The NHS is being hijacked – ‘Deadly Spin’

Wendell Potter offers an essential insight into how the US insurance industry operates to maintain their dominance of the American health care system. As the NHS is being hijacked by these same corporations, UK health campaigners need to have a greater understanding of the modus operandi these predatory corporations.

Introduction

 Wendell Potter is a former American Health insurance insider, serving 20 years in total with Humana and CIGNA in Public Relations as chief “spinmeister”.

Following a series of events in 2007 he decided he could no longer continue to protect the image of an industry which was responsible for the premature deaths of 45,000 people a year died because of lack of insurance or refusal of pay-outs to insured people. He and his colleagues helped create the now widespread myth of USA having the best health system in the world: in truth it is actually ranked 47th in life expectancy at birth, behind Bosnia, and 54th, behind Bangladesh in ‘fairness’!

Attempts by reformers and others to reform the system have effectively been derailed or moulded to suit the corporations and preserve profits. Revelations of standard insurance industry practice in 2007 showed US health insurers to be corrupt and deadly, an evil system built and sustained on greed.

Dominated by a cartel of large for-profit corporations focussed on ‘enhancing shareholder value’ to please Wall Street’s expectations for relentless profit, without any reference to patients’ or the populations needs. To achieve their goals, the services of ‘invisible persuaders’ need to plant myths beneath the level of consciousness without the public noticing that they are being influenced and manipulated. The dark arts of PR include the use of “third-party advocates”, front groups, “charm offensives”, selective disclosure of information and disinformation.

Gurus of PR include Ivy Lee, who changed the public perception of J.D. Rockefeller Jr from “biggest criminal of all time” to “the great benefactor of society”. Sigmund Freud’s propagandist nephew Edward Bernays persuaded young women to take up smoking “as an expression of their independence”, for American Tobacco Company. PR is big business supporting all major corporate interests including Big Oil, Big Soda and Big Banks.

PR is short on ethics; they are especially ignored by those who work in publicly traded companies. Decent people can be tasked to plan and implement fearmongering deception-based PR campaigns to erode public support for healthcare reform. Thanks to their efforts, Obama’s Affordable Care Act (ACA) could now be renamed “Health Insurance Industry Profit Protection and Enhancement Act”!

ACA expands the Medicare Program to low-income families and makes it illegal for insurance companies to deny cover because of pre-existing conditions. It does not include the public provider option as intended; mandates those without public program cover to buy coverage from private insurer hence creating new revenues for insurers and billions more in government subsidy.

The Beginning

 America’s Health Insurance Plans (AHIP), the industry trade lobby, set about discrediting Obama’s reforms calling them a socialist plot. Describing the uninsured and choosing to ‘go naked’ without cover they planted key misinformation in the public discourse to be echoed remorselessly by friendly politicians. Simultaneously other AHIP operatives claimed the desire to work with congress and commitment to find solutions.

Potter’s route into this murky world came from very well intentioned aims. He came from working class family, the first to go to university where he studies communications and journalism. After graduation he started work for a small newspaper following which he ended up in PR for a banker with political ambition. He gained experience as a Washington lobbyist. He later ended up as PR man for a non-profit Baptist Health System before being recruited by Humana, a great career opportunity with a Fortune 500 company then finally working for the bigger CIGNA insurance company.

Here he developed skills in PR rapid response to ‘horror stories’ and played a greater role at industry level in Washington with other senior executives for Health Insurance developing strategies to combat ‘anti-managed-care legislation’. Managed care was a system of cost control for insurers trying to restrict choice of doctor and hospital patients were seen at, limiting them to ‘in network’ care. Congress attempts to pass a Patients Bill of Rights which would enable external review of disputed payment denials and give patients the right to sue for wrongful denial, was successfully thwarted by a scaremongering campaign based on the potential for and explosion of frivolous lawsuits. Mixing in elite and well-heeled circles he never had to face any of the patients affected by the results of his work.

The Campaign against ‘Sicko’

 ‘Sicko’ was a documentary by Michael Moore released in May 2007 which exposed the problems of the American healthcare system. So worried were the industry that they set to work in 2004 following Moore’s public announcement about plans for ‘Sicko’. The film content was kept under wraps until the premiere in Cannes when thanks to an AHIP employees at the premiere, the details were relayed to the US and via conference call to a group of nervous insurance executives.

