How Large Health Care Organizations Set the "Rules of the Game" to Dominate Health Care

The notion that health care is increasingly "dominated by large, bureaucratic organizations which do not honor ... [its] core values"(1) just made it into a main-stream, large circulation US medical journal.  A brand new commentary in the American Journal of Medicine(2) by Supri and Malone declared:

To explain why we have the most expensive health care system in the world and yet one of the lowest performing, we need to take a perspective that focuses on the US institution of medicine as a whole. We expose the hidden rules by which this institution operates and discuss how its powerful organizations shape, control and perpetuate this ailing system.

The article then described the main types of large, powerful health care organizations:

The US institution of medicine is not a single, comprehensive and cohesive system of health care. Instead, it is comprised of a myriad of large and powerful organizations, including insurance companies, Health Maintenance Organizations (HMOs), corporate for-profit hospital chains, and pharmaceutical companies. This institutional structure is large and vast, and has over the years become ever more labyrinthine.

Note that there are even more kinds of large and powerful health care organizations, including non-profit hospitals and hospital systems, employers acting as payers for health care, government agencies, device and biotechnology companies, health care information technology companies, public relations firms, medical education and communication companies, contract research organizations, professional societies, patient advocacy groups, accrediting bodies, health care charities, etc, etc, etc.  But the point is that the large organizations, not the patients, the physicians, nor the public dominate.

Supri and Malone suggested that each kind of organization sets the "rules of the game," that is, the priorities important to the organization, which are very different from the core values that many of us believe ought to guide health care:

Not only is the institutional structure large, it is dynamic, and actively creates, shapes, and maintains the institution of medicine. It does this through what we call setting the “rules of the game”; that is, by imposing the terms by which the system operates.

For example,

Insurance companies have set the rule 'restrict choice and coverage.' They enact this through their elaborate system of copayments and deductibles, exclusion clauses and loopholes, each designed to deter patients from claiming the health care they need, and to override physicians' medical judgment.

Similarly, it cited the rules for managed care, "manage care," that is, "restrict utilization of health care" regardless of patients' needs; the pharmaceutical industry, "charges as much as we want, because insurance will pay;" and "corporate hospital chains ... test as much as we want, because insurance will pay." Thus it made the point that US health care now is driven by the priorities of large organizations whose interests at best may disregard and at worst may conflict with providing the best possible care for individual patients.

Further, the resulting complexity is to the benefit of the large organizations:

As each organization has created its own 'rules of the game,' the institution of medicine has grown into a complex entity that few really understand. This very complexity actually works to the advantage of the organizations that comprise the system, creating an operating environment that allows them to siphon off billions of dollars. It is one of the main reasons why the cost of health care has spiraled out of control.

This is very important, and suggests that the system will just become more bureaucratic, complex and opaque until it finally collapses.

Finally, it raised the point that the organizations collude to promote their priorities at the expense of patients' and the public's health:

Although each organization sets their 'own rules of the game,' they are also strongly and deeply interlinked, and cooperate and collaborate to protect the system of health care that they have devised, so that it remains intact and continues to serve their own interests.

Although  Supri and Malone did not differentiate the leadership of large organizations from the organizations themselves, we have pointed out that the top leaders of various kinds of organizations seem to think alike, becoming a sort of de facto executives' guild, with a "superclass" of oligarchs at its pinnacle.  The guild may be enabled by these leaders' often huge compensation and other benefits and corporate arrangements that keep them shielded from the vicissitudes of daily life that patients, health care professionals, and lower level organizational employees must face.  Furthermore, the leadership of these organizations is often interlinked, for example, by leaders of one organization serving on boards of directors or trustees of others.

It is so nice for us at Health Care Renewal to have some company. It is a very important blow to the anechoic effect for these sorts of views to appear in a mainstream medical journal.

When I interviewed a motley group of physicians and health care professionals in the early part of the 21st century, many expressed concerns about how medicine had been taken over by large organizations which did not honor its values. The article published in 2003(1) in Europe which tried to summarize their concerns probably could not have been published at that time in the US, but its publication remote from its main topic only made it more anechoic. It may be that an article published in a respected American journal will generate some more echoes. Here is hoping that Health Care Renewal can help create some such echoes. 

Obviously, those who lead large organizations in health care will not be happy about that, so it is possible this article's appearance in a main-stream journal may incite some pushback, perhaps generated by the public relations machines of the large health care organizations (see this post about how Wendell Potter's excellent Deadly Spin documented how large organizations use propaganda and disinformation to undermine viewpoints that threaten their domination.)

In conclusion, I strongly support Supri and Malone's final sentiments:

The sum of the 'rules of the game' devised by these organizations has resulted in a fragmented, haphazard and broken system of health care. Reform is long overdue, and demands root and branch transformation of the 'rules of the game' governing the US institution of medicine. This requires us to understand these rules, who is setting them, and how these rules are being used to exploit the system of medicine. Only then can we begin to heal our ailing health care system.

Well said!

But now almost 8 years since the publication of "A Cautionary Tale," we still have a long way to go.

References


1.  Poses RM. A cautionary tale: the dysfunction of American health care.  Eur J Inte Med 2003; 14: 123-130.  Link here.
2.  Supri S, Malone K. On the critical list: the US institution of medicine. Am J Med 2011; 124: 192-193.  Link here. 

How Large Health Care Organizations Set the "Rules of the Game" to Dominate Health Care

The notion that health care is increasingly "dominated by large, bureaucratic organizations which do not honor ... [its] core values"(1) just made it into a main-stream, large circulation US medical journal.  A brand new commentary in the American Journal of Medicine(2) by Supri and Malone declared:

To explain why we have the most expensive health care system in the world and yet one of the lowest performing, we need to take a perspective that focuses on the US institution of medicine as a whole. We expose the hidden rules by which this institution operates and discuss how its powerful organizations shape, control and perpetuate this ailing system.

The article then described the main types of large, powerful health care organizations:

The US institution of medicine is not a single, comprehensive and cohesive system of health care. Instead, it is comprised of a myriad of large and powerful organizations, including insurance companies, Health Maintenance Organizations (HMOs), corporate for-profit hospital chains, and pharmaceutical companies. This institutional structure is large and vast, and has over the years become ever more labyrinthine.

Note that there are even more kinds of large and powerful health care organizations, including non-profit hospitals and hospital systems, employers acting as payers for health care, government agencies, device and biotechnology companies, health care information technology companies, public relations firms, medical education and communication companies, contract research organizations, professional societies, patient advocacy groups, accrediting bodies, health care charities, etc, etc, etc.  But the point is that the large organizations, not the patients, the physicians, nor the public dominate.

Supri and Malone suggested that each kind of organization sets the "rules of the game," that is, the priorities important to the organization, which are very different from the core values that many of us believe ought to guide health care:

Not only is the institutional structure large, it is dynamic, and actively creates, shapes, and maintains the institution of medicine. It does this through what we call setting the “rules of the game”; that is, by imposing the terms by which the system operates.

For example,

Insurance companies have set the rule 'restrict choice and coverage.' They enact this through their elaborate system of copayments and deductibles, exclusion clauses and loopholes, each designed to deter patients from claiming the health care they need, and to override physicians' medical judgment.

Similarly, it cited the rules for managed care, "manage care," that is, "restrict utilization of health care" regardless of patients' needs; the pharmaceutical industry, "charges as much as we want, because insurance will pay;" and "corporate hospital chains ... test as much as we want, because insurance will pay." Thus it made the point that US health care now is driven by the priorities of large organizations whose interests at best may disregard and at worst may conflict with providing the best possible care for individual patients.

Further, the resulting complexity is to the benefit of the large organizations:

As each organization has created its own 'rules of the game,' the institution of medicine has grown into a complex entity that few really understand. This very complexity actually works to the advantage of the organizations that comprise the system, creating an operating environment that allows them to siphon off billions of dollars. It is one of the main reasons why the cost of health care has spiraled out of control.

This is very important, and suggests that the system will just become more bureaucratic, complex and opaque until it finally collapses.

Finally, it raised the point that the organizations collude to promote their priorities at the expense of patients' and the public's health:

Although each organization sets their 'own rules of the game,' they are also strongly and deeply interlinked, and cooperate and collaborate to protect the system of health care that they have devised, so that it remains intact and continues to serve their own interests.

