversals of all claims request and post claims underwriting actions. This would help effectively shut down the "death boards"! BTW, there is one problem with the name AFLAC. It rhymes with Ex-lax, which some people feel aptly describes their products!

He was constantly checking "to see whether some of the health insurer's members are visiting emergency rooms too much for nonemergency reasons, such as for the flu or a sprained ankle" ? I am upset. My health care provider kept _sending_ me to the emergency room! Go to the doctor with a sprained ankle? They'd say, "we need an X-ray, but we can't do that here, send him to our ER." I had an infection that needed lancing? "You'll have to have that lanced, down in the ER, we don't do that here." I was not going to the ER, my doctor/hospital was sending me! We can't have that kind of Big Brother monitoring, who knows what false conclusions they'll draw from that kind of data?

I work for another giant insurance company, and I want to thank you for speaking out. The article about you on CNN.com nearly brought me to tears -- you are saying the things I've been trying to convey to friends and loved ones about the insurance industry and the way the US health care system is set up. Thank you. You were very brave to do this.