The documentary compared the US system with other systems including the NHS which delivered universal coverage, better outcomes and for much less cost. Secret meetings were convened by insurance executives to plan strategy to enact on release of the film in the US. Senior insurance executives, PR men, lawyers made up this elite group. No written notes were allowed to avoid leaking to Moore who would readily expose them in the media. AHIP’s multipronged strategy to discredit both Moore and his film would use “combat message development” to defend and promote insurance industry interests. This comprised of

  • shifting media focus away from Moore’s agenda
  • present health insurers as part of the solution
  • educate the public on the positive things the industry does by collecting positive stories to combat the film’s negative ones
  • campaign against government-run health care systems and stoke up fear of a ‘government takeover’
  • recruit allies that could say what industry people could not i.e Moore is a nut who threatens the American way of life
  • recruit free-market think tanks e.g. the American Enterprise Institute and the Galen Institute as third party allies to work aggressively to discredit Moore
  • create a front group the Health Care America presented as a ‘non-partisan, non-profit health care advocacy organization’ to attack Moore on the film’s release.

Watching the film, Potter was deeply affected and struggled to hold back the tears. AHIP’s campaign, however, they deemed a success as the film grossed $25 million compared to Moore’s Fahrenheit 9/11 at $120 million. It was a warm up for the next battle which AHIP anticipated following the 2008 presidential elections.

Perception is reality

 Public relations have evolved into a powerful yet largely invisible force in society. A multi-billion dollar industry with tentacles reaching into powerful spheres on influence to present strong, positive images for their clients. Through cultivation of contacts and relationships with journalists and other media gatekeepers walk a fine line between contributing the marketplace of ideas and warping public understanding. The boundaries for PR practice should be to maintain mutually beneficial relationships between an organisation and the public. In reality loyalty to the client often supersedes everything else so ethics slip and PR crosses into misleading, withholding, or simply lying with potentially society suffering as a result.

Aristotle spoke of ‘rhetoric’ in ancient Athens and informed people in order for them to be able to tell truth from lies. In 18th century Russia, Grigory Potempkin created artificial ‘Potemkin villages’ to impress foreign visitors creating a false perception of prosperity. In 1836 American showman and exceptional self-promotor, P. T. Barnum ‘bought’ an elderly woman and claimed she was 161 years old and former nursemaid to Pres George Washington. After death doctors estimated her age at 80 years to which Barnum claimed to be shocked and the victim of a deception.

Ivy Lee, co-founder of PR agency Parker and Lee, developed the concept of ‘crisis management’, the organised and orchestrated response to a negative event. Working for Coal mine owner Rockefeller during notorious strike-breaking which led to dozens of miners, women and children were killed, he made it easy for reporters during strikes, producing handouts which became known as press releases. He attempted to diffuse public outrage by producing pro-company bulletins and advising Rockefeller to improve his image by keeping dimes to give away to children. Years later Lee worked for Rockefeller again following the killing of 70 miners in Virginia. This time he emphasised his employer charitable deeds and how miners had to spend their wage tokens in company stores to protect hapless miners. Public were won over and Rockefeller died being regarded as a generous philanthropist.

The flamboyant and tireless self-promoter Edward Bernays wrote in his 1923 book Crystallizing Public Opinion about using the science of psychology in PR. His close uncle was Sigmund Freud. Working for American Tobacco (makers of Lucky Strike) he promoted cigarettes as low-calorie alternatives to sweets for women, equating cigarettes with slenderness, grace, and beauty. ‘Third party’ advocates would warn against eating desserts instead smoking would give you clean teeth and make you a better dancer. Sales of Luck Strike cigarettes increased more than all other brands combined. Next he devised a scheme to associate smoking with women’s rights. In 1929 he invited debutantes to join women demonstrating for equality. Whilst doing so his girls would smoke their ’torches of freedom’. The ‘spontaneous’ act of defiance was reported widely and replicated in many other cities. It was not disclosed that funding came from American Tobacco.

