Bill Moyers Journal (2007-2010); 1316; Wendell Potter

This week on Bill Moyer's Journal, if you risked on Bill Moyer's journal, if you missed him the first time, Wendell Potter is back with the truth about health care and insurance from the inside out, to the business that they're in is health care, certainly. But keep in mind what they want to do is enhance their profits. And the drug industry is riding its own prescription for health care reform. Stay tuned. Funding for Bill Moyer's Journal is provided by the Partridge Foundation, a John and Paulie Gut Charitable Fund, Park Foundation, dedicated to heightening public awareness of critical issues, the Colberg Foundation, the Herb Alpert Foundation, Maryland and Bob Clements

and the Clements Foundation, the Fetzer Institute, the John D. and Catherine T. MacArthur Foundation, the Public Welfare Foundation, and by our sole corporate sponsor, Mutual of America, providing retirement plan by the exam services to employers and individuals since 1945. Mutual of America, your retirement company. From our studios in New York, Bill Moyer's. Welcome to the Journal. When one of our broadcasts strikes a nerve, we'd like to bring it back to give you a second chance to see it and to express your support of stations like this one whose independence depends on viewers like you. When the potter was here a few weeks ago to tell an insider story of how the health insurance industry puts profits before patients. Your response, boldness over. One blogger at the widely read website Talking Points Memo summed up what many of you had

to say. I beg everyone who reads this and clicks onto the link to send it on to everyone you know. Send it to your congressman, your governors, your legislatures, the White House. Get an email chain going, put the link up on yard signs or billboards, put it on bumper stickers, stencil it on t-shirts or tattoo it on your forehead. Whatever it takes, this is a television event too important to die, keep it going. Well, it's alive and well, and thanks to this station, you're about to see it again. The message is even more timely. You heard when the potter tell us how the industry would try to shape the health care debate as it played out in Washington over the summer. Sure enough, that's exactly what has been happening. By pouring millions of dollars into lobbying, including hiring more than 350 former members of congress and government staffers, and by enriching incumbents with campaign contributions, the health care industry is winning again.

Here a congressional subcommittee investigated the twisted tactics used by health insurance companies to dump customers and stick them with the bill. It's a practice known as precision. In May 2008, I went to a dermatologist for acne pimples. A word was written down on my chart, which was considered to mean precancerous. In June 2008, I was diagnosed with an invasive HER2 genetic breast cancer, a very aggressive form of this cancer. I needed a double mastectomy immediately, with a cross and blue shield, pre-certified me for my surgery and for a hospital stay. The Friday before I was to have my double mastectomy, Blue Cross and Blue Shield called me by telephone and told me that my chart was red flagged. Red flagged, the insurer used inadvertent omissions on her original application, data that had nothing to do with her current condition as an excuse to cancel her health policy.

Without that insurance, she couldn't have the cancer surgery that she needed. I was frantic. I did not know what to do. I didn't know how to pay for my surgery. The hospital wanted a $30,000 deposit, and I was by myself. I didn't have that kind of money. The committee found other insurers pulling the same tricks. Over the past five years, the companies, a sure and golden rule and well point, had canceled 20,000 individual policies. Michigan Congressman Bart Stupac asked their executives if they would change their ways. Let me ask each of our seals this question, starting with you, Mr. Ham. Would you commit today that your company will never rescind another policy unless there was intentional fraudulent misrepresentation in the application? I would not commit to that. How about you, Mr. Collins? Would you commit to not to rescind any policy unless there's an intentional fraudulent misrepresentation? No, Sarah, we follow the state laws and regulations, and we would not stipulate to that. That's not consistent with each state's laws.

How about you, Mr. Sassy? Would you commit that your company will never rescind another policy unless there was an intentional fraud misrepresentation? No, I can't commit to that. The intentional standard is not the law of the land in the majority of states. But business as usual comes as no surprise to a little potter, who knows all too well how they win, and we lose. I'm pleased to welcome Mr. Wendell Potter to the committee today. He is a former insurance executive who is going to tell us about some of the tactics insurance companies use to keep insurance in the dark. I have a special respect for him, simply because he's doing something I think very courageous and very, very brave. Mr. Chairman, thank you for the opportunity to be here this afternoon. Until last year, Wendell Potter was head of corporate communications for SIGNO, the country's fourth largest health insurance company. Altogether, Potter spent nearly two decades playing for the side that has opposed health care reform from the Clintons forward. He set on policy committees, crafted executive messages, cajole the press, and witness firsthand

the promises made and broken. Take the case of Natalie Sarkisian. The insurance company is denying our case. She needs a liver transplant. At the end of 2007, Potter defended SIGNO when it refused to pay for the 17-year-olds transplant surgery, claiming the procedure was experimental. Protest and original headquarters created a public relations nightmare. SIGNO reversed its decision, but by then it was too late. Natalie died just two hours after her surgery was approved. Early last year, Potter left SIGNO this summer, before the Senate Commerce Committee, he went public for the first time. The industry and its backers are using fear tactics, as they did in 1994, to tar a transparent and accountable, publicly accountable healthcare option as, quote, government-run healthcare. But what we have today, Mr. Chairman, is Wall Streetrun healthcare.