Although  Supri and Malone did not differentiate the leadership of large organizations from the organizations themselves, we have pointed out that the top leaders of various kinds of organizations seem to think alike, becoming a sort of de facto executives' guild, with a "superclass" of oligarchs at its pinnacle.  The guild may be enabled by these leaders' often huge compensation and other benefits and corporate arrangements that keep them shielded from the vicissitudes of daily life that patients, health care professionals, and lower level organizational employees must face.  Furthermore, the leadership of these organizations is often interlinked, for example, by leaders of one organization serving on boards of directors or trustees of others.

It is so nice for us at Health Care Renewal to have some company. It is a very important blow to the anechoic effect for these sorts of views to appear in a mainstream medical journal.

When I interviewed a motley group of physicians and health care professionals in the early part of the 21st century, many expressed concerns about how medicine had been taken over by large organizations which did not honor its values. The article published in 2003(1) in Europe which tried to summarize their concerns probably could not have been published at that time in the US, but its publication remote from its main topic only made it more anechoic. It may be that an article published in a respected American journal will generate some more echoes. Here is hoping that Health Care Renewal can help create some such echoes. 

Obviously, those who lead large organizations in health care will not be happy about that, so it is possible this article's appearance in a main-stream journal may incite some pushback, perhaps generated by the public relations machines of the large health care organizations (see this post about how Wendell Potter's excellent Deadly Spin documented how large organizations use propaganda and disinformation to undermine viewpoints that threaten their domination.)

In conclusion, I strongly support Supri and Malone's final sentiments:

The sum of the 'rules of the game' devised by these organizations has resulted in a fragmented, haphazard and broken system of health care. Reform is long overdue, and demands root and branch transformation of the 'rules of the game' governing the US institution of medicine. This requires us to understand these rules, who is setting them, and how these rules are being used to exploit the system of medicine. Only then can we begin to heal our ailing health care system.

Well said!

But now almost 8 years since the publication of "A Cautionary Tale," we still have a long way to go.

References


1.  Poses RM. A cautionary tale: the dysfunction of American health care.  Eur J Inte Med 2003; 14: 123-130.  Link here.
2.  Supri S, Malone K. On the critical list: the US institution of medicine. Am J Med 2011; 124: 192-193.  Link here. 

Millions to Health Insurance CEOs, But Blame Everyone Else for Rising Health Care Costs

The revelations about the huge golden parachute given the outgoing CEO of ostensibly non-profit Massachusetts Blue Cross Blue Shield induced some public discussion about the disconnect between executive compensation and the mission of health care organization (see most recent post here).  Several other recent stories should generate more discussion on these issues. 

First, new proxy statements revealed the compensation of executives of two large for-profit health care insurers/ managed care companies.  In alphabetical order,

Cigna

As reported by the AP, via ABC news, the CEO got a big raise:

Cigna Corp. CEO David M. Cordani's total compensation more than doubled in 2010, his first year as leader of the nation's fourth-largest health insurer, and a period in which the company's earnings, revenue and enrollment all climb.

Cordani, 45, received compensation valued at $15.1 million last year from the Philadelphia managed-care company, according to an Associated Press analysis of a regulatory filing Friday.

That included a $1 million salary, a performance-related bonus totaling more than $7.3 million and stock and option awards adding up to $6.7 million.

In 2009, Cordani's compensation was $6.5 million, but he did not serve for the entire year. Note that according to the 2009 proxy, the previous CEO, H Edward Hanway, received $12,236,740 in total compensation in 2008, his last year as CEO.

What was the rationale for the huge rise in Cordani's compensation from 2009 to 2010? (And implicitly, the fairly large increase compared to Hanway's compensation in his last year?)

The company said in its proxy statement filed with the Securities and Exchange Commission that Cigna 'effectively executed on its growth strategy under Cordani's leadership last year.

'Revenue rose significantly in 2010, reflecting strong premium growth in (Cigna's) ongoing business segments,' the proxy said.

Cigna earned about $1.35 billion, or $4.89 per share, on $21.25 billion in revenue in 2010. That was up from $1.3 billion, or $4.73 per share, on $18.41 billion in revenue in 2009. The insurer's medical membership climbed 4 percent to 11.4 million people compared to the final quarter of 2009, when it fell more than 5 percent. That helped raise premiums and fees in health care, the insurer's largest segment.

Also,

Cigna shares climbed 4 percent to close 2010 at $36.66, while the Standard & Poor's 500 index rose 12.8 percent.

So to recap, Cigna's current CEO's total compensation doubled in a year while earnings and the stock price rose about 4%.

WellPoint

Also reported by AP, via the Washington Post, the CEO got a small raise (but ended up with compensation similar to Mr Cordani's above):

The president and CEO of health insurer WellPoint Inc. received a 3 percent boost in total compensation in 2010 even as the company’s profit and enrollment numbers slipped during a transitional year for U.S. health care companies.

The Indianapolis-based insurer awarded Angela Braly a total pay package worth $13.4 million up from $13.1 million in 2009. Wellpoint disclosed the compensation — which includes salary, bonus and other awards — in a filing with federal financial regulators late Friday.

On the other hand, the company did not do so well financially:

The insurer’s profit fell sharply last year compared with 2009, when the sale of its NextRx subsidiary contributed $2.2 billion in after-tax income. Medical enrollment also slid 1 percent last year to 33.3 million members.

So what was the rationale for even a small raise (over an already huge compensation package)?

In the company’s filing, Wellpoint’s board of directors highlighted accomplishments by management, including reducing general expenses by 3 percent.

Also,

A Wellpoint spokeswoman stressed Friday that the company’s pay formula rewards executives for improving enrollee health, boosting share prices and meeting other pre-set goals.

'For the CEO, almost 90 percent of total target compensation is based on company performance and is tied to meeting established goals,' Kristin Binns said in a statement.

So while Cigna did slightly better financially than last year, its CEO's total compensation doubled to well over $10 million, and while WellPoint did slightly worse financially than last year, its CEO's total compensation increased, again remaining well over $10 million.  It seems that the leaders of top health care organizations will continue to get richer, no matter how well their organizations performed financially, let alone what effect they had on patients' and the public's health.
So What Drives Up Health Care Costs?

Just to distract from CEOs getting increases in their already huge compensation that seem disproportionate to any reasonable measure of their companies' financial performance, health care insurers continued to deny any responsibility for the rise in health care costs.

For example, the San Francisco Chronicle published a story entitled, "Insurer Wants Focus on What Drives Up Health Costs," which had a familiar ring:

When health insurers notify members that rates are going up - often in the punishing double-digits - they typically blame rising medical costs.

They say the problem really isn't theirs; it's all the other pieces of the health-care puzzle that drive up costs that must be passed on to customers.

Don't blame you, don't blame me, blame that fella behind the tree.
It went on to name all the usual suspects (color-coded for comparison below):

Insurers say their costs grow in part because of new medical technologies and the rising price of pharmaceutical products and medical equipment.

The consolidation of hospitals and doctors into large networks also makes it hard to keep prices low, as do waste, fraud and malpractice, they say. The system also lacks incentives for hospitals and doctors to curb costs. For example, they can charge twice by repeating tests and procedures, and by readmitting patients.

Insurers also say they lose money with policies people buy on their own, as opposed to group coverage from employers. Because the individual policies are more expensive, healthier people tend to avoid them, leaving insurers with a sicker pool.

Poor reimbursement from government programs such as Medi-Cal also forces insurers to raise private insurance prices to make up the slack, they say.

Finally, as people get older and fatter, they gobble up more health care resources.

'When you're looking at growth in premiums, the largest engine of that growth are those medical costs,' said Charles Bacchi, executive vice president of the California Association of Health Plans, which represents health insurers. He said critics who claim that insurers raise prices to increase profits and pad executive salaries are wrong, and that insurers' average profit margin has remained at 3 to 5 percent for years.

First, note that the executive compensation, the administrative costs, the marketing, public relations and lobbying costs all come off the top of revenues before any profits are generated, and before any possible dividends get paid to stock-holders.   I suspect that the insurance industry spokespeople immediately switch the topic to profits and investors' results to distract from those who really make money from health insurance companies, the top executives, and all those managers, bureaucrats, marketers, public relations people, and lobbyists who never touch patients and never deliver any care.  As Wendell Potter has written, many people like to blame government bureaucrats for health care's problems. They may deserve some blame, but not any more, and perhaps less than corporate bureaucrats and executives.

