The Center for Public Integrity

One of the reasons Americans seem so willing to tolerate the fact that 50 million of us are uninsured and almost 30 million more of us are underinsured is that most of us who have coverage assume we are OK. That nothing truly catastrophic will happen to us, and that, even if it did, our insurance policies will pay our bills and keep us whole.

Who would think that a decision to go see a movie on a Friday night could change our lives — and the lives of our families — forever? That we or a loved one, even with what we believed was decent coverage, might become a victim of violence that could leave us not only disabled for life but also potentially bankrupt and homeless?

That random act of violence in Aurora, Colo. earlier this month could have happened anywhere in America, of course — or in any other country, for that matter — but among the world’s developed nations, we live in the only one where the families of some of the injured would have to face begging for money to pay the doctors and hospitals and keep the sheriff and his foreclosure papers at bay. Talk about American exceptionalism. This is one area where, sadly, we truly are unique.

News reports informed us last week that three of the five hospitals where the victims were taken have said they will absorb most, if not all, of the cost of their care if they don’t have insurance. But who will pay for the care they’ll need after they’re discharged? And who will pay the medical bills of those who were unlucky enough to be taken to a hospital that decides not to be so generous? And what about those who have policies with such limited benefits or high deductibles they might actually wind up in worse shape than those who are uninsured? Having any type of insurance, even if it’s essentially worthless, can disqualify a patient from charity care.

I’ve often said the U.S. health care system is so complex that trying to understand it makes your hair hurt. Case in point: the Affordable Care Act runs more than 2,000 pages. I’ll grant you that it’s a massive piece of legislation — but lawmakers felt that’s what was needed to fix at least some of the problems that resulted from the helter-skelter way our health care system developed.  

This complexity also helps explain why it has been so difficult for the Obama administration to communicate how the numerous provisions of the law will likely benefit average Americans. And it also explains why so many journalists covering health care often do little more than “he said, she said” reporting. Going deeper requires a willingness to figure out how to make arcane but important parts of the system interesting and relevant.  

I’ll never forget being told by a reporter for a major financial publication while I was still at Cigna that her editor would not let her use the term “reinsurance” in a story she was writing about my firm — even though the company had just disclosed having to take a big charge against earnings because of problems within the company’s reinsurance operations. She said her editor believed readers simply couldn’t wrap their heads around the concept of reinsurance. As part of their risk management efforts, insurers buy "reinsurance" from other insurance firms to reduce their exposure to unexpected high claims from policyholders. The resinsurer assumes a portion of the risk.  

Similarly, many reporters refused or were not allowed to use the term “medical loss ratio” during the reform debate, even though changes in that mathematical equation can mean the difference between black ink and red ink on an insurance company’s balance sheet. That’s why shareholders and Wall Street financial analysts keep close tabs on it — and why it’s something we all ought to know a bit about.

The House of Representatives voted for the 33^rd time last week to repeal ObamaCare, and for the 33^rd time it was an exercise in futility. The Senate will ignore the House vote and allow the reform law to move forward, just as the Supreme Court did last month.

House members are well aware of all that, so the vote was all for show. And GOP leaders have no intention of repealing the Affordable Care Act because their friends in the health insurance industry are counting on major provisions of the law going forward, especially the expansion of Medicaid. Don’t be fooled by Republican governors like Florida’s Rick Scott and Texas’ Rick Perry, who are saying they’ll opt out of the Medicaid expansion now that the Supreme Court says that’s allowable. When the Feds start doling out billions in 2014 to bring an additional 16 million Americans into the Medicaid program, they’ll be on board. Trust me.

Want proof that Big Insurance has figured out how to make a lot of money off reform? Last Monday WellPoint announced it will pay nearly $5 billion to buy the country’s largest private Medicaid managed care company, AmeriGroup. Rest assured that lobbyists for WellPoint and other firms wanting to get their hands on that new Medicaid money will have a “here’s how it has to be” talk with their buddies on Capitol Hill.  

If you look at recent quarterly earnings reports from the big five for-profit insurance companies (UnitedHealth, WellPoint, Aetna, Cigna and Humana), you’ll see that the biggest growth in their membership has come not from the private sector but from public programs like Medicare and Medicaid.

Back during the debate on the Clinton health care reform proposal, insurance executives tried to convince lawmakers that they were on the same side of health care reform as consumers were, so they embraced the idea of “community rating” in which insurers charge everyone in a given community the same premium regardless of age, gender or health status. In testimony before a House committee in 1993, the president of Cigna’s health care business assured lawmakers that all the big insurers were on board with a return to community rating.