The Institute of Propaganda Analysis (IPA 1937-42) worked to expose domestic propaganda considered a threat to democracy. Its mission was to teach people how to think not what to think. Usefully 8 ‘Rhetorical Tricks’ were identified

  • Fear – When the stakes are high fearmongering is employed.
  • Glittering generalities – Arouse strong positive emotion using phrases like ‘democracy’ ‘American way of life’ to create support. Can be effectively combined with negative messaging.
  • Testimonials – Celebrities/experts to endorsement
  • Name-calling – Associate target with a negative message. Difficult to defend and mud sticks.
  • Plain folks – Present as ‘one of the people’
  • Euphemisms – obscure real meaning, ‘doublespeak’ e.g. ‘transitioned’ rather than ‘fired’
  • Bandwagon – everyone else is doing or supporting this. Use of crafted Opinion polls
  • Transfer – approval of a respected individual or organisation thereby transferring some of their respect.

2006 Wal-Mart were being widely criticised for paying low wages and denying health benefits to workers. They hired PR agency Edelman who set up a false grassroots movement ‘astrotufing’. An ‘independent’ blog ‘Wal-Marting Across America’ was a fake blog or ‘flog’ presented as a middle-class adventure with a couple Jim and Laura driving across America stopping at Wal-Mart stores and interviewing happy employees. BusinessWeek.com exposed the scheme. The bad publicity did not affect Edelman named the 2009 PR Agency of the Year.

Bernays in 1929 argued that his PR tactics were necessary for a smoothly functioning society. He was forced to face the potential horrific consequences when in 1933 he visited Nazi minister of propaganda Joseph Goebbels who had used Bernays book Propaganda as the basis of his campaign against the Jews.

Hitler’s Mein Kampf could be used by todays PR counsellors. He wrote

“The receptivity of the great masses is very limited, their intelligence is small, but their power of forgetting is enormous. In consequence of these facts, all effective propaganda must be limited to a very few points and must harp on these in slogans until the last member of the public understands what you want him to understand by your slogan. As soon as you sacrifice this slogan and try to be many-sided, the effect will piddle away, for the crowd can neither digest nor retain the material offered”

 PR is subtle, patient, freely broadcast if presented as unbiased information and is about control leaving little to chance. Media training for corporate executives is standard practice with mock press conferences, preparation with expected questions and appropriate answers. Speeches are written by PR teams. The cardinal rule: Stay on message. Most PR practitioners are former journalists on whom news outlets are increasingly dependent as budgets for investigative journalism are dwindling. Outlets rely more on PR feed ‘as is’ without fact checking.

1982 Tylenol tragedy of 7 people in Chicago died after consuming cyanide-laced Tylenol. Johnson and Johnson immediately worked with news media, recalled Tylenol from stores, the reintroduced tamper-resistant packs. They were praised for their handling of the problem. The cause of the poisoning never solved.

2010 Toyota recalled 8 million cars resulting in 20% drop in share price. Their response was slow, passive, ignored customers, denied safety problems. Handled better the damage could have been reduced.

PR chiefs control access to senior executives and use this power to ensure corporate interests are served. Potter produced daily news roundups for his CEO to prevent being caught off guard. Wrote speeches and was gatekeeper providing background on reporters and briefing executives.

Remote Area Medical in Wise County, Virginia

Part of WP’s role was to brief his CEO on leading political candidates promoting health reform and to produce a position paper for CIGNA as 15th member of the industry Public Policy Council. It was anticipated the 2008 presidential election would have health reform high on the agenda. Insurance industry tactic was initially shift focus away from the uninsured to the ‘real cost drivers of health care’ diverting away to problems that were beyond their control and responsibility. The main threads of the spin:

  • Costs out of control because of new treatments and technologies are more expensive
  • Population older and sicker
  • People seeking unnecessary care
  • Providers too willing to treat without real need

AHIP prepared a multi-million dollar PR and advertising campaign to achieve the desired misdirection and keep them blameless. The ‘Campaign for an American Solution’ was launched. Democratic candidate John Edwards made public his concern about lack of affordable health care.

The charity Remote Area Medical (RAM) was founded by Stan Brock, a wildlife adventurer and TV show host to provide medical services to remote villages in South America that he had witnessed suffering catastrophic loss of life from preventable disease. Soon his services became equally vital in his own country.

RAM organised volunteer doctors, nurses, dentists and other medical professionals to provide care in large temporary facilities. In 2007 a RAM mission was arranged for Wise County where Edwards would visit. WP went to see for himself what RAM were doing and report back on Edwards. This was to be life changing for WP. He saw a packed car park of the fairground site where RAM had set up. Inside the facility hundreds of patients were receiving treatment. Teeth were pulled, eyes tested, glasses provided, mammograms, cervical smear, endoscopies and many other tests and procedures and medication given. Hundreds of other people were unable to be treated in the 3 days RAM was there.