Recall further what Wendell Potter described in Deadly Spin. All those health insurance corporate public relations people were earning good salaries in part based on their ability to distract the public and policy-makers from the insurance companies' roles in health care dysfunction. Potter wrote (p. 110):

Rather than admit responsibility for the failures, insurance executives pointed the finger of blame at their customers, the 'consumers' of health care, and, of course, the providers of care. In introducing the concept of their new silver bullet - consumer driven health care - insurance executives claimed that the 'real drivers of health care costs' (one of my CEO's favorite expressions) were the people who sought care when they really didn't need it and the doctors and hospitals who were all too willing to provide this unnecessary care. Sure, the aging population and expensive new technology were also factors, but the main culprits were people who just didn't realize how expensive health care had become.

Note the similarities among the "real drivers of health care costs" promulgated by the corporate PR people and the defense of the health insurers' role mounted above (some of the more obvious color-coded). Note that the defenses never explain why the insurance companies seem unable to negotiate prices down, and why they all use the physician payment schedule derived from the recommendations of the secretive RUC.

For some final irony, the Chronicle found an academic who was not too hard on the health insurance companies:

Glenn Melnick, a health economist at the University of Southern California, sympathizes with many of the insurers' arguments.

He blamed rising costs mainly on higher prices charged by hospitals and doctors, which account for the largest portion of health care spending.

The reporter did not note Prof Melnick's full title, Professor and Blue Cross of California Chair in Health Care Finance. Oops.

So in summary, health care costs continue rising, access keeps declining, and there is no evidence of improvements in quality. Large health care organizations blame each other for the problems, but nearly all of them continue to make their top executives extremely rich. Although the amounts diverted to these executives cannot solely account for the rise in health care costs, the perverse incentives given those who lead health care are likely a major cause of the problems. A health care system run by leaders who are comfortable becoming extremely rich while the health care crisis worsens is a likely recipe for dysfunction.

We now know commercial health insurers deploy well paid public relations departments to use stealthy if not downright deceptive means to distract those who want to address what really causes health care dysfunction (see this post.) It is likely that all large health care organizations use similar stealth advocacy strategies. These strategies have successfully distracted the conversation away from problems with health care leadership and governance, at least until now.

As we have said before, far too often the leaders of not-for-profit health care institutions seem more interested in padding their own bottom lines than upholding the institutions' missions. They often seem entirely unaware of their duty to put those missions ahead of their own self-interest. Like the financial services sector in the era of "greed is good," health care too often seems run by "insiders hijacking established institutions for their personal benefit." True health care reform would encourage leadership of health care who understand health care and care about its mission, rather than those who see a quick way to make a small fortune.

Furthermore, we need an open discussion of the real issues related to health care dysfunction, not one stifled by the anechoic effect, spun by corporate PR, and dominated by "third parties" whose conflicts of interest are hidden. 

Millions to Health Insurance CEOs, But Blame Everyone Else for Rising Health Care Costs

The revelations about the huge golden parachute given the outgoing CEO of ostensibly non-profit Massachusetts Blue Cross Blue Shield induced some public discussion about the disconnect between executive compensation and the mission of health care organization (see most recent post here).  Several other recent stories should generate more discussion on these issues. 

First, new proxy statements revealed the compensation of executives of two large for-profit health care insurers/ managed care companies.  In alphabetical order,

Cigna

As reported by the AP, via ABC news, the CEO got a big raise:

Cigna Corp. CEO David M. Cordani's total compensation more than doubled in 2010, his first year as leader of the nation's fourth-largest health insurer, and a period in which the company's earnings, revenue and enrollment all climb.

Cordani, 45, received compensation valued at $15.1 million last year from the Philadelphia managed-care company, according to an Associated Press analysis of a regulatory filing Friday.

That included a $1 million salary, a performance-related bonus totaling more than $7.3 million and stock and option awards adding up to $6.7 million.

In 2009, Cordani's compensation was $6.5 million, but he did not serve for the entire year. Note that according to the 2009 proxy, the previous CEO, H Edward Hanway, received $12,236,740 in total compensation in 2008, his last year as CEO.

What was the rationale for the huge rise in Cordani's compensation from 2009 to 2010? (And implicitly, the fairly large increase compared to Hanway's compensation in his last year?)

The company said in its proxy statement filed with the Securities and Exchange Commission that Cigna 'effectively executed on its growth strategy under Cordani's leadership last year.

'Revenue rose significantly in 2010, reflecting strong premium growth in (Cigna's) ongoing business segments,' the proxy said.

Cigna earned about $1.35 billion, or $4.89 per share, on $21.25 billion in revenue in 2010. That was up from $1.3 billion, or $4.73 per share, on $18.41 billion in revenue in 2009. The insurer's medical membership climbed 4 percent to 11.4 million people compared to the final quarter of 2009, when it fell more than 5 percent. That helped raise premiums and fees in health care, the insurer's largest segment.

Also,

Cigna shares climbed 4 percent to close 2010 at $36.66, while the Standard & Poor's 500 index rose 12.8 percent.

So to recap, Cigna's current CEO's total compensation doubled in a year while earnings and the stock price rose about 4%.

WellPoint

Also reported by AP, via the Washington Post, the CEO got a small raise (but ended up with compensation similar to Mr Cordani's above):

The president and CEO of health insurer WellPoint Inc. received a 3 percent boost in total compensation in 2010 even as the company’s profit and enrollment numbers slipped during a transitional year for U.S. health care companies.

The Indianapolis-based insurer awarded Angela Braly a total pay package worth $13.4 million up from $13.1 million in 2009. Wellpoint disclosed the compensation — which includes salary, bonus and other awards — in a filing with federal financial regulators late Friday.

On the other hand, the company did not do so well financially:

The insurer’s profit fell sharply last year compared with 2009, when the sale of its NextRx subsidiary contributed $2.2 billion in after-tax income. Medical enrollment also slid 1 percent last year to 33.3 million members.

So what was the rationale for even a small raise (over an already huge compensation package)?

In the company’s filing, Wellpoint’s board of directors highlighted accomplishments by management, including reducing general expenses by 3 percent.

Also,

A Wellpoint spokeswoman stressed Friday that the company’s pay formula rewards executives for improving enrollee health, boosting share prices and meeting other pre-set goals.

'For the CEO, almost 90 percent of total target compensation is based on company performance and is tied to meeting established goals,' Kristin Binns said in a statement.

So while Cigna did slightly better financially than last year, its CEO's total compensation doubled to well over $10 million, and while WellPoint did slightly worse financially than last year, its CEO's total compensation increased, again remaining well over $10 million.  It seems that the leaders of top health care organizations will continue to get richer, no matter how well their organizations performed financially, let alone what effect they had on patients' and the public's health.
So What Drives Up Health Care Costs?

Just to distract from CEOs getting increases in their already huge compensation that seem disproportionate to any reasonable measure of their companies' financial performance, health care insurers continued to deny any responsibility for the rise in health care costs.

For example, the San Francisco Chronicle published a story entitled, "Insurer Wants Focus on What Drives Up Health Costs," which had a familiar ring:

When health insurers notify members that rates are going up - often in the punishing double-digits - they typically blame rising medical costs.

They say the problem really isn't theirs; it's all the other pieces of the health-care puzzle that drive up costs that must be passed on to customers.

Don't blame you, don't blame me, blame that fella behind the tree.
It went on to name all the usual suspects (color-coded for comparison below):

Insurers say their costs grow in part because of new medical technologies and the rising price of pharmaceutical products and medical equipment.

The consolidation of hospitals and doctors into large networks also makes it hard to keep prices low, as do waste, fraud and malpractice, they say. The system also lacks incentives for hospitals and doctors to curb costs. For example, they can charge twice by repeating tests and procedures, and by readmitting patients.

Insurers also say they lose money with policies people buy on their own, as opposed to group coverage from employers. Because the individual policies are more expensive, healthier people tend to avoid them, leaving insurers with a sicker pool.

Poor reimbursement from government programs such as Medi-Cal also forces insurers to raise private insurance prices to make up the slack, they say.

Finally, as people get older and fatter, they gobble up more health care resources.