That has proven itself an untrustworthy partner to its customers, to the doctors and hospitals who deliver care, and to the state and federal governments that attempt to regulate it. Wendell Potter joined us now. Welcome to the journal. Thank you very much for having me here. You worked for SIGNO 15 years and left last year. I did. Were you pushed out? I was not. I left. It was my decision to leave. And my decision to leave when I did. Were you passed over for a promotion? Absolutely not. No. Had you been well paid and rewarded by the company? Very well paid. The over the years had many job opportunities, many bonuses, salary increases, so no, I was not. And I, in fact, there was no further place for me to go in the company. I was head of corporate communications, and that was the ultimate PR job. Did you like your boss and the people you work with? I did. And still do. And still respect them. And they gave you a terrific party when you left? They sure did. Yeah. So then why are you speaking out now? I didn't intend to until it became really clear to me that the industry is resorting to the same tactics they've used over the years, and particularly back in the early 90s when

they were leading the effort to kill the Clinton plan. But doing this 15 years you were there, did you go to them and say, you know, I think we're on the wrong side. I think we're fighting the wrong people here. You know, I didn't, because for most of the time I was there, I felt that what we were doing was the right thing, and that I was playing on a team that was honorable. I just didn't really get it all that much until toward the end of my tenure as a intern. What did you see? Well, I was beginning to question what I was doing as the industry shifted from selling primarily managed care plans to what they refer to as consumer driven plans. And there are really plans that have very high deductibles, meaning that they're shifting a lot of the cost of health care from employers and insurance companies to individuals. And a lot of people can't even afford to make the co-payments when they go get care as a result of this. But it really took a trip back home to Tennessee for me to see exactly what is happening

to so many Americans. When was this? This was in July of 2007. You were still working for Singapore? I was. I went home to visit relatives, and I picked up the local newspaper, and I saw that a health care expedition was being held, a few miles up the road in Wyze, Virginia. And I was intrigued. So you drove there? I did a bar. My dad's car and drove up 50 miles up the road to Wyze, Virginia. It was being held at the Wyze County Fairground. I took my camera. I took some pictures. It was a very cloudy, misty day with a lot of it was raining that day, and I walked through the fairground gates, and I didn't know what to expect. But I just assumed that it would be like a health, it would boost that up, and people just getting their blood pressure checked, and things like that. But what I saw were doctors who were set up to provide care in animal stalls, or they had erected tents to care for people. I mean, there was no privacy. In some cases, and I've got some pictures of people being treated on gurneys, on rain-soaked pavement.

And I saw people lined up, standing in line, or sitting in these long, long lines, waiting to get care. People drove from South Carolina and Georgia, and Kentucky, Tennessee, all over the region because they knew that this was being done. They've heard about it from word of mouth. There could have been people, and probably were people that I had grown up with. They could have been people who grew up at the house down the road, and the house down the road for me. And that made it real to me. What did you think? It was absolutely stunning. It was like being hit by lightning. It's almost like, what country am I in? I just seem to be a possibility that I was in the United States. It was like a lightning bolt, didn't it? People are going to say, how could Wendell Potter sit here and say he was just finding out that there were a lot of Americans who didn't have adequate insurance and needed health care? The industry for over 15 years. And that was my problem.

I had been in the industry, and I'd risen up in the ranks, and I had a great job, and I had a terrific office in a high-rise building in Philadelphia. I was insulated. I didn't really see what was going on. I saw the data. I knew that 47 million people were uninsured, but I didn't put faces with those with that number. Just a few weeks later though, I was back in Philadelphia, and I would often fly on corporate aircraft to go to meetings, and I just thought that was a great way to travel. It is a great way to travel. You're sitting in a luxurious corporate jet, leather seats, very spacious, and I was served my lunch by Flotted Tenant who brought my lunch on a gold rim plate. And she had me a gold-plated civil war to eat it with. Then I remembered the people that I had seen in Wise County. And definitely they had no idea that this went on at the corporate levels of health insurance companies. But you had all these years seen premiums rising, and people purged from the roles, people