Fast forward nearly two decades and you’ll find that insurance executives have changed their tune, now that they’re actually being required to go back to the good old days when community rating was the norm. Today’s health insurers want nothing to do with it. There’s just not enough profit in it.

Community rating was the original way insurance companies set prices for their policies. The practice began in the late 1920s when the administrator of Baylor University Hospital in Dallas came up with a strategy to deal with his hospital’s mounting expenses. His idea was to have groups of local residents, beginning with the city’s teachers, pay fifty cents a month and receive up to 21 days of hospital care — if needed — during any year. If you were a 21-year-old man who was as healthy as a bear, you paid the same each month as a 42-year-old woman who was not nearly as healthy. It made everybody happy, subscribers and cash-strapped hospital officials alike. Pretty soon, other hospitals began offering similar plans. Eventually they were united under a common name — Blue Cross — and they were all operated on a nonprofit basis.

Health insurers avoided their worst case scenario last week — the prospect of the Supreme Court striking down the individual mandate but letting the rest of the health care law, especially profit-threatening consumer protections, go forward. Now the industry can focus on a goal it has had all along: getting rid of those pesky consumer protections.

That goal was clear to me from the reaction statement issued by America’s Health Insurance Plans. The statement was jam-packed with feel-good phrases like “secure and affordable,” “peace of mind,” and “choice and competition.” Allow me to provide an interpretation of what AHIP, the industry’s biggest PR and lobbying group, was really saying and really planning. After twenty years as an industry PR guy, I’m all too familiar with prose written to obscure intentions.

Sentence by sentence, here’s what AHIP’s communications people crafted as soon as they realized the industry would not have to go nuclear to wipe out ObamaCare — that instead, it could conduct a stealth ground war to get rid of everything in the law that might threaten profits.

“Individuals and families need secure, affordable coverage choices. Maintaining the link between market reforms and universal coverage is essential to avoiding significant cost increases and loss of choice for consumers and employers.”

Translation: “Whew! Thank you, Chief Justice Roberts. We can now shelve the campaign we were poised to launch to convince people why the consumer protections in the law won’t work without the mandate. We won’t have to squander resources on that effort. Now we can devote our war chest to helping elect candidates willing to use our talking points and vote the way we tell them to vote — and to persuading people to believe the consumer protections are not in their best interests after all. The mandate will work best for us when they’re all gone.”

As I was waiting anxiously for today’s Supreme Court decision, I knew there was a man in Colorado I’d met on the first anniversary of the Affordable Care Act who was likely far more anxious than I was. 

I do not recall the man’s name, but I have kept him in mind in the months since he came up to the podium to tell me after I spoke to an audience in Denver that he knew he was alive that day because of the new law. To me, he came to represent the thousands of Americans whom I know can truthfully say that they probably would be in their graves if not for ObamaCare.

That man was among millions of people in this country who insurance companies have labeled “uninsurable,” meaning they could not buy insurance coverage at any price because of pre-existing conditions. One of the most important provisions of the law that was upheld by the Court today was the one that will take effect on January 1, 2014, the one that will at long last make it illegal for insurers to refuse to sell coverage to people who have been sick in the past.

Knowing that 2014 was too far in the future for people to wait, Congress included in the reform law funding to help states create or expand high-risk pools to cover millions of people whom insurance companies for years wouldn’t touch with a 10-foot pole. That man was among those millions who were finally able to buy coverage that gave them access to life-saving care.

Et tu, Ron?

As President Obama read former Aetna CEO Ron Williams’ op-ed in The Wall Street Journal renouncing his support for a key provision of the health care reform law, he must have felt like Julius Caesar when Caesar realized, as he drew his last breath, that his close friend Brutus was in cahoots with his assassins.

Williams’ betrayal appeared in last Monday’s edition of the Journal under the headline, “Why I No Longer Support the Health Insurance Mandate.” The fact that it was published just days before the Supreme Court was expected to rule on the constitutionality of the mandate made it clear that Williams was not the trusted advisor the President thought he was, that, like Brutus, Williams had thrown his lot with those plotting against the commander-in-chief.