'When you're looking at growth in premiums, the largest engine of that growth are those medical costs,' said Charles Bacchi, executive vice president of the California Association of Health Plans, which represents health insurers. He said critics who claim that insurers raise prices to increase profits and pad executive salaries are wrong, and that insurers' average profit margin has remained at 3 to 5 percent for years.

First, note that the executive compensation, the administrative costs, the marketing, public relations and lobbying costs all come off the top of revenues before any profits are generated, and before any possible dividends get paid to stock-holders.   I suspect that the insurance industry spokespeople immediately switch the topic to profits and investors' results to distract from those who really make money from health insurance companies, the top executives, and all those managers, bureaucrats, marketers, public relations people, and lobbyists who never touch patients and never deliver any care.  As Wendell Potter has written, many people like to blame government bureaucrats for health care's problems. They may deserve some blame, but not any more, and perhaps less than corporate bureaucrats and executives.

Recall further what Wendell Potter described in Deadly Spin. All those health insurance corporate public relations people were earning good salaries in part based on their ability to distract the public and policy-makers from the insurance companies' roles in health care dysfunction. Potter wrote (p. 110):

Rather than admit responsibility for the failures, insurance executives pointed the finger of blame at their customers, the 'consumers' of health care, and, of course, the providers of care. In introducing the concept of their new silver bullet - consumer driven health care - insurance executives claimed that the 'real drivers of health care costs' (one of my CEO's favorite expressions) were the people who sought care when they really didn't need it and the doctors and hospitals who were all too willing to provide this unnecessary care. Sure, the aging population and expensive new technology were also factors, but the main culprits were people who just didn't realize how expensive health care had become.

Note the similarities among the "real drivers of health care costs" promulgated by the corporate PR people and the defense of the health insurers' role mounted above (some of the more obvious color-coded). Note that the defenses never explain why the insurance companies seem unable to negotiate prices down, and why they all use the physician payment schedule derived from the recommendations of the secretive RUC.

For some final irony, the Chronicle found an academic who was not too hard on the health insurance companies:

Glenn Melnick, a health economist at the University of Southern California, sympathizes with many of the insurers' arguments.

He blamed rising costs mainly on higher prices charged by hospitals and doctors, which account for the largest portion of health care spending.

The reporter did not note Prof Melnick's full title, Professor and Blue Cross of California Chair in Health Care Finance. Oops.

So in summary, health care costs continue rising, access keeps declining, and there is no evidence of improvements in quality. Large health care organizations blame each other for the problems, but nearly all of them continue to make their top executives extremely rich. Although the amounts diverted to these executives cannot solely account for the rise in health care costs, the perverse incentives given those who lead health care are likely a major cause of the problems. A health care system run by leaders who are comfortable becoming extremely rich while the health care crisis worsens is a likely recipe for dysfunction.

We now know commercial health insurers deploy well paid public relations departments to use stealthy if not downright deceptive means to distract those who want to address what really causes health care dysfunction (see this post.) It is likely that all large health care organizations use similar stealth advocacy strategies. These strategies have successfully distracted the conversation away from problems with health care leadership and governance, at least until now.

As we have said before, far too often the leaders of not-for-profit health care institutions seem more interested in padding their own bottom lines than upholding the institutions' missions. They often seem entirely unaware of their duty to put those missions ahead of their own self-interest. Like the financial services sector in the era of "greed is good," health care too often seems run by "insiders hijacking established institutions for their personal benefit." True health care reform would encourage leadership of health care who understand health care and care about its mission, rather than those who see a quick way to make a small fortune.

Furthermore, we need an open discussion of the real issues related to health care dysfunction, not one stifled by the anechoic effect, spun by corporate PR, and dominated by "third parties" whose conflicts of interest are hidden. 

Some Dare Call It "Corruption" - the Massachusetts Blue Cross Blue Shield Golden Parachute Scandal Continues

We have discussed many cases of health care organizations' leaders reaping rewards disproportionate to any concept of their performance, and especially to any concept of the effect of their conduct on patients' or the public's health.  Most of these cases have been pretty anechoic, but for some reason, the case of the huge golden parachute given to the outgoing CEO of Massachusetts Blue Cross Blue Shield despite a tenure  marked by financial losses and no particularly brilliant advances in patients' care or outcomes, (see this post) continues to generate responses. 

One editorial suggested that should the non-profit health insurance company continue to pay so lavishly, it should lose its tax exemption.  Another noted that the company should start putting its stakeholders, defined as its policy-holders "first and its funding of overly generous compensation packages to board members and outgoing CEOs somewhere far below."  Finally, an editorial in the local Providence Journal used the "c" word, "corruption," to define the company's and its CEO's behavior.

So it should not be surprising that defenders of the company have appeared.  The Boston Globe published an article which featured attempts to minimize the importance of the CEO's golden parachute. Further analysis of the points are in order.

Executive Salaries are a Minimal Component of Cost

The article quoted an expert who asserted executive salaries are not themselves a big component of cost:

The outcry grew big enough to force Blue Cross board members to vote to suspend their own payments and to lead the insurer to make promises to curb excessive payouts to executives. There’s just one problem: Those steps will do little to fix soaring health care costs.

'I have the same outrage,' Stuart H. Altman, a national health policy professor at Brandeis University, said about Blue Cross’s payments. But, 'We need to put executive pay and board salaries in perspective. It is not the major force, or even close to the major force, in driving up health care costs.'

My comment is that just because administrative costs are not the largest component of health care costs does not mean they do not drive health care costs.

As I have argued before, the biggest problem created by excess compensation for health care organizations' leaders is not the amount of money they get, per se.  The problem is the effect of the perverse incentives created by the money.  One concern is that people paid that much may make decisions that support their pay in the short-term, but damage the organizations' mission in the long-term.  Another is that the sorts of people attracted by the possibility of big pay packages are those least likely to uphold the mission in the first place.  Another is that the huge disparity between the pay of the top leaders and of everybody else is demoralizing for the relatively poorly paid staff who actually must do the work.

Finally, it may be worth quoting the former President of Princeton University, just interviewed about what academic leadership was like in the days before giant pay packages:

I’m not a fan of huge salaries for presidents of academic institutions. These are hard jobs. But people don’t really do them for the money. What kind of message do you really want to convey concerning the nature of the institution and its leadership? I always thought that it was important to convey a message of we’re all in this together. If you as president earn so much more than everyone else, it’s hard to argue that we’re all in this together.

Focusing on Executive Compensation Distracts from the Real Issues

The final argument in the Boston Globe piece was that huge executive compensation just is a distraction from the real issues:

Yet [current Massachusetts Blue Cross Blue Shield CEO Andrew] Dreyfus said he is concerned that the focus on executive and director pay will distract insurers, providers, and policy makers from addressing factors driving health care costs higher. Those factors range from an aging population to increases in obesity to expensive tests, drugs, and treatments that cure diseases and prolong lives.

'If you had a dozen health economists sitting in this room and you asked them what’s driving health care [costs], you know executive and board compensation wouldn’t be at the top of the list,' he said. 'It would be chronic illness and prices of hospitals and doctors and medical advances and discoveries and technology.'

That list of the "real" drivers of health care costs sounds very familiar.

Wendell Potter's Deadly Spin, is an expose of how how insurance and managed care corporations' public relations departments used deception, propaganda, and outright disinformation campaigns to make sure health policy supported the companies' interests.

Potter wrote (p.110) about how PR campaigns were designed to distract the public and policy makers from the industry's responsibility for health care dysfunction:

Rather than admit responsibility for the failures, insurance executives pointed the finger of blame at their customers, the 'consumers' of health care, and, of course, the providers of care. In introducing the concept of their new silver bullet - consumer driven health care - insurance executives claimed that the 'real drivers of health care costs' (one of my CEO's favorite expressions) were the people who sought care when they really didn't need it and the doctors and hospitals who were all too willing to provide this unnecessary care. Sure, the aging population and expensive new technology were also factors, but the main culprits were people who just didn't realize how expensive health care had become.

I color coded the factors listed by the current Blue Cross CEO as the real "drivers" of health care using the same colors with which I coded Mr Potter's list the specific distractors created by insurance company executives to deflect attention from the companies' inability (and probable) disinclination to control costs.
So it appears that Andrew Dreyfus is working from the same playbook that Wendell Potter described, down to the "drivers of health care costs" terminology. 