WP was struck by the great unmet need by people that could easily have been his parents or neighbours before leaving for university. This was his epiphany. His time at CIGNA would not last.

He still had to produce the policy document. In college reading How to Lie with Statistics WP learnt to recognise how people could be misled by slicing and dicing numbers in certain ways. Now these same slights of hand he deployed by selectively using official statistics and application of spin.

  • 40% of uninsured were young adults who believe they were at low risk of illness so went without cover
  • 35% uninsured earned more than $50,000 so should be able to afford insurance and chose to go without
  • 20% uninsured weren’t even US citizens

The interpretation put on these figures was that most of the uninsured were shirking their responsibility. Not the insurance industry’s fault and government should compel them to buy cover or enrol in a public program, or deport them. This was ideal fodder for conservative commentators and politicians. People would interpret non-citizens as illegal but many were legally in the US on study or work permits who could not get or afford coverage.

In Wise County the average household income was only $26,000 most people working for small businesses which were unable to offer health care benefits. Average family health insurance cover was $12,106. Clearly affordability was the main factor for not having insurance.

With each promotion, WP developed greater insights on the insurance industry and how they got rid of enrolees they didn’t want, the people who need insurance most when they became sick and expensive. Insurers were a major cause of swelling the ranks of the uninsured by

  • Rescission – Dumping policy holders who are less profitable or sick by retroactively cancelling policyholders with large medical bills
  • Purging – hiking up business premiums for covering employees when costs exceeded premiums. The rates of small business offering employee coverage dropped from 61% in 1993 to 38% in 2009

Aetna was so aggressive at getting rid of less profitable policyholders after a string of company acquisitions in 1990s shed 8 million enrolees in a few years. Aetna also spent $20 million installing new technology able to identify and dump unprofitable corporate accounts. Aetna’s share price rose as did employee bonuses for rescinding policies. Insurers want to get rid of risk and ‘not sacrifice profitability for membership’.

Travelling in CIGNA private jets and hearing about executives living lavishly in multi-million dollar houses became intolerable in the light of the new insights gained from the RAM experience, connecting insurance industry actions with the suffering of the uninsured.

Health Care History, Reform and Failure

Universal healthcare is available in all industrialised countries except America. Powerful special interest groups e.g. American Medical Association (AMA) and Health insurers have effectively and repeatedly thwarted attempt to introduce universal government cover. Only Lyndon Johnson in 1965 made significant reform creating government run Medicare and Medicaid. In 2010 the intended public option for health cover was also eliminated by industry efforts.

Deceptive PR funded by AMA through fake ‘grassroots’ up risings thwarted early Medicare legislation. B-list actor Ronald Reagan recorded a vinyl record titled “Ronald Reagan Speaks Out Against SOCIALIZED MEDICINE”. Through networks of doctors wives’ coffee mornings were arranged to hear the record and launch a mass letter writing campaign to Washington politicians. It worked though the AMA sponsorship was kept hidden until Reagan was outed. The campaign boosted his profile eventually leading to the Whitehouse.

In Otto von Bismarck’s Germany the world’s first compulsory sickness insurance was introduced in 1883. Far from a Socialist enterprise, he believed a strong working class would lead to a strong nation and prevent the drift to communism, ‘turning benevolence into power’.

Other European countries followed suit, England’s turn in 1911. In the decentralised America, for-profit life insurance gained ground expanding cover to health costs, remaining extremely profitable with administration costs of 60%!

Several US governments attempted health reform which despite the AMA objections, universal insurance was gaining public acceptance. Progressive forces continued to call for change but events took over such as World War I.

The void was filled by free-market prepaid health insurance creeping into existence with the introduction of company group plans. Subscribers could choose which ‘participating’ non-profit hospital to use.

In 1934 non-profit corporations like hospitals were permitted to sell insurance. Tax-exempt, these policies united under the name ’Blue Cross’ which by 1945 had 2/3 of US health insurance market. Government non-profit status shielded this growth.

The great depression required Roosevelt to centralise more executive power which he used to set up social security made law in 1935. The AMA mobilised again to prevent ‘socialised’ medicine then the outbreak of war in Europe pushed health reform off the agenda.

The 40s and 50s saw the AMA and allies in business strengthen insurance company domination and takeover of health care by for-profit providers.