who couldn't afford the healthcare that Sigma and other companies were offering. This is the first time you came face-to-face. Yeah, it was. I certainly knew people, and I talked to people who were uninsured. But when you're in the executive offices, when you're getting prepared for a call with analysts and the financial media, what you think about are the numbers. You don't think about individual people. You think about the numbers, and whether or not you're going to meet Wall Street's expectations. That's what you think about at that level. And it helps to think that way. That's why it enables you to stay there if you don't really think that you're talking about and dealing with real human beings. Did you go back to corporate headquarters and tell them what you'd seen? I went back to corporate headquarters. I was trying to process all this and trying to figure out what I should do. I did tell them about the many of them, about the experience I had, and the trip. I showed them some pictures I took while I was down there.

But I didn't know exactly what I should do. I had bills of my own, and it was hard to just figure out, well, how do I step away from this? And this was one of those things that made me decide, OK, I can't do this. I can't keep. I can't. One of the books I read, as I was trying to make up my mind here, was President Kennedy's Profiles in Courage. And in the forward, Robert Kennedy said that one of the presidents, one of his favorite quotes, was a Dante quote, that the hottest places in hell are reserved for those who, in times of moral crisis, maintain the neutrality. And when I read that, I said, oh, jeez, I, you know, I'm the head for that hottest place in hell, unless I say something. Your own resume says, and I'm quoting, with the chief medical officer and his staff, Potter, developed rapid response mechanisms for handling media inquiries, pertaining to complaints. And I quote, this was highly successful in keeping most such inquiries from becoming news stories at a time when managed care horror stories about it.

I mean, you knew there were horror stories out there. I did, I did. You put these techniques to work representing Signe doing the Natalie Sarkisian case, right? That's right. And that was a public relations nightmare you called it. Right? It was. It was just the most difficult. We call them high profile cases when you have a case like that that a family or a patient goes to the news media and complains about having some coverage denied that a doctor had recommended. In this case, Natalie Sarkisian's doctors at UCLA had recommended that she have a liver transplant. But when the coverage request was reviewed at Signe, the decision was made to deny it. It was around that time also that the family had gone to the media, had sought out help from the California Nurses Association and some others to really bring pressure to bear on Signe.

Very successful in getting a lot of media attention and nothing like I had ever seen before. It got everyone's attention, everyone who was focused on that in the corporate offices. You were also involved in the campaign by the industry to discredit Michael Moore in his film, Sickle in 2007. In that film, Moore went to several countries around the world and reported that their healthcare system was better than our healthcare system. In particular, Canada and England. Take a look at this. It went across the city to a crowded hospital waiting room. How long did you have to wait here to get help? Twenty minutes. Twenty minutes. Forty-five minutes. I got help right away. You can see how crowded this is. They really do an amazing job. Did you have to get anyone's permission to come to this hospital? No, no, no. No. Oh, we go anywhere we want. You don't have to get it pre-approved? No, no. It just... You're insurance company? Oh, no. Oh, heavens no. Can you choose your own doctor? Oh, sure.

Oh, yes. What's your deductible? Nothing. I don't think we have any. I don't know. I don't think there's any as far as I know. It's a really a fabulous system for it to make sure that the least do I send the best of us for taking care of. This is... Oh, really? It's not like that in the U.S. No. Not at all. No. So what do you pay for it? Stay here. No one pays. That's it. We're asking, um, how do people pay? And I say, well, there isn't... You don't, you just leave. It's not the insurance. Yeah. Yeah, that's no bill at the end of it, is it worth? No. Even with insurance, there's bound to be a bill somewhere. So where's the building department? There isn't really a building department. There's no such thing as a building. What do they charge you for that baby? This way. You got to pay before you can get out of here, right? No. And everything's on there. This is NHS. Yeah. You know, it's not America. It's not America.

So what did you think when you saw that film? I thought that he hit the nail on the head with his movie. And... But the industry, from the moment that the industry learned that Michael Moore was taking on the healthcare industry, it was really concerned. What were they afraid of? They were afraid that people would believe Michael Moore. We obtained a copy of the game plan that was adopted by the industry's Trade Association AHIP, and it spells out the industry strategies in gold letters. It says highlight horror stories of government-run systems. What was that about? The industry has always tried to make Americans think that government-run systems are the worst thing that could possibly happen to them, that if you even consider that, you're heading down on the slippery slope towards socialism. So they have used care tactics for years and years and years to get that from happening. If there were a broader program like our Medicare program now, it could potentially reduce the profits of these big companies.