Summary

The Massachusetts Blue Cross Blue Shield kerfuffle seems to be enlarging into a good case to teach about what health care dysfunction is really all about.  It shows how the leaders of large health care organizations seem to be putting their self-interest ahead of the missions they are supposed to uphold.  Without governance structures that hold them accountable for upholding these missions, they have set up perverse incentives to pay themselves very well regardless of the effects of their actions on patients' or the public's health. 

So it appears, as the Providence Journal editorial asserted, that the leadership of health care organizations is increasingly corrupt, at least using the Transparency International definition of corruption, abuse of entrusted power for private gain. 

True health care reform would make leaders of health care organizations accountable for upholding their missions, and for patients' and the public's health.  Leaders of health care organizations ought to get reasonable incentives for improving health, but not incentives so large as to demoralize the people who actually do the work and take care of the patients. 

Post Script: More Undisclosed Conflicts of Interest

It is obvious why Andrew Dreyfus, the new CEO of Massachusetts Blue Cross Blue Shield might quote the health insurance industry public relations party line about drivers of health care costs that conveniently do not include insurance company practices and executive compensation. 

It was not obvious when reading the Boston Globe article why Professor Altman might be susceptible to that party line.  Perhaps his conclusions were only based on his scholarship.

However, the Boston Globe article failed to disclose Prof Altman's part-time jobs.  As per this 2010 proxy statement, he is a member of the board of directors of Lincare, a company that provides respiratory care services, including disease management, and of Aveta Inc, a privately held health insurance company.  Prof Altman's total compensation from Lincare in 2009 (per the latest proxy statement available, i.e., that issued in 2010), was over $1.7 million.   Note that corporate directors, as we have discussed previously, have a fiduciary duty to exhibit "unyielding loyalty" to the stockholders of the company and their interests  [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.].  Given Prof Altman's membership in the board of directors of a health insurance company, and his towering compensation as a director of a health care company that may need to maintain good relationships with health care insurers, it would seem that he has multiple financial relationships that could lead to sympathy with the health insurance industry's public relations party line.

So it seems that regardless of the intent of the reporter who wrote it, the latest Boston Globe article about the Massachustts Blue Cross Blue Shield CEO golden parachute scandal ended up being an apologia for excess compensation of health care insurance executives that followed the script written years ago by health care insurance corporate public relations.

So I need to add another conclusion.  The discussion of health care policy needs to be informed by disclosure of the financial interests of those participating, particularly those participating as experts in the media.   True health care reform would lead to such disclosure.  However, in our currently dysfunctional health care environment, be very skeptical about the interests of "health policy experts" who seem eager to support the powers that be.

Some Dare Call It "Corruption" - the Massachusetts Blue Cross Blue Shield Golden Parachute Scandal Continues

We have discussed many cases of health care organizations' leaders reaping rewards disproportionate to any concept of their performance, and especially to any concept of the effect of their conduct on patients' or the public's health.  Most of these cases have been pretty anechoic, but for some reason, the case of the huge golden parachute given to the outgoing CEO of Massachusetts Blue Cross Blue Shield despite a tenure  marked by financial losses and no particularly brilliant advances in patients' care or outcomes, (see this post) continues to generate responses. 

One editorial suggested that should the non-profit health insurance company continue to pay so lavishly, it should lose its tax exemption.  Another noted that the company should start putting its stakeholders, defined as its policy-holders "first and its funding of overly generous compensation packages to board members and outgoing CEOs somewhere far below."  Finally, an editorial in the local Providence Journal used the "c" word, "corruption," to define the company's and its CEO's behavior.

So it should not be surprising that defenders of the company have appeared.  The Boston Globe published an article which featured attempts to minimize the importance of the CEO's golden parachute. Further analysis of the points are in order.

Executive Salaries are a Minimal Component of Cost

The article quoted an expert who asserted executive salaries are not themselves a big component of cost:

The outcry grew big enough to force Blue Cross board members to vote to suspend their own payments and to lead the insurer to make promises to curb excessive payouts to executives. There’s just one problem: Those steps will do little to fix soaring health care costs.

'I have the same outrage,' Stuart H. Altman, a national health policy professor at Brandeis University, said about Blue Cross’s payments. But, 'We need to put executive pay and board salaries in perspective. It is not the major force, or even close to the major force, in driving up health care costs.'

My comment is that just because administrative costs are not the largest component of health care costs does not mean they do not drive health care costs.

As I have argued before, the biggest problem created by excess compensation for health care organizations' leaders is not the amount of money they get, per se.  The problem is the effect of the perverse incentives created by the money.  One concern is that people paid that much may make decisions that support their pay in the short-term, but damage the organizations' mission in the long-term.  Another is that the sorts of people attracted by the possibility of big pay packages are those least likely to uphold the mission in the first place.  Another is that the huge disparity between the pay of the top leaders and of everybody else is demoralizing for the relatively poorly paid staff who actually must do the work.

Finally, it may be worth quoting the former President of Princeton University, just interviewed about what academic leadership was like in the days before giant pay packages:

I’m not a fan of huge salaries for presidents of academic institutions. These are hard jobs. But people don’t really do them for the money. What kind of message do you really want to convey concerning the nature of the institution and its leadership? I always thought that it was important to convey a message of we’re all in this together. If you as president earn so much more than everyone else, it’s hard to argue that we’re all in this together.

Focusing on Executive Compensation Distracts from the Real Issues

The final argument in the Boston Globe piece was that huge executive compensation just is a distraction from the real issues:

Yet [current Massachusetts Blue Cross Blue Shield CEO Andrew] Dreyfus said he is concerned that the focus on executive and director pay will distract insurers, providers, and policy makers from addressing factors driving health care costs higher. Those factors range from an aging population to increases in obesity to expensive tests, drugs, and treatments that cure diseases and prolong lives.

'If you had a dozen health economists sitting in this room and you asked them what’s driving health care [costs], you know executive and board compensation wouldn’t be at the top of the list,' he said. 'It would be chronic illness and prices of hospitals and doctors and medical advances and discoveries and technology.'

That list of the "real" drivers of health care costs sounds very familiar.

Wendell Potter's Deadly Spin, is an expose of how how insurance and managed care corporations' public relations departments used deception, propaganda, and outright disinformation campaigns to make sure health policy supported the companies' interests.

Potter wrote (p.110) about how PR campaigns were designed to distract the public and policy makers from the industry's responsibility for health care dysfunction:

Rather than admit responsibility for the failures, insurance executives pointed the finger of blame at their customers, the 'consumers' of health care, and, of course, the providers of care. In introducing the concept of their new silver bullet - consumer driven health care - insurance executives claimed that the 'real drivers of health care costs' (one of my CEO's favorite expressions) were the people who sought care when they really didn't need it and the doctors and hospitals who were all too willing to provide this unnecessary care. Sure, the aging population and expensive new technology were also factors, but the main culprits were people who just didn't realize how expensive health care had become.

I color coded the factors listed by the current Blue Cross CEO as the real "drivers" of health care using the same colors with which I coded Mr Potter's list the specific distractors created by insurance company executives to deflect attention from the companies' inability (and probable) disinclination to control costs.
So it appears that Andrew Dreyfus is working from the same playbook that Wendell Potter described, down to the "drivers of health care costs" terminology. 

Summary

The Massachusetts Blue Cross Blue Shield kerfuffle seems to be enlarging into a good case to teach about what health care dysfunction is really all about.  It shows how the leaders of large health care organizations seem to be putting their self-interest ahead of the missions they are supposed to uphold.  Without governance structures that hold them accountable for upholding these missions, they have set up perverse incentives to pay themselves very well regardless of the effects of their actions on patients' or the public's health. 

So it appears, as the Providence Journal editorial asserted, that the leadership of health care organizations is increasingly corrupt, at least using the Transparency International definition of corruption, abuse of entrusted power for private gain. 

True health care reform would make leaders of health care organizations accountable for upholding their missions, and for patients' and the public's health.  Leaders of health care organizations ought to get reasonable incentives for improving health, but not incentives so large as to demoralize the people who actually do the work and take care of the patients. 

Post Script: More Undisclosed Conflicts of Interest

It is obvious why Andrew Dreyfus, the new CEO of Massachusetts Blue Cross Blue Shield might quote the health insurance industry public relations party line about drivers of health care costs that conveniently do not include insurance company practices and executive compensation. 

