We revisit Wendell Potter’s whistleblowing testimony that exposed how the insurance industry is more interested in pleasing Wall Street than in people’s care, and asked him if these abuses continued after the passing of the ACA–Wendell Potter on Reality Asserts Itself, hosted by Paul Jay
PAUL JAY On June 24, 2009, former health insurance executive Wendell Potter blew the whistle on private insurance companies as he testified, before the U.S. Senate Committee on Commerce, Science, and Transportation.
WENDELL POTTER Mr. Chairman, thank you for the opportunity to be here this afternoon. Recently, it became abundantly clear to me, that the industry’s charm offensive – which is the most visible part of duplicitous and well-financed PR and lobbying campaigns – may well shape reform in a way that benefits Wall Street far more than average Americans.
PAUL JAY Wendell Potter went on to say, “the industry has consolidated to the point that it is now dominated by a cartel of large for-profit insurers. The average family doesn’t understand how Wall Street’s dictates determine whether they will be offered coverage, whether they can keep it, and how much they’ll be charged for it. But, in fact, Wall Street plays a powerful role. The top priority of for-profit companies is to drive up the value of their stock.”
And this is the story of a very important moment that changed, really changed, Wendell’s life, where he testified against his industry at that Senate hearing. And now he joins me in the studio. Thanks for joining me again.
WENDELL POTTER Thank you, Paul.
PAUL JAY Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on how Corporate PR Is Killing Healthcare and Deceiving Americans. He’s also co-author of Nation on the Take: How Big Money Corrupts Our Democracy and What We Can Do About It. And he’s the founder of the investigative journalism site Tarbell.org.
So the clip I played at the beginning, how you describe that insurance companies are only there to boost their stock price, they’re there to make money for their executives, their shareholders, for Wall Street, since you gave that testimony, Congress and the president signed the Affordable Care Act, which was supposed to significantly change things. So does what you said then still apply?
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WENDELL POTTER It does. We still have a Wall Street-driven health care system just as much as we did before; maybe even more so. Because the way the Affordable Care Act was structured, it kind of locked in place the role of health insurance companies as middlemen, but middlemen who really call the shots in so many ways in our health care system. And a lot of the practices that they were engaging in that I spoke about in my testimony had been declared illegal. They can no longer refuse to sell people coverage because of a pre-existing condition. They can’t charge you more because you’ve been sick in the past. They can’t charge women more than men. And there are a number of things that has facilitated more and more people coming into to coverage. Many states have expanded their Medicaid programs as a result of that. And a lot of people have been able to get coverage through the so-called Obamacare exchanges. So it has reduced the number of people without insurance, but once again we’re seeing the number of uninsured begin to rise again, and we’re seeing just as much profiteering in health care as we ever did.
PAUL JAY Later in his testimony Wendell Potter said, “To help meet Wall Street’s relentless profit expectations, insurers routinely dump policyholders who are less profitable or who get sick. Insurers have several ways to cull the sick from their rolls. The practice is known in the industry as purging.”
PAUL JAY Does the Affordable Care Act change that? Or is this still going on?
WENDELL POTTER It’s still going on. In 1997, about 69 percent of Americans had coverage through their employers. What we’re talking about here are companies that have been purged from the rolls of insurance companies. These are employers that provide coverage to their workers.
PAUL JAY Whole companies.
WENDELL POTTER Whole companies. That’s what has been purged. And, of course, along with them are those who work for those companies and their dependents. So many people can be purged at one time.
PAUL JAY How do you purge a whole company? You just refuse to sell insurance to that company?
WENDELL POTTER No, you just raise the rates. You just jack up the rates to the point that the company can no longer afford it. Can’t afford the coverage. So as I said, I think it was ’97, 69 percent of non-elderly Americans got their coverage through their workplace. It’s now down to about 56 percent. So you see, over the years, year after year after year, fewer and fewer Americans as a percentage of the population are getting coverage through the workplace. And that’s largely been a result of employers, small and midsize employers, not being able to offer coverage anymore. And insurance companies will look at what is referred to as the experience of a group, of an employer, to determine how many employees and dependents have used health care, and how much the medical claims have been for those those employees and dependents. And if it has been more than they anticipated, and they deem those policies or those customers to be not as profitable as they were before, or unprofitable, they will jack the rates up significantly.
And a lot of employers just are having to throw in the towel. They can’t continue to offer benefits. So our employer-based system is unraveling. It’s really crumbling as a consequence of the insurance industry’s purging activities.
PAUL JAY And does the ACA to some extent actually facilitate this? Because it’s not like people can’t go, in theory, and buy individually. And so the company can say, well, you’ll just go ahead and buy it. Except–but isn’t that a legitimate argument, that there’s a safety valve now?
WENDELL POTTER It absolutely is the case. And some employers have done just that. And now that the exchanges exist, employees, you go get your coverage over there. Many of them have done that, and some of them are such low wage earners that they are eligible for a subsidy, but sometimes they’re not. Which means that they have to pay the full freight of the premiums on their own, and that’s becoming prohibitively expensive. That’s another reason why the number of uninsured Americans is beginning to creep back up.
But employers are having to take–the thing about the Affordable Care Act, one of the things that has made it so–one of the things that has made the Affordable Care Act less helpful than it should be is that it has provided little relief to employers, small employers in particular, midsize employers.
I was recently in Tennessee, my home state. And I heard the mayor of McKenzie, Tennessee talk about a couple of things. One was losing the hospital in her community. And one of the reasons for that is because she’s once again–they’re seeing more and more people who are uninsured or underinsured, and not able to pay their bills at the hospital. But the other thing is, what she said, as an employer, a municipal employer, they’re no longer able to offer coverage to the dependents of their workers. So that’s happening all across the comp–all across the country. Employers, whether they’re in the private sector or the public sector, are just not able to continue offering benefits like they used to.