The reason why that opinion piece was such a knife in the back was because it was Ron Williams who possibly more than anyone else had persuaded the President to reconsider his campaign pledge to enact reform without making people buy coverage from a private insurer. Candidate Obama’s reform platform differed from those of Hillary Clinton’s and John Edwards’ in only one significant way: both Clinton and Edwards embraced the mandate, which Williams was championing, first behind the scenes and then publicly, on behalf of the insurance industry. Candidate Obama said he didn’t believe it was right for people to be forced to buy something they couldn’t afford.

Several years ago, when I was still a health insurance company PR guy, I was accused by a furious CNBC producer of withholding important information when I cajoled her into having my CEO on “Squawk Box” to talk about some new initiative we were rolling out.  

“You played us like a Stradivarius!” she screamed at me when she realized that while my CEO was fielding softball questions from her show’s host, our chief financial officer was signing off on a disclosure the company was obligated by the SEC to make by the close of business. Because the news we had to announce was so bad it would have a “material effect on earnings” (translation: cost shareholders a bundle), the big bosses ordered us to wait until after the New York Stock Exchange closed at 4:00pm — and many hours after the Squawk Box interview — to release it. They wanted to postpone the trauma it would cause the company.

Sure enough, when the markets opened the next morning, the company’s stock price began a long slide. The CEO was quoted in the bad-news news release about how the company was taking steps to make sure nothing like that would ever happen again, a statement written for him by the company’s lawyers and PR people, but he was nowhere near a TV camera. Every time he was asked for an interview, we “declined” to make him available. We were not about to make him answer what we referred to as “rude” questions from a reporter. 

That episode came to mind as I read story after story in the mainstream media last week about the decision by UnitedHealth Group to “honor” some of the provisions of ObamaCare even if the Supreme Court declares the law unconstitutional.

The Stradivarius playing I was accused of was nothing compared to the virtuoso performance turned in by UnitedHealth’s PR team. I have seen a lot of masterful work in purposeful misdirection over the years, but I can’t recall a PR coup to top this one. 

In 2007, a few months before I left the health insurance industry, I was tasked to write a “white paper” designed to help convince media folks and politicians that the problem of the uninsured wasn’t much of a problem after all. If demographic data was sliced just so, I was expected to write, it was easy to conclude that many of the uninsured — some 46 million at the time — were that way by choice.

I was told to point out, for example, that a significant percentage of people without coverage were in families with annual incomes of $75,000 or more. The implication: That those folks were simply shirking their responsibilities. A crucial fact that I was not to disclose, of course, was that many Americans, including wealthy ones, couldn’t buy coverage at any price because of pre-existing conditions. These are the “untouchables” as far as insurance companies were concerned. (That’s my term, not the industry’s. The underwriters prefer the term “uninsurable.”)

I also was expected to stress that most young adults — who comprise the largest segment of the uninsured — had chosen to “go naked” because they felt invincible. They simply didn’t want to pay good money for insurance because that cash could better be spent keeping the fridge stocked with Bud Light. To perpetuate that myth, we even came up with a catchy name for those twenty-somethings — the “young invincibles.”

Our message to America: Don’t feel sorry for those irresponsible bums, and by all means don’t let Congress pass any new laws that would require insurers to cover them.

Having to write that paper was one of the reasons I resigned. As the father of a couple young adults, I knew that their crowd did not consider themselves invincible. They simply did not have money left over after paying student loans and the rent to buy health insurance.

If you think the idea of privatizing Medicare has gone away, that the health insurance industry has thrown in the towel on one of its biggest goals, there was fresh evidence last week that you would be wrong.

As I wrote more than a year ago — when Rep. Paul Ryan (R.-Wis.) unveiled his plan to replace the Medicare system with one that would essentially be run by private insurers — Democrats would be foolish to think that Ryan couldn’t get the public to support the concept.  I noted then that insurers would be investing heavily in efforts to convince people that Ryan’s plan represented the only way to save the Medicare program from insolvency.

One of the tried-and-true tactics insurers have used many times to influence public opinion is the enlistment of “third-party advocates” to disseminate industry talking points. Last week an industry friend in high places — Thomas Scully, who headed the Medicare program during much of the George W. Bush administration — weighed in on the matter. It is only a matter of time, Scully told Kaiser Health News, before politicians on both sides of the aisle endorse Ryan’s proposal of providing Medicare beneficiaries with a set amount of money every year to buy coverage from private insurers.

Scully, now senior counsel at Alston & Bird, the big law and lobbying firm that has represented some of the country’s biggest health insurers, including WellPoint and Cigna, is advocating a gradual phase-in of the Ryan plan, similar to how the recent changes in Social Security came about.