It was not obvious when reading the Boston Globe article why Professor Altman might be susceptible to that party line.  Perhaps his conclusions were only based on his scholarship.

However, the Boston Globe article failed to disclose Prof Altman's part-time jobs.  As per this 2010 proxy statement, he is a member of the board of directors of Lincare, a company that provides respiratory care services, including disease management, and of Aveta Inc, a privately held health insurance company.  Prof Altman's total compensation from Lincare in 2009 (per the latest proxy statement available, i.e., that issued in 2010), was over $1.7 million.   Note that corporate directors, as we have discussed previously, have a fiduciary duty to exhibit "unyielding loyalty" to the stockholders of the company and their interests  [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.].  Given Prof Altman's membership in the board of directors of a health insurance company, and his towering compensation as a director of a health care company that may need to maintain good relationships with health care insurers, it would seem that he has multiple financial relationships that could lead to sympathy with the health insurance industry's public relations party line.

So it seems that regardless of the intent of the reporter who wrote it, the latest Boston Globe article about the Massachustts Blue Cross Blue Shield CEO golden parachute scandal ended up being an apologia for excess compensation of health care insurance executives that followed the script written years ago by health care insurance corporate public relations.

So I need to add another conclusion.  The discussion of health care policy needs to be informed by disclosure of the financial interests of those participating, particularly those participating as experts in the media.   True health care reform would lead to such disclosure.  However, in our currently dysfunctional health care environment, be very skeptical about the interests of "health policy experts" who seem eager to support the powers that be.

Health Care Corporate Disinformation Campaigns: Wendell Potter's "Deadly Spin"

I wish I had gotten to this earlier....  In 2009, Wendell Potter, a mild-mannered former chief of public relations for for-profit health care insurance company Cigna, testified before Congress about how insurance companies manipulated public opinion to support corporate vested interests. 

insurance companies make promises that they have no intention of keeping, how they flout regulations designed to protect consumers . . . and how they ‘purge’ small businesses when their employees’ medical claims exceed what underwriters expected
[Kendall]

In November, 2010, he published a book entitled Deadly Spin on this topic.  Starting then, a series of op-ed pieces by Potter, reviews of his book, and interviews with him provided a chilling picture about how corporate health care uses disinformation to support its interests, regardless of the public's interests.  I am sure there is much more in the book, which I will endeavor to purchase and read forthwith.  Meanwhile, pieced together from these articles are examples of insurance industry disinformation campaigns, and some observations about how their disinformation machine works.

Stifling the Clinton Administration's Health Care Reform

He took part in the planning for the 'Harry and Louise advertising blitz that helped derail the Clinton health-care initiative and used to bandy about catchphrases that have resonated in more recent campaigns.
[Wilemon]

Discrediting Michael Moore's Movie Sicko

I described the meticulously planned and deception-based strategy the health insurance industry developed and carried out -- with help from one of Washington's biggest PR firms -- to discredit documentary maker Michael Moore and his 2007 movie, Sicko. Because the movie laid much of the blame for the seemingly intractable problems of the American health care system on insurers, the industry I used to work for spent a big chunk of policyholders' premiums on a behind-the-scenes campaign to demonize Moore and to misinform Americans about the health-care systems in Canada and Europe that -- as Moore explained in the movie -- provide coverage for all their citizens and provide high quality care for them at much lower costs than we do in the U.S.
[Potter, Huffington Post]

Quieting the Furor After a Denied Liver Transplant

In 2007, Cigna initially denied payment for a liver transplant for a 17-year old girl named Nataline Sarkisyan, creating a national uproar.

We learn that executives at Cigna worried that Nataline’s situation would only add fire to the growing public discontent with a health care system anchored by private insurance. As the case drew more national attention, the threat of a legislative overhaul that would ban for-profit insurers became real, and Mr. Potter found himself working on the biggest P.R. campaign of his career.[Chen]

As busy as they might have felt in the days leading up to Nataline’s death, he and his staff were inundated with calls from the news media immediately afterward. To bolster what was seen as a fight for its survival, Cigna hired a large international law firm and a P.R. firm already well known to them from previous work aimed at discrediting Michael Moore and his film 'Sicko.'
[Chen]

Twisting "Obamacare" to Benefit the Insurance Industry

Mr Potter himself wrote about how "Obamacare" was twisted into a win for the insurance industry in an op-ed entitled "Repeal and Replace?":

Despite all the attacks on 'Obamacare,' the new law props up the employer-based system that insurers and large corporations benefit from so greatly. It also guarantees that private insurers will get billions of dollars in new revenue. And the insurers won’t have to share a penny of that windfall with a government-run public option the president once said was necessary 'to keep insurers honest.'
[Potter, Newsweek]

On one hand, the goal of the insurance industry was the "individual mandate," the requirement that all Americans MUST purchase insurance, which for most means insurance provided by for-profit health insurance companies:

Although I was ashamed of many of the things I did during my career, I didn’t plan to speak out about the industry’s devious practices until I saw Karen Ignagni, president of America’s Health Insurance Plans, tell President Obama at the end of his March 2009 White House Forum on Health Reform, 'You have our commitment to play, to contribute, and to help pass health-care reform this year.' Then I knew the industry’s disingenuous charm offensive had begun. Soon after that I read that, Aetna chairman and CEO Ron Williams, the driving force behind the industry’s effort to get the individual mandate enacted, had met with the president half a dozen times. I knew Williams was trying to persuade the president to drop his insistence on the public option and to embrace the individual mandate. Sure enough, Williams got his wish.
[Potter, Newsweek]

In fact,

For months before I left my job, I worked closely with my counterparts at the other big insurers to develop the list of must-haves our well-connected army of lobbyists would take to Capitol Hill when lawmakers began drafting reform legislation. Despite their public statements to the contrary, insurance companies really liked much of what was in both House and Senate versions of the bill—big chunks of which they actually wrote behind the scenes—especially the requirement that all Americans buy insurance if they’re not eligible for an existing public program like Medic-aid or Medicare.
[Potter, Newsweek]

On the other hand, the industry wanted to make sure that the law did not regulate them too tightly, or otherwise inconvenience them or cost them too much money:

During the reform debate, the industry’s deception-based PR strategy had two active fronts. One was a highly visible charm offensive designed to create an image of the industry as an advocate for reform and a good-faith partner with the president and lawmakers in achieving it. The second was a secret fearmongering campaign using shadowy 'AstroTurf' groups and business and political allies as shills to disseminate misinformation and lies—like the one about the creation of 'death panels'—with the sole intent of killing any reform that might hurt the bottom line.
[Potter, Newsweek]

Tactic: Front Groups

This seems right out of the old KGB playbook, as described by Mr Potter in an interview about the campaign to discredit Michael Moore's Sicko:

one key component was to fund a front group, and that is something that I write about quite a bit in the book, about how special interests, and the insurance industry, in particular, will use premium dollars to funnel thousands and thousands, if not millions, of dollars to big PR firms to set up fake grassroots organizations—astroturf, as we call it—and front groups. And in this case, there was a front group that was set up called Health Care America, and the sole purpose for it to be set up was to attack Michael Moore and to attack the notion of a single-payer system in this country.
[Goodman]

Note that this particular tactic was never previously exposed:

I’ve done a search recently just to find out how they were covered, and they were never exposed.
[Goodman]

But it was quite influential:

They were quoted extensively. They sent out press releases. And they were given status as a legitimate organization, even by the New York Times.
[Goodman]

Tactic: Third Parties (Useful Idiots?)