PAUL JAY And so what are people doing?
WENDELL POTTER They’re going back into the ranks of the uninsured. One of the things the Republican Congress did a couple of years ago was remove the penalty that was put in place by the Affordable Care Act. If you didn’t buy insurance then you had to pay a penalty. That isn’t–that penalty is now gone–has gone away. So more and more people are saying, well, the value–I just can’t afford insurance. And even if I tried to buy coverage that I might be able to afford, it’s not very valuable anymore. And one reason for that is, again, because of these very high deductibles that–the Commonwealth Fund recently did a study that showed that 42 percent of people who buy their coverage through the Obamacare exchanges are underinsured, which is remarkable. That means that yeah, they’re technically covered. They have insurance. But if they get sick or injured they’re very vulnerable.
PAUL JAY Well, let’s roll a clip from your testimony.
“An estimated 25 million Americans are now underinsured for two principle reasons. First, the high deductible plans many of them have been forced to accept – like I was forced to accept at CIGNA – require them to pay more out of their own pockets for medical care, whether they can afford it or not. The trent toward these high-deductible plans alarms many health care experts and state insurance commissioners.”
So that’s what you said in 2009. You’re saying that now that there’s the ACA it actually hasn’t changed that much.
WENDELL POTTER No, it’s even gotten worse, because deductibles continue to go up year after year. And as again, one of the consequences of that–employers are beginning to see this as well, too. They have had in many instances no alternative except to shift more and more of their workers into these high deductible plans. And that’s one of the ways they’ve been able to continue to offer benefits as their premiums have gone up.
PAUL JAY Because if you’re an employer, your premiums are lower, the higher the deductible is.
WENDELL POTTER That’s exactly right. That’s exactly right. But if your employees are going without the care that they need, they’re taking a risk. And in many cases they’re waiting until they had to go to the emergency room, or have an illness that could have been caught, could have been prevented if they had been able to use their benefits early on.
PAUL JAY I know our health care plan, which is a relatively good one, a family has a $3,000 deductible. You know, you get hit with that $3,000, that’s a lot of money, especially if you get hit with it year after year.
WENDELL POTTER Well, exactly. And most Americans only have a few hundred dollars in their savings account or checking accounts. Even if they have that much, so many American families are paycheck to paycheck, and they just simply can’t cover the cost of a high hospital bill, for example, if they get sick. And we have a situation in this country that thousands of people every year file for bankruptcy because of medical bills.
PAUL JAY Still.
WENDELL POTTER Still.
PAUL JAY Because this was part of the argument why a lot of the Democrats were saying you needed ACA.
WENDELL POTTER Right. But a lot of people who have insurance file for bankruptcy because they’re in these high deductible plans. In 2005, that was when, more or less, this trend of moving people into high deductible plans began. Deductibles have risen 250 percent since then. So it’s, it’s, you know, the trajectory has been very sharp, and there’s nothing that’s going to stop it. And the insurance industry doesn’t really have any other tricks up their sleeves to try to make health care more affordable to their corporate customers or their other customers. But it has been very profitable for them as they’ve been able to shift more and more of the cost of both premiums and coverage to companies’ employees.
PAUL JAY You were talking about purging of companies. Can insurance companies raise rates on the individuals and purge the individuals the way they were before the ACA?
WENDELL POTTER Well, not particularly. But there is pressure on employers to sometimes drop coverage of dependents, for example. And that can be one way of eliminating coverage for individuals, even through an employer-sponsored plan. For example.
PAUL JAY But if you’re directly buying into the exchange, can your rates be raised because you have too many claims?
WENDELL POTTER No. No, that can’t happen. But the rate-
PAUL JAY It used to happen.
WENDELL POTTER It used to happen, for sure. Yeah. In fact, insurance companies always would evaluate your claim experience for the prior year, and then your rates would change based on whether or not you used your benefits, whether there were any significant claims that were paid. In some cases your policies were canceled. One of the things I testified about was a lot of policies being rescinded. When women with breast cancer, for example, were diagnosed and needed to have expensive treatment, insurance companies would look to see if they could find a reason to cancel that policy. ‘Rescinded’ is the term that they use. And they would scour the applications to see if there might be something that was–that had not been reported.
PAUL JAY Like they hadn’t reported some kind of preexisting condition, even if it was minor, as an excuse to get out of the payments for the cancer.
WENDELL POTTER Exactly. In fact, one woman testified before Congress that she had forgotten to report that she’d been treated for acne. And she had breast cancer, she needed a mastectomy. And just before that procedure was about to be done she got a notice that her policy was being rescinded because she had failed to report that she’d been treated for acne.
PAUL JAY So what did she do?
WENDELL POTTER She had to try to figure out how to raise money on her own.
PAUL JAY And did the ACA stop that practice?
WENDELL POTTER The ACA did, essentially, stop that, because you cannot cut off someone’s coverage or rescind it because of a preexisting condition.
PAUL JAY Because of a preexisting condition. So it has some merits, ACA.
WENDELL POTTER Exactly. It has some merits. But as I said before, it left the insurance companies largely controlling our health care system, and Wall Street controls those insurance companies. It’s all about the money. The thing that–the one stakeholder that insurance company executives really care about are their shareholders, and the small group of individuals that they listen to most are shareholders and Wall Street financial analysts.
PAUL JAY OK. In the next segment of our interview we’re going to talk about the debate within the Democratic Party: fix, strengthen ACA? Or move to Medicare for All? So please join us for Reality Asserts Itself on The Real News Network, and we’ll continue with Wendell Potter then.