Predictably, once dominant commercial insurers started cherry-picking young and healthy clients. By 1963, nearly 80% of Americans were covered by employer schemes but costs had been contained by market conditions.

The 60s saw costs spiralling due to burden of disease in elderly. Company health plans were requiring greater premiums from current workers to support retiree benefits. The rest of the elderly, mostly poor and uninsured demonstrated the Achilles heel of the system.

Public opinion strongly supported a call for government assistance for the uninsured elderly. President Kennedy backed it and with support of the American Hospital Association, the Medicare Bill was passed. Part A covered hospitals; Part B covered doctors and was optional; and Medicaid, a separate program for the states. Drugs, glasses, dentist and long-term care were not covered but the bill was the largest expansion of health care in American history.

Medicare did not solve the problem and costs and the uninsured continued to rise with louder calls for greater reform. 1973 saw Nixon’s Health Maintenance Organisation (HMO) Act. This required companies with more than 25 employees to provide HMO option. Enrolment in HMO plans grew fourfold as managed care flourished. Still millions were without insurance. Now for-profit insurance providers had control over the health care system even more successfully than the AMA. Power had decisively shifted away from the medical profession.

Consumer-Driven Care

American financing of health insurance has strayed from the original concept of insurance which was to spread risk through large pools of policy holders. A typical plan may cost $1,000 per month but required $10,000 ‘deductible’ which means that the insurance would only pay out if health costs exceed that amount. Costs of health care must first be paid by policy holders then claimed back from insurers requiring proof that it was not for a pre-existing condition. If the threshold for pay-out is not met the patients foot the bill. The number of such underinsured Americans reached 25 million in 2007, up 60% on 2003. Estimates put this number at 40 million despite Obama’s reforms though cost of deductibles has been capped, many will still be unable to afford them.

1 in 5 Americans delay or avoid seeking medical help, put off by out-of-pocket costs. More middle class families are getting caught in this trap and health insurers shift risk and cost to policy holders. Yet the spin and perception actively created by WP and colleagues behind deductibles was ‘consumer-friendly’ ‘consumer-driven’ and a weapon for ‘keeping costs down’. The fiction was that patients wanted to spend more of their own money on their own medical care.

Managed care began with low cost prepaid contribution and cheap out-of–pocket charges ($10 co-pay). Nixon reforms boosted the HMO model which promoted more preventative care via primary care physicians who also coordinated care with specialists if required and kept costs down by negotiating favourable rate with ‘in network’ providers. Enrolees remained on the hook for costs incurred if they used non-network providers.

Indemnity insurance paid fee-for-service to providers leading to cost escalation by encouraging unnecessary procedures and tests. They were losing market share to HMO’s so they bought up their competitors. Insurers were very effective at getting big–employer costumers to switch from insurance to HMO cover. This was swift and successful.

Attitudes towards HMOs started to change with insurers growing their policyholder base, exerting pressure on hospitals for big discounts and through guidelines and incentives, control how doctors practiced medicine.

In 2000, doctors joined a class action lawsuit claiming insurers has cheated them huge sums through various methods including refusing to pay if they did not adhere to strict guidelines, software programs to calculate fees due. An out of court settlement was made without admitting wrongdoing. CIGNA alone paid out $400 million.

Patients’ backlash against HMOs which were perceived as offering poorer care, restricting choice of doctor or hospital, less time spend by doctor with patient, ‘cookie-cutter’ guidelines restricting clinical freedom, drive-by surgery with patient being forced out same day despite doctor objection.

HMO horror stories became a daily occurrence. In response big insurers set up a front group Coalition for Affordable Quality Healthcare (CAQH) which used doctors in commercials to testify their faith in HMOs. Key messages were to focus on benefits of prevention, remind people why they liked managed care. The campaign failed to move public opinion.

WP started to think he was on the wrong side having repeatedly to defend CIGNA and managed care in social settings, turning more to alcohol and positive self-talk as did many of his work colleagues.

The marketplace had failed, costs going up, satisfaction going down. Insurance executives did not admit their responsibility but instead set about blaming the ‘consumer’ who were seeking care they didn’t need and the ‘providers’ who were all too happy to supply it. The one mistake they did admit was that £10 co-pay was too small.

CIGNA CEO Hanway claimed that separating cost from care didn’t work and clients did care ‘what things cost’. Age 57 he retired from CIGNA with £111 million package leaving to follow a crusade on ‘personal responsibility’ i.e. pushing costs from institutions to individuals.