An example from Potter's account of how insurers manipulated the Obama administration's health care reform:

He contends that the insurance industry used 'third parties,' such as sympathetic congressmen, 'to kill key elements of the president’s plan, if not all of it, by scaring and lying to the public.'
[Weiss]

Here is another version used in the campaign to quell the furor over the denial of the liver transplant:

the aggressive placement of articles with friendly 'third party' reporters, editors and producers who would 'disabuse the media, politicians and the public of the notion that Nataline would have gotten the transplant if she had lived in Canada or France or England or any other developed country.'
[Chen]

Tactic: Spies

This really is out of the espionage playbook:

A 'spy' was dispatched to Nataline’s funeral; and when the Sarkisyan family filed a lawsuit against the insurer, a team of lawyers was assigned to keep track of actions and comments by the family’s lawyer.
[Chen]

Tactic: Distractions to Make Important Issues Anechoic

We have often discussed how some of the issues we discuss on Health Care Renewal are anechoic, generating almost no discussion, polite or otherwise in the medical and health care research and policy literature, and sometimes even in the main-stream media. Part of the anechoic effect may be due to deliberate distraction, as Potter discussed in reference to the campaign to manipulate "Obamacare":

Potter shows then-Cigna chairman Edward Hanway's leading role in "a multi-milllion-dollar public relations and advertising campaign" in the run-up to the 2008 presidential election, designed to 'divert the public's and the media's attention' away from the central fact of millions of uninsured and underinsured sick people, toward other problems that were harder to blame on insurers: aging Americans, extravagant doctors, expensive technology, and consumers demanding costly operations they don't need.
[DiStefano]

Note that the usual dogma one sees in the medical and health care research/ policy literature about the causes of US health care's excess costs, declining access and poor quality are just as listed above: an aging population, high doctors' fees and excessive utilization, technology that appears to be ever costlier (unlike technology everywhere but health care), and patients' unreasonable demands.

Tactic: Message Discipline

As discussed by Potter in terms of the campaign to align "Obamacare" with the insurance industry's interests:

It's incredible message discipline, and it's based on an understanding of ideology. The health insurers know that they need to be allied with big, well-researched organizations like the Chamber of Commerce. They want to be associated with people who can convince us that the way to go for health care is market-based. You're going to be hearing in the weeks to come, as we revisit health care, from Republicans and big business and those in the industry that what we need are 'common-sense, market-based solutions.' Those are carefully crafted words, just as what we have now was a 'government takeover of the health care system.' They spend enormous amounts of money very carefully selecting words and putting them together in a way that will elicit an emotional response. The people who are saying this believe their own talking points because they don't have an understanding of how the system is working or not working. If they are conservative, they think, 'I'm supposed to believe this.' They're supposed to believe that the market should work well in health care. They just simply have their blinders on and won't take them down to see the reality.
[Whitaker]

Tactic: Entrapment (Double-Think?)

Finally, Potter discussed how public relations leaders keep their own people in line:

There's an entrapment that's part of the problem here. I was paid very well, but I wasn't independently wealthy, and I had to consider my own ability to make the house payments and the car payments and putting the kids through school. You also find that your ego and what you do for a living, you let it define you. How much money you make, what neighborhood you're able to live in, where you're able to send your kids to school, it all becomes part of your shell and your own self-identity. To do anything that will potentially destroy that is too frightening for people. It was certainly something I had to deal with, and I had to come to terms with the fact that I could lose all of that, whatever I had. I came to feel, well, I could lose it but what have I lost? A good friend of mine said, 'Well, you can at least push a broom, can't you?' I didn't think I was going to end up pushing a broom, but I didn't have to have all of that stuff. But people are afraid of losing all that stuff because they're afraid of losing part of their identity. So, financially and psychologically and from an ego point of view, it's hard to separate yourself from something you've been involved in.
[Whitaker]

Summary

In Mr Potter's own words, the for-profit health insurance industry's public relations machine, and by extension, the public relations machines of all the big health care corporate players

onslaught drastically weakened health-care reform and how it plays an insidious and often invisible role in our political process anywhere that corporate profits are at stake, from climate change to defense policy.
[Potter, Huffington Post]

So,

The onslaughts of spin will not stop, the distortions will not diminish, and the spin will not slow down. To the contrary, spin begets spin, as the successes of corporate PR functionaries increase the revenues of their employers, further funding their employers' efforts to create a more hospitable climate for their business interests. Americans are thus being faced with increasingly subtle but effective assaults on their beliefs and perceptions. Their best defense right now is to understand and to recognize the sophisticated tactics of the spinners trying to manipulate them.

Most important is a singular mandate: Be skeptical.
[Potter, Huffington Post]

I hope that summarizing some of Mr Potter's amazing points will help us all to be much more skeptical.

Note that Mr Potter has his own blog here, which will be added soon to our blog roll.

References


Chen P. When insurers put profits between doctor and patient. New York Times, January 6, 2011. Link here.
DiStefano JN. Potter vs Hanway: Cigna rebel tells all in book. Philadelphia Inquirer, January 20, 2011. Link here.
Goodman A. "Push Michael Moore off a cliff." Democracy Now, November 17, 2010. Link here.
Kendall J. An insider dissects the health insurance industry. Boston Globe, November 22, 2010. Link here.
Potter W. Repeal and replace? Newsweek, November 5, 2010.  Link here. 
Potter W. Why I will stay far away from cliffs from now on. Huffington Post, November 9, 2010. Link here.
Weiss G. Spin doctor reveals all. Portfolio.com, December 21, 2010. Link here.
Whitaker R. The insurance industry scam. Austin Chronicle, January 21, 2011. Link here.
Wilemon T. 3 events led 'Deadly Spin' author to turn on health insurance industry. Tennessean, January 13, 2011. Link here.

Health Care Corporate Disinformation Campaigns: Wendell Potter's "Deadly Spin"

I wish I had gotten to this earlier....  In 2009, Wendell Potter, a mild-mannered former chief of public relations for for-profit health care insurance company Cigna, testified before Congress about how insurance companies manipulated public opinion to support corporate vested interests. 

insurance companies make promises that they have no intention of keeping, how they flout regulations designed to protect consumers . . . and how they ‘purge’ small businesses when their employees’ medical claims exceed what underwriters expected
[Kendall]

In November, 2010, he published a book entitled Deadly Spin on this topic.  Starting then, a series of op-ed pieces by Potter, reviews of his book, and interviews with him provided a chilling picture about how corporate health care uses disinformation to support its interests, regardless of the public's interests.  I am sure there is much more in the book, which I will endeavor to purchase and read forthwith.  Meanwhile, pieced together from these articles are examples of insurance industry disinformation campaigns, and some observations about how their disinformation machine works.

Stifling the Clinton Administration's Health Care Reform

He took part in the planning for the 'Harry and Louise advertising blitz that helped derail the Clinton health-care initiative and used to bandy about catchphrases that have resonated in more recent campaigns.
[Wilemon]

Discrediting Michael Moore's Movie Sicko

I described the meticulously planned and deception-based strategy the health insurance industry developed and carried out -- with help from one of Washington's biggest PR firms -- to discredit documentary maker Michael Moore and his 2007 movie, Sicko. Because the movie laid much of the blame for the seemingly intractable problems of the American health care system on insurers, the industry I used to work for spent a big chunk of policyholders' premiums on a behind-the-scenes campaign to demonize Moore and to misinform Americans about the health-care systems in Canada and Europe that -- as Moore explained in the movie -- provide coverage for all their citizens and provide high quality care for them at much lower costs than we do in the U.S.
[Potter, Huffington Post]

Quieting the Furor After a Denied Liver Transplant

In 2007, Cigna initially denied payment for a liver transplant for a 17-year old girl named Nataline Sarkisyan, creating a national uproar.

We learn that executives at Cigna worried that Nataline’s situation would only add fire to the growing public discontent with a health care system anchored by private insurance. As the case drew more national attention, the threat of a legislative overhaul that would ban for-profit insurers became real, and Mr. Potter found himself working on the biggest P.R. campaign of his career.[Chen]

As busy as they might have felt in the days leading up to Nataline’s death, he and his staff were inundated with calls from the news media immediately afterward. To bolster what was seen as a fight for its survival, Cigna hired a large international law firm and a P.R. firm already well known to them from previous work aimed at discrediting Michael Moore and his film 'Sicko.'
[Chen]

Twisting "Obamacare" to Benefit the Insurance Industry

Mr Potter himself wrote about how "Obamacare" was twisted into a win for the insurance industry in an op-ed entitled "Repeal and Replace?":

Despite all the attacks on 'Obamacare,' the new law props up the employer-based system that insurers and large corporations benefit from so greatly. It also guarantees that private insurers will get billions of dollars in new revenue. And the insurers won’t have to share a penny of that windfall with a government-run public option the president once said was necessary 'to keep insurers honest.'
[Potter, Newsweek]

On one hand, the goal of the insurance industry was the "individual mandate," the requirement that all Americans MUST purchase insurance, which for most means insurance provided by for-profit health insurance companies:

Although I was ashamed of many of the things I did during my career, I didn’t plan to speak out about the industry’s devious practices until I saw Karen Ignagni, president of America’s Health Insurance Plans, tell President Obama at the end of his March 2009 White House Forum on Health Reform, 'You have our commitment to play, to contribute, and to help pass health-care reform this year.' Then I knew the industry’s disingenuous charm offensive had begun. Soon after that I read that, Aetna chairman and CEO Ron Williams, the driving force behind the industry’s effort to get the individual mandate enacted, had met with the president half a dozen times. I knew Williams was trying to persuade the president to drop his insistence on the public option and to embrace the individual mandate. Sure enough, Williams got his wish.
[Potter, Newsweek]

In fact,

For months before I left my job, I worked closely with my counterparts at the other big insurers to develop the list of must-haves our well-connected army of lobbyists would take to Capitol Hill when lawmakers began drafting reform legislation. Despite their public statements to the contrary, insurance companies really liked much of what was in both House and Senate versions of the bill—big chunks of which they actually wrote behind the scenes—especially the requirement that all Americans buy insurance if they’re not eligible for an existing public program like Medic-aid or Medicare.
[Potter, Newsweek]

On the other hand, the industry wanted to make sure that the law did not regulate them too tightly, or otherwise inconvenience them or cost them too much money:

During the reform debate, the industry’s deception-based PR strategy had two active fronts. One was a highly visible charm offensive designed to create an image of the industry as an advocate for reform and a good-faith partner with the president and lawmakers in achieving it. The second was a secret fearmongering campaign using shadowy 'AstroTurf' groups and business and political allies as shills to disseminate misinformation and lies—like the one about the creation of 'death panels'—with the sole intent of killing any reform that might hurt the bottom line.
[Potter, Newsweek]

Tactic: Front Groups

This seems right out of the old KGB playbook, as described by Mr Potter in an interview about the campaign to discredit Michael Moore's Sicko:

one key component was to fund a front group, and that is something that I write about quite a bit in the book, about how special interests, and the insurance industry, in particular, will use premium dollars to funnel thousands and thousands, if not millions, of dollars to big PR firms to set up fake grassroots organizations—astroturf, as we call it—and front groups. And in this case, there was a front group that was set up called Health Care America, and the sole purpose for it to be set up was to attack Michael Moore and to attack the notion of a single-payer system in this country.
[Goodman]

Note that this particular tactic was never previously exposed:

I’ve done a search recently just to find out how they were covered, and they were never exposed.
[Goodman]

But it was quite influential:

They were quoted extensively. They sent out press releases. And they were given status as a legitimate organization, even by the New York Times.
[Goodman]

Tactic: Third Parties (Useful Idiots?)

An example from Potter's account of how insurers manipulated the Obama administration's health care reform:

He contends that the insurance industry used 'third parties,' such as sympathetic congressmen, 'to kill key elements of the president’s plan, if not all of it, by scaring and lying to the public.'
[Weiss]

Here is another version used in the campaign to quell the furor over the denial of the liver transplant:

the aggressive placement of articles with friendly 'third party' reporters, editors and producers who would 'disabuse the media, politicians and the public of the notion that Nataline would have gotten the transplant if she had lived in Canada or France or England or any other developed country.'
[Chen]

Tactic: Spies

This really is out of the espionage playbook:

A 'spy' was dispatched to Nataline’s funeral; and when the Sarkisyan family filed a lawsuit against the insurer, a team of lawyers was assigned to keep track of actions and comments by the family’s lawyer.
[Chen]

Tactic: Distractions to Make Important Issues Anechoic

We have often discussed how some of the issues we discuss on Health Care Renewal are anechoic, generating almost no discussion, polite or otherwise in the medical and health care research and policy literature, and sometimes even in the main-stream media. Part of the anechoic effect may be due to deliberate distraction, as Potter discussed in reference to the campaign to manipulate "Obamacare":

Potter shows then-Cigna chairman Edward Hanway's leading role in "a multi-milllion-dollar public relations and advertising campaign" in the run-up to the 2008 presidential election, designed to 'divert the public's and the media's attention' away from the central fact of millions of uninsured and underinsured sick people, toward other problems that were harder to blame on insurers: aging Americans, extravagant doctors, expensive technology, and consumers demanding costly operations they don't need.
[DiStefano]

Note that the usual dogma one sees in the medical and health care research/ policy literature about the causes of US health care's excess costs, declining access and poor quality are just as listed above: an aging population, high doctors' fees and excessive utilization, technology that appears to be ever costlier (unlike technology everywhere but health care), and patients' unreasonable demands.

Tactic: Message Discipline

As discussed by Potter in terms of the campaign to align "Obamacare" with the insurance industry's interests:

It's incredible message discipline, and it's based on an understanding of ideology. The health insurers know that they need to be allied with big, well-researched organizations like the Chamber of Commerce. They want to be associated with people who can convince us that the way to go for health care is market-based. You're going to be hearing in the weeks to come, as we revisit health care, from Republicans and big business and those in the industry that what we need are 'common-sense, market-based solutions.' Those are carefully crafted words, just as what we have now was a 'government takeover of the health care system.' They spend enormous amounts of money very carefully selecting words and putting them together in a way that will elicit an emotional response. The people who are saying this believe their own talking points because they don't have an understanding of how the system is working or not working. If they are conservative, they think, 'I'm supposed to believe this.' They're supposed to believe that the market should work well in health care. They just simply have their blinders on and won't take them down to see the reality.
[Whitaker]

Tactic: Entrapment (Double-Think?)

Finally, Potter discussed how public relations leaders keep their own people in line:

There's an entrapment that's part of the problem here. I was paid very well, but I wasn't independently wealthy, and I had to consider my own ability to make the house payments and the car payments and putting the kids through school. You also find that your ego and what you do for a living, you let it define you. How much money you make, what neighborhood you're able to live in, where you're able to send your kids to school, it all becomes part of your shell and your own self-identity. To do anything that will potentially destroy that is too frightening for people. It was certainly something I had to deal with, and I had to come to terms with the fact that I could lose all of that, whatever I had. I came to feel, well, I could lose it but what have I lost? A good friend of mine said, 'Well, you can at least push a broom, can't you?' I didn't think I was going to end up pushing a broom, but I didn't have to have all of that stuff. But people are afraid of losing all that stuff because they're afraid of losing part of their identity. So, financially and psychologically and from an ego point of view, it's hard to separate yourself from something you've been involved in.
[Whitaker]

Summary

In Mr Potter's own words, the for-profit health insurance industry's public relations machine, and by extension, the public relations machines of all the big health care corporate players

onslaught drastically weakened health-care reform and how it plays an insidious and often invisible role in our political process anywhere that corporate profits are at stake, from climate change to defense policy.
[Potter, Huffington Post]

So,

The onslaughts of spin will not stop, the distortions will not diminish, and the spin will not slow down. To the contrary, spin begets spin, as the successes of corporate PR functionaries increase the revenues of their employers, further funding their employers' efforts to create a more hospitable climate for their business interests. Americans are thus being faced with increasingly subtle but effective assaults on their beliefs and perceptions. Their best defense right now is to understand and to recognize the sophisticated tactics of the spinners trying to manipulate them.

Most important is a singular mandate: Be skeptical.
[Potter, Huffington Post]

I hope that summarizing some of Mr Potter's amazing points will help us all to be much more skeptical.

Note that Mr Potter has his own blog here, which will be added soon to our blog roll.

References


Chen P. When insurers put profits between doctor and patient. New York Times, January 6, 2011. Link here.
DiStefano JN. Potter vs Hanway: Cigna rebel tells all in book. Philadelphia Inquirer, January 20, 2011. Link here.
Goodman A. "Push Michael Moore off a cliff." Democracy Now, November 17, 2010. Link here.
Kendall J. An insider dissects the health insurance industry. Boston Globe, November 22, 2010. Link here.
Potter W. Repeal and replace? Newsweek, November 5, 2010.  Link here. 
Potter W. Why I will stay far away from cliffs from now on. Huffington Post, November 9, 2010. Link here.
Weiss G. Spin doctor reveals all. Portfolio.com, December 21, 2010. Link here.
Whitaker R. The insurance industry scam. Austin Chronicle, January 21, 2011. Link here.
Wilemon T. 3 events led 'Deadly Spin' author to turn on health insurance industry. Tennessean, January 13, 2011. Link here.