So that is their biggest concern. And there was a political strategy, position sicko as a threat to Democrats' larger agenda. What does that mean? That means that part of the effort to discredit the film was to use lobbyists and their own staff to go into Capitol Hill and say, look, you don't want to believe this movie. You don't want to talk about it, you don't want to endorse it. And if you do, we can make things tough for you, how? By running ads, commercials in your home district when you're running for re-election, not contributing to your campaigns again, or contributing to your competitor. This is fascinating. Bill awareness among centrist democratic policy organizations, including the Democratic Leadership Council, then it says message to democratic insiders. Embracing more is one way ticket back to minority party status. Yeah. That's exactly what they did, didn't they? They radicalized more so that his message was discredited because the messenger was seen to be radical. Absolutely.

And memos that would go back within the industry, he was never, by the way, mentioned by name any memos because we didn't want to inadvertently write something that would wind up in his hand. So the memos would usually, the subject line would be, the emails would be Hollywood. And as we would do the media training, we would always have someone refer to him as Hollywood entertainer or Hollywood movie maker Michael Moore. Why? Well, just to Hollywood, I think people think that's entertainment, that's movie making, that's not real documentary, they don't want you to think that it was a documentary that had some truth, that they would want you to see this, it's just some fantasy that Hollywood filmmaker would come up with. That's part of the strategy. So you would actually hear politicians mild the talking points that had been circulated by the industry to discredit Michael Moore. Absolutely. You hear ordinary people talking that way. And politicians as well, right? Absolutely. And so your plan worked.

It worked beautifully. The film was blunt, right? The film was blunt. Was it true? Did you think it contained a great truth? Absolutely. What was it? That we shouldn't fear government involvement in our healthcare system, that there is an appropriate role for government and it's been proven in the countries that were in that movie. You know, we have more people who are uninsured in this country than the entire population of Canada and that if you include the people who are uninsured, more people than in the United Kingdom. We have huge numbers of people who are also just a lay off away from joining the ranks of the uninsured or being purged by their insurance company and winding up there. You know, another thing is the advocates of reform or the opponents of reform are those who are saying that we need to be careful about what we do here because we don't want the government to take away your choice of a health plan is more likely that your employer and your insurer is going to switch you from a plan that you're in now to one that you don't want.

You might be in a plan you like now, but chances are pretty soon you're going to be enrolled in one of these high deductible plans in which you're going to find that much more of the cost is being shifted to you than you ever imagined. I have a member written by Frank Luntz, he's the Republican strategist who we discovered in the spring has written the script for opponents of health care reform. First he says you have to pretend to support it, then use phrases like government takeover, delayed care is denied care, consequences of rationing, bureaucrats, not doctors prescribing medicine. That was a memo by Frank Luntz to the opponents of health care reform in this debate. Now watch this clip. The forthcoming plan from democratic leaders will make health care more expensive, limit treatments, ration care, and put bureaucrats in charge of medical decisions rather than patients and doctors. Americans need to realize that when someone says government option what could really occur is a government takeover that soon could lead to a government bureaucrats denying and

delaying care and telling Americans what kind of care they can have. Washington run health care would diminish Americans access to quality care, leading to denials, shortages, and long delays for treatment. How will a government run health plan not lead to the same rationing of care that we have seen in other countries? We don't want to put the government, we don't want to put bureaucrats between a doctor and a patient. Why do politicians puppet messages like that? Well, they are ideologically aligned with the industry. They want to believe that the free market system can and should work in this country like it does in other industries. So they don't understand from an insider's perspective like I have what that actually means and the consequences of that to Americans. They parrot those comments without really realizing what the real situation is. I was watching MSNBC one afternoon and I saw Congressman Zach Wompe from Tennessee.

He's just down the road from where I grew up in Chattanooga and he was asking a question about the health care reform. I think it was just the day or two after the president's first health care reform summit and he was one of the ones Republicans put on the tube and he was saying that the health care problem is not necessarily as bad as we think. The uninsured people, half of them are that way because they want to go naked. Half the people that are uninsured today choose to remain uninsured. Half of them don't have any choice but half of them choose to what's called go naked and just take a risk of getting sick. They end up in the emergency room costing you and me a whole lot more money. Use a word naked. It's an industry term for those who presumably choose not to buy insurance because they want to, they don't want to pay the premiums. So he was saying that half, well first of all, there's nothing like that. It was an absolutely ridiculous comment.

But it's an example of a member of Congress buying what the insurance industry is peddling. Back in 1993, the Republican propagandist William Crystal urged his party to block any health care proposal in order to present the Democrats from being seen as the quote generous protector of the middle class, but today you've got some Democrats who are going along with the industry. I mean, Max Bakers, the Senator from Montana, for example, the most important figure right now in this health care legislation that's being written in the Senate, he's resisted including a public insurance option in the reform bill, right? That's right. Why is the industry so powerful on both sides of the aisle? Well, money and relationships, ideology. The relationships, an insurance company can hire and does hire many different lobbying firms and they hire firms that are predominantly Republican and predominantly Democrat. And they do this because they know they need to reach influential members of Congress

like Max Bakers. So they're people who used to work for Max Bakers, who are in lobbying firms or on the staff of companies like Signal or the association itself. Yeah, I just read the other day in the Washington Post that Max Bakers' staff met with a group of lobbyists. Two of them had been Bakers' former chiefs of staff. Right. I mean, they left the government. They go to work for the industry now. They're back with an insider status. They get an access, right? They do. They do. And these lobbyists' ability to raise money for these folks also is very important as well. The big lobbyists contribute a lot of money themselves. One of the lobbyists for one of the big health insurance companies is Heather Podesta. The Podesta group. Oh, yes. And she's married to Tony Podesta, who's a brother of John Podesta, who used to be the White House chief of staff. Right. And they're Democrats. And my executives wanted to meet with, when I say my, the people I used to work for.

That's Signal. Yeah. Wanted to meet with Hillary Clinton when she was still in the Senate and still in Canada for President. Well, that's hard to do. It's hard to pull off, but she did. That just shows you that you can, through the relationships that are formed and that the insurance industry pays for by hiring these lobbyists, you can get your foot in the door. You can get your messages across to these people in ways that the other average American couldn't possibly. So it's money that can buy access to have their arguments heard, right? That's right. When ordinary citizens cannot be heard. Absolutely right. It's the way the American system has evolved, the political system. But it does offend me that the vested special interest who are so profitable and so powerful are able to influence public policy in the way that they have and the way that they've done over the years. And the insurance industry has been one of the most successful in beating back any kinds of legislation that would hinder or affect the profitability of the companies.

We'll return to my conversation with Wendell Potter in just a few minutes. The first, you are the public in public television and this station needs your help. So we're counting on you now to do your part. Thank you. Here's the journal we enjoy hearing your feedback. So tonight we turn again to some of the thought-provoking comments we've received from viewers like you in recent weeks. In April we heard from former regulator William K. Black who argued that the American economy was brought down not just by greed and incompetence in the financial sector but by fraud. Fraud is deceit and the essence of fraud is I create trust in you and then I betray that trust and get you to give me something of value and as a result there's no more effective acid against trust than fraud.

As a conservative I honestly have never really known what I believe regarding regulation. I've always deemed it a scary Harry monster that keeps economic growth at bay. However in light of recent times I'm finding that I'm required to open my mind a bit. I appreciate your interview with Mr. Black as a hopeful catalyst for changing this current world. David Young. I listened to the Bill Black interview and was not really surprised but certainly disturbed by the blatant disregard and self-serving mindset of powerful men in powerful places. I can only hope that justice finds a way to be served. Alan Lee. My conversation with David Simon, the creator of the acclaimed HBO series The Wire prompted viewers to share their thoughts on crime in our nation's cities and on the future of journalism. As a reporter I got to see the war on drugs I got to see policing as a concept and I got to see journalism. You see how interconnected things are, how connected the performance of the school system

is to the culture of the corner. Mr. Moyer's interview with David Simon of The Wire was an outstanding analysis of what is wrong with our cities, schools, drug policies and economy. If only our public dialogue were of this depth and clarity we would be well on our way to solving these problems. Richard Zendt. I was struck by David Simon's comments that we were not asking the hard questions about where we are and how we got that way. He may mistakenly believe that he is somehow operating outside these institutionalized structures but isn't he more part of the problem by feeding that profit-making system and presenting these critical issues to the public as some kind of pop cultural cookie? Kathy Daley. And finally, a few weeks ago the sociologist Sarah Lawrence Lightfoot spoke with me about what she calls the third chapter and the need to change our attitudes toward aging. All of us at this point to some degree I think are on a search for meaningfulness, for purposefulness.

And we want to find what this next 25 years, this in fact penultimate chapter of our life is going to be about. And we are ready for something new, for a new experience, for a new adventure. I turned 15 next month that to Lawrence Lightfoot's interview provided me with a framework for moving forward with zest and vitality, rather than doubt and fear. Thanks a million and one, J.B. Hunt. The interview with Sarah Lawrence Lightfoot was inspiring and captivating. Our observations about the inquiring mind are what true leadership is all about, the willingness to listen to others, to be open to persuasion, to invite others into our conversations, lay the foundations for an ethical and healthy democracy, Charles Field. At 72, I too am searching for a meaningful life, but I plan on many more good years. Why say the third chapter ends at 75?

The desire for a meaningful life through personal challenges or giving of oneself are always with us. Ellen Grabick. Keep telling us what you think of the journal by mail, email or on the blog at pbs.org, and we'll keep reading. We now return to Bill Moyers and Wendell Potter in the studio. Why is public insurance a public option so fiercely opposed by the industry? The industry doesn't want to have any competitor. It in fact, over the course of the last few years, has been shrinking the number of competitors through a lot of acquisitions and mergers. So first of all, they don't want any more competition period. They certainly don't want it from a government plan that might be operated more efficiently than they are, that they operate. The Medicare program that we have here is a government run program that has administrative

expenses that are like 3% or so. Compared to the industries, they spend about 20 cents of every premium dollar on overhead, which is administrative expense or profit. So they don't want to compete against a more efficient competitor. You told Congress that the industry has hijacked our healthcare system and turned it into a giant ATM for Wall Street. You said, I saw how they confuse their customers and dumped the sick. Also they can satisfy their Wall Street investors. How do they satisfy their Wall Street investors? Well, there's a measure of profitability that investors look to. And it's called the medical loss ratio. It's unique to the health insurance industry. And by medical loss ratio, I mean that it's a measure that tells investors or anyone else how much of the premium dollar is used by the insurance company to actually pay medical claims.

And that has been shrinking over the years since the industry has been dominated or become dominated by four private insurance companies. Back in the early 90s or back during the time that the Clinton plan was being debated, 95 cents out of every dollar on average was used by the insurance companies to pay claims. Last year it was down to just slightly above 80%. So investors want that to keep shrinking and if they see that an insurance company has not done what they think meets their expectations with a medical loss ratio, they'll punish them. They'll, investors will start leaving in droves. I've seen a company's stock price fall 20% in a single day when it did not meet Wall Street's expectations with this medical loss ratio. And they do what to make sure that they keep diminishing the medical loss ratio. One is one thing, denying claims as another, being really careful as they review claims particularly for things like liver transplants to make sure from their point of view that it really is medically necessary and not experimental.

That's one thing and that was that issue in the Netherlands are key in case. But another way is to purge employer accounts that if a small business has an employee for example who suddenly has to have a lot of treatment or is in an accident and medical bills are piling up and this employee is filing claims with the insurance company. That'll be noticed by the insurance company and when that business is up for renewal and it typically is up once a year up for renewal, the underwriters will look at that and they'll say we need to jack up the rates here because the experience was, when I say experience, the claim experience, the number of claims filed was more than we anticipated so we need to jack up the price, jack up the premiums, often they'll do this knowing that the employer will have no alternative but to leave and that happens all the time. So the more of my premium that goes to my health claims pays for medical coverage, the less

money the company makes. That's right. Exactly right. To reverse that, they don't want my premium to go for my health care, right? Exactly right. Where does it go? It goes a big chunk of it goes into shareholders' pockets. It's returned to them as part of the investment to them. It goes into the exorbitant salaries that a lot of the executives make. It goes into paying sales, marketing and underwriting expenses so a lot of it goes to pay those kinds of administrative functions overhead. When a member of Congress asked the three executives who appeared before the committee, if they were in the practice of canceling policies for sick and roll-eased, they refused. Why did they refuse? Well, they were talking to Wall Street at that moment. They were saying that because, I guess, they might have to spend some additional dollars to be more vigilant to make sure that they were not rescinding a policy inappropriately. It makes no sense.

The only reason they would ascend that is to discover themselves and to signal to Wall Street that, you know, we're going to continue business as usual here. You know, I've been around a long time and I have to say, I just don't get this. I just don't understand how corporations can oppose a plan that gives the unhealthy people a chance to be covered. And they don't want to do it themselves. Well, keep in mind what they want to do is enhance their profits, enhance shareholder value. That's number one. And the way that the business that they're in is health care, certainly. But their primary motivation is to reward their shareholders. Most of the shareholders are large institutional investors. And hedge funds, hedge fund managers are the ones who look at this stock and investors for large organizations. It's not Mama Pop investor. You wrote a column just the other day with the headline, Obama's False Friends of Health Reform.

You use as a prime example, a man named Ron Williams, who is at the top of the list of insurance executives in terms of their compensation. We actually saw Ron Williams at President Obama's Town Hall meeting. I would commend the president for the commitment he's made to really try to get and keep everyone covered. And I think as a health insurance company, we're committed to that. Who is Ron Williams and why do you use him as the example of what Wall Street expects and wants from the insurance company? He was recruited by Etna from Wellpoint. Etna had gone on a buying bench. There's been an enormous amount of consolidation in the health insurance industry over the last several years. Etna bought a lot of competitors and reached 21 million members. But what it realized and what investors began to see is that a lot of the businesses that it had bought were not all that profitable. So they were in Etna was in a pickle and they saw their stock price starting to plummet. So they brought among the things they did was bring Ron Williams in and Williams among

the first thing he did was order a revamp of the IT system so that the information technology is. Exactly. So that the company could determine more about which accounts were not profitable or margining profitable. So with that new system, he was able and the other executives to identify the accounts that they went to get rid of. And over the course of very few years, they shed 8 million members, 8 million policy holders, 8 million people, men, women, and children. Yes. Now, some of them were shed by intention. Some I'm sure probably walked because they were left for whatever other reason but they intentionally had this program to purge these accounts. 8 million fewer people were enrolled in Etna's plans. Many of them undoubtedly joined the ranks of the uninsured because their employers had been purged. So what happened to Etna's stock? Went up.

And so did Ron's compensation and his stock on Wall Street. And so I think in the context of thinking about a government plan, what we say is let's identify the problem we're trying to solve, let's work collaboratively with physicians, hospitals, and other healthcare professionals, and make certain that we solve the problem as opposed to introduce a new competitor who has the rulemaking ability that government would have. You know, there's an irony because you hear the companies and their trade groups talking about how we don't want a public option that would put a bureaucrat between a patient and his doctor, but you've just described a situation which a CEO is actually between a doctor and the patient. It's true. And that same thing happened and Nettelene's are key in case. You had a corporate bureaucrat making a decision on coverage. So they are trying to make you worry and fear a government bureaucrat being between you and your doctor.

And now is a corporate bureaucrat between you and your doctor who's motive is profit, who's motive is profit. Understandably, naturally is profit, right? Well, companies, any companies in business to make a profit, right? Absolutely. So how can we object when an insurance company wants to increase his profits? As a serious question, I mean, it sounds like a set up, but it's a serious question. It's a very serious question. And I think that's people who are strong advocates of our healthcare system remaining as it is, as very much a free market healthcare system, fail to realize that we're really talking about human beings here, and it doesn't work as well as they would like it to. Yeah, there's nothing wrong, and I'm a capitalist as well. I think it's a wonderful thing that companies can make a profit. But when you do it in such a way that you are creating a situation in which these companies are adding to the number of people who are uninsured and creating a problem, are they underinsured? Then that's when we have a problem with it, at least I do.

This is the key question for me. Can health reform, that includes a public plan, actually rid our system of the financial incentive on the part of the insurance industry to provide less for more? It will help. It would help. Would it rid it? No, I don't think it would because of the for-profit structure that is not dominant in this country. But the public plan would do a lot to keep them honest, because it would have to offer a standard benefit plan. It would have to operate more efficiently as does the Medicare program. It would be structured on a level playing field so that it wouldn't be unfair advantage to the private insurance companies. But because it would be, because it could be administered more efficiently, then the private insurers would, they, they would have to operate more efficiently. And they, those, that 20 cents in that medical loss ratio, we talked about earlier, might get narrower. And they don't want that.

As this debate unfolds in the next month into the fall, what should we be watching for? Peter, tell us as an insider, what to look for that is more than meets the eye. When we see the actual legislation, when there's something before Congress, and it will happen presumably within the next few weeks, you'll start seeing a lot more criticism of it. And the special interest will be attacking this or that. The AMA will be upset about something. The pharmaceutical industry will be upset about something. The insurance industry will not like this or that. It's a lot of money is made in this country off of sick people. And, and, and, and then you will start seeing a lot more of the behind the scenes attacks on, on these, on this legislation in an attempt to kill it. The status quo is what would work best for these, these, these industries. In other words, if the industry is able to kill reform or the Democrats and the Republicans can't agree on a proposal, that's what the industry really wants. Exactly. And it's, it happened in 93 and 94. And, and just about every time there has

been significant legislation before Congress, the industry has been able to kill it. Yeah, the status quo works for them. They, they don't like to have any regulation forced on them or laws forced on them. They don't want to have any competition from the federal government, already in the additional regulation from the federal government. They say they will accept it, but the, the behavior is that they will not, you know, they'll not do anything after say, say this plan fails. Say nothing happens. They're saying now what they did in 93, 94. We think preexisting conditions is, is a bad thing, for example. Let's watch and see if they really take the initiative to do anything constructive. I bet you won't see it. They didn't then. Well, on the basis of the past performance and on the basis of your own experience in the industry, can we believe them when they say they will do these things voluntarily? I don't think you can. I think that they will, they will, they implement things that make them more efficient and that enhance shareholder value. And if what they do contributes to

that, maybe so. But they do say they are in favor of an individual mandate. They want us all to be insured. The government to require every one of us to have some policy. Exactly. And that sounds great. It is, it is an important thing that everyone be enrolled in some kind of the benefit plan. They don't want a public plan. They want all the uninsured to have to be enrolled in a private insurance plan. They want, they see those 50 million people as 50, potentially 50 million new customers. So they're, they're in favor of that. They see this as a way to essentially lock them into the system and ensure their profitability in the future. The strategy is, as it was in 1993 and 1994, to, to conduct this charm offensive on the surface. But behind the scenes to use front groups and third party advocates and, and ideological allies and, and those on Capitol Hill who are aligned with him philosophically to do the dirty work, to demean and scare people about a government run plan. Trying to

make people not even remember that Medicare, their Medicare program is a government run plan that is operated a lot more efficiently. And also the people who are enrolled in their Medicare plan, like it better, the satisfaction ratings are higher in our Medicare program, a government run program than in private insurance. But they don't want you to remember that or to know that. And they want to scare you into thinking that through the anecdotes they tell you, that any government run system, particularly those in Canada and UK and France, that the people are, are very unhappy and that these people will have to wait in long lines to get care, or wait a long time, to get care. I'd like to take them down to Wise County. I'd like the president to come down to Wise County and see some real lines of Americans standing in line to get their care. Wendell Potter, thank you very much for being with me on the journal. Thank you for inviting me. And in just a few minutes, you'll start calling numbers above 900. Watching the people in those lines waiting patiently and hopefully for free medical treatment,

I couldn't help but think about how little chance they have against the powerful interest that are deciding the health care debate underway in Washington right now. In the week since my interview with Wendell Potter was first broadcast, the reports have kept piling up and the message is the same. Money, Trump's need. Look at this recent story by Alicia Mundy and Laura Meckler in the Wall Street Journal. Quote, the pharmaceuticals industry, which President Barack Obama promised to take on during his campaign is winning most of what it wants in the health care overhaul. The story describes a string of victories plucked from the Senate Finance Committee by lobbyists for the pharmaceutical industry known around town as Big Farmer. Here's what Big Farmer got. No cost-cutting steps. No cheaper drugs to be imported from Canada. No direct federal government negotiations with the pharmaceutical companies to lower Medicare drug prices. And that's not all. The Senate Health Committee is giving the biotech industry monopoly protection against competition from generic drugs for 12 years after those drugs

go in the market, 12 years. That prompted the economist Robert Reich to throw up his hands and discuss and say that is guaranteed to keep prices sky high. Obviously to the pharmaceutical industry, free market means a cartel protected against competition. Now in Washington, you don't get something for nothing. It costs the drug industry plenty to buy that protection. So take a look at Alan Fram's story for the Associated Press. He reports that the industry spent more money on lobbying in the second quarter of this year than any other health care organization. So far this year, Farmer has spent $13.1 million lobbying. One drug company alone, Pfizer Incorporated, would almost that high, $11.7 million. Here's what some other health-related organizations put out for lobbying during the second quarter of the year. American Medical Association, $4 million. Eli Lillian Company, $3.6 million. The American Hospital Association, $3.5 million. Blue Cross and Blue Shield, $2.8 million. I'd call this a health care

bananzer for lobbyists. Lobbists, we can be sure, who aren't working for those thousands of people who showed up at the Wise County Fairgrounds in Virginia just last weekend for another free clinic run by the organization Remote Area Medical. They came for eye exams and glasses, dental care, hearing tests, chest x-rays, and dermatology treatments, among other needs. This is the clinic's 10th year, and all the care is still provided by volunteers. In three days last year, they pulled 3,896 bad teeth and saved another 1,888 by filling them. Windle Potter went back to Wise County last weekend. Back to the place where, after spending almost 20 years in corporate suites, he discovered for himself that the people most in need of care are precisely those least able to pay. With nothing to give Washington, these people get nothing from Washington in return. Log on to pbs.org, click on Bill Mortier's Journal, and we'll link you to more information about Remote Area Medical,

that amazing organization behind the clinics. And hear more from Windle Potter. That's it for the Journal. I'm Bill Mortier's thanks for tuning in. For more information, visit www.wendlepotters.com and explore the journal's full coverage of the healthcare debate. Log on at pbs.org. Page your funding is provided by the Partridge Foundation, a John and Polly Gough Charitable

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