1996 saw the launch of medical savings accounts. Initial poor uptake was given a boost when in 2002 they were made tax-exempt. But these ‘consumer-driven’ schemes with high deductibles only suited the young and healthy and were not the golden bullet advocates claimed. Despite independent research proving how high co-pays damaged health care, big insurers turned to producing their own evidence to show consumer driven plans saved money. These did not stand up to close scrutiny as groups compared were not similar and details often buried within reports. PR teams just put out positive spin. Influence on journalists was clear; few challenged the evidence or questioned the authors but remained compliant conduits for corporate propaganda.

Big insurers’ domination and transformation of managed care had not lived up to the business plan. In order to keep Wall Street happy insurers focussed on finding new ways of avoiding paying for health care.

Financial analyst Roberta Goodman produced a damning report stating ‘Consumer-driven health care cannot resolve the problem of the uninsured’. 65% of uninsured had incomes below 200% the federal poverty line. Many could not afford the plans or would not be covered because of pre-existing conditions which would drive up premiums and increase deductibles. The sickest 10% generate 60% of health expenditure. The critically ill are not in any mood to be shopping around for cheap cover so least able to exercise ‘consumer power’.

Despite this, many employers had shifted over to consumer driven plans from managed care against the interest of many enrolees. Ignoring further warnings about consumer-driven care, big insurers began forcing their own employees into high-deductible plans. UnitedHealth and CIGNA were the first to eliminate all other options going ‘full replacement’. New policy holders would be cynically attracted by low monthly premiums and deductibles then once enough were on board moving aggressively to increase deductibles, many higher than annual incomes of workers. The illusion of affordable insurance maintained.

The result:

  • Maine Bureau of Insurance report – the average family would have to spend 65% of the household income on health costs before insurers would have to contribute.
  • Another study showed that average employee contributions to company-provided health insurance increased by 143% between 2000 and 2005.
  • Average out-of-pocket expenses increased by 115%

Starbridge Select Plan – Another cost transfer wheeze was a ‘limited-benefit plan’ which offered skimpy coverage. CIGNA targeted medium-sized employers with high staff turnover e.g. restaurant chains.

  • Workers could not be over 40 years old
  • Females could not make up more than 65% of the workforce
  • Annual staff turnover of greater than 70%. Most never in their job long enough to make a claim
  • Pre-existing conditions not covered
  • Employees to pay entire cost with no employer subsidy

Though few companies could match the criteria, enough did and proved highly profitable. So many restrictions reduced risk to insurers so policies were no more than fake insurance. These were so lucrative they proved to be the fastest growing insurance product. Though Obama’s reforms cap deductibles, it will not prevent many becoming bankrupt by inadequate insurance.

Medical Loss Ratio – proportion insurers pay out in claims. This statistic was of ultimate importance to Wall Street and would determine how stocks would perform. Financial incentives were to keep the MLR down by denying care. Since 1993 the MLR has dropped from 95% to 80%. Minor increases in MLR could cause stock prices to plummet in some cases by 20%.

Senior executives and had bonuses in stock options so share price changes could mean potential losses of millions for senior managers. Medical directors also had similar incentive schemes and the power to decide whether expensive treatments were authorised. Such lucrative financial incentives for insurance industry seniors are the drivers for rescinding individual policies, purging small-business customers, denying claims, cheating doctors, pushing new mothers and breast cancer patients out of hospital prematurely, and shifting costs to customers.

It’s All About the Money

Clinton’s failed attempt at health care reform emboldened the insurance industry. Non-profit practices with public service ethos were abandoned in favour of conversion to profit driven entities. Annual health costs increased by 8.5%, leaving millions of people uninsured, doctors and hospitals holding the burden of uncompensated care.

In 1990 a coalition of vested interests including insurers, drug producers and hospitals formed the Healthcare Leadership Council (HLC). Their common interest was to prevent government regulation which would affect their profits. Clinton adopted a managed competition solution which HLC advocated. The marketplace and ‘the power of informed consumer choice’ would deliver cost control and quality improvement. The news that Clinton was considering federally imposed spending caps and more regulation signalled the end of co-operation.

Negative memes pushed by insurance lobby included ‘top-down’ approach and ‘rationing by chaos’ HCL, an ideal front group, charged itself with message-creation and distribution factory to conduct a fearmongering campaign against the Clinton plan. Key proposals were:

  • Mandatory purchasing cooperatives in each state to sit between insurers and employers and patients
  • Global budget limits on total health spend
  • Caps on insurance premiums
  • Federal review of new drug pricing
  • Drug company rebates to Medicare

The plan was to be presented as non-governmental and voluntary.

HCL launched a multipronged attack to include grassroots organising, lobbying, PR, TV and radio ads. The ‘Harry and Louise’ TV ads portrayed a middle-class couple troubled by the threat to their benefits and government interference between them and their doctor. A stealth campaign of radio ads urged listeners to call a toll-free number which via a lobbying firm passed them through to members of Congress. Varied group were courted including war veterans to conservatives. It worked.

Later Clinton wrote that the $300 million spent by the insurance industry was well invested.

Washington became dominated by the Republican Party. Mutual non-profit insurers amended bylaws to allow conversion to public-stock companies enriching their executives and allowing for mergers and consolidation.

  • By 2004 all 14 Blue Cross plans were acquired by WellPoint
  • From 1996 Health insurers have undertaken 400 mergers
  • Federal Trade Commission and Department of Justice took no consumer-protection anticompetitive-practices actions against big insurers but targeted providers like small groups of doctors
  • AMA report 2010 found 24 of 43 states, 2 largest insurers had combined market share of 70%
  • 54% of metropolitan markets one insurer had 50% or more market share

A cartel of huge for-profit insurers emerged causing a collapse in a competitive market to the detriment of patients. Using dominance to impose premium hikes, deliver massive profit growth whilst enrolees paid more while getting less and less. The uninsured and not covered by government programs could choose to by insurance with onerous deductibles or go ‘naked’.

Laissez-faire regulation allowed for costs to be passed on to policy holders. Insurers were able to rig the system agreeing deals with providers not to undercut.

  • 2007 the CEOs for the top 10 insurers pockets an average of $11.9 million
  • Some CEOs were caught backdating share options to maximise pay-outs. One had to pay back $620 million in stock options but still got $530 million in non-stock payments
  • 2003 to 2008 the 7 largest insurers spent $52.4 billion in buying back their own shares thereby artificially elevating the share price and their bonuses.
  • UnitedHealth Group was ranked 23rd in top re-purchasers and spent $23.7 billion in buybacks between 2000-8 representing 104% net income for the same period.
  • Manipulation of stock prices to enrich a small group at the top of these companies.

Private insurers avoided being transparent and accountable choosing not to provide data on claim denials, payments to doctors and hospitals, death rates, health outcomes as this could be classed as ‘trade secrets’. MLRs were particularly guarded. The trend was downward and reached 81% by 2007 compared to Medicare which consistently above 97% since 1993. Obama’s reform sets a threshold for MLR above 80% but indications are insurers will game to figures by reclassifying costs from administrative to medical.

Despite holding nearly all the cards, insurers continue to play victim to rising health costs. Premium hikes have outstripped inflation rising 2.5 times above medical inflation, 3.3 times above wage growth, 4.6 times general inflation.

  • 2007 Medical debt caused 62% of household bankruptcy
  • The largest 5 insurers reported record profits through the 2008 banking crisis and beyond
  • 2009 the big 5 covered 2.7 million fewer Americans
  • Despite purchasing clout equal to Medicare insurers claim to be powerless to control costs
  • Propaganda claimed that private insurers were cross subsidising Medicare which did not pay hospitals adequately, which was false.

An End Too Soon

December 2007 WP prepared himself for the PR battle of his career. A 17 year old girl Nataline Sarkisyan, from a religious Armenian immigrant family in Los Angeles, needed a liver transplant as a result of complications following treatment for leukaemia. Her doctors were confident that the transplant offer good prospect of success estimating a 65% 5 year survival. They needed prior approval from the family insurer. Nataline’s father worked for Mercedes Benz who insured workers with CIGNA. The approval was turned down.

Doctors submitted more evidence to CIGNA that transplant was necessary and had a good prognosis but this made no difference. Nataline’s mother was determined to fight. She reached out for support and the Armenian community obliged, as did the California Nurses Association, a formidable activist group calling for a single payer system. They recognised Nataline’s predicament as a product of the for-profit insurance system. They contacted the media and spelt out the issue and called a demonstration outside CIGNA headquarters in California.

This was turning into a big story by the time WP became aware and he recognised it as such. At stake was the reputation of CIGNA and the industry. On a personal level, WP had a daughter around the same age as Nataline and experienced an emotional connection with the family’s plight. He also knew that most denials go unchallenged as when the patient dies no one can prove that had they received treatment it would have altered the outcome.

His duty was to protect, defend and enhance CIGNA’s reputation. The story was discussed with the CEOs of CIGNA and other insurers. It was agreed this should be dealt with an industry wide damage limitation campaign. A sweet-looking 17 year old would be irresistible to the media who could portray insurers as heartless corporations. A review of the decision was called and CIGNA decided it would pay for the transplant. WP was relived for the family and with minutes to spare before the demonstration was to start, word was passed to Nataline’s mother who by now was already live on TV. Her reaction and that of the crowd was televised. Tears of joy flowed as she told the gathered crowd and media.

CIGNA’s press release stated that the decision was a one off due to the unique circumstances despite the lack of medical evidence and authorisation being outside the scope of the plan’s coverage, they were prepared to make an exception. The decision came too late, Nataline had deteriorated and died.

The profile of the case was increased with the family appointing Mark Geragos as lawyer. He was a lawyer for Michael Jackson and an Armenian. He declared that CIGNA had ‘consciously disregarded her life’.

CIGNA realised that the PR campaign was now about to be cranked up. Tactics were

  • Executive lead would be a doctor to carry more clout
  • Industry wide response via AHIP
  • Aggressive outreach to reporters and pundits
  • Approved talking points and comprehensive set of Q&As
  • Letters to editors and opinion pieces defending Insurers position
  • Third party advocates – insurance industry advocates; list of pundits to argue that America was plagued with ‘frivolous lawsuits’; list of doctors ‘experts’ on transplantation;
  • Messaging – touch decision have to be made about allocation of scare organs; the decision would have been the same in other developed countries and not related to the UA system; the government should focus on a national policy for ‘experimental’ treatments
  • Defend against litigation – monitor actions of lawyer appointed by Sarkisyan family

Stories in national publications were favourable to CIGNA with headlines suggesting that they were not solely to blame tough decisions have to be made. Their tactics were paying off.

The effect on WP was more profound. He started to question his role in an industry prepared to do whatever it takes to protect it huge profits. He felt he had sold his soul. By chance he discovered a former high paid colleague had left her job and gone to work for a clinic providing free health care for the poor. She explained she had never been happier and advised him to listen to his conscience. Having given up alcohol for a year had helped WP to connect with reality and his reaction to ‘Sicko’ and Nataline’s plight lead him to resign in May 2008.

ERISA Stymies the Sarkisyans, and Us

The legal case undertaken by the Sarkisyan family was doomed from the start. A little known Federal law in effect protects insurers. The Employee Retirement Income Security Act of 1974 (ERISA) was necessary to protect pension pot being raided by executives. An unintended consequence was that Federal judges have interpreted the law to apply to all employee benefits including health cover.

Employer-sponsored plans are largely exempt from State benefit mandates and consumer protection as Federal law takes precedence. The 130 million Americans enrolled in ERISA-protected plans cannot sue employer or insurer in State court if they are denied cover for treatment.

 Hilda Sarkisyan’s mission in life now is to change ERISA. In defence of ERISA, insurers have formed another front group the National Coalition on Benefits. Big Employers also like ERISA as it allows them to offer uniform benefit packages across states ignoring state regulations and consumer protections.

The Sarkisyan’s could not bring a State case because of ERISA, or a Federal case because Nataline had died and there were no costs of treatment to compensate for. Federal judges do not have the power to award punitive damages or anything to patients’ survivors.

The mass switch from indemnity plans to managed care was another insult to consumer rights. Indemnity plan denials occurred after treatment so costs had been incurred. In managed care, treatments required prior approval so denials occurred before treatment and no cost incurred.

There is growing judicial and consumer pressure to change ERISA, however, Big Insurers and employers will not allow this to happen without a fight. Their PR, Washington lobbying, media domination, third party advocates and front groups will do what it takes to defend the status quo.

A Victory, of Sorts

Obama had in mind an ambitious set of health reforms which would provide for a public option for health cover and increase regulations on private insurers to control cost growth and some of their notorious practices. Election in 2008 was soon followed by his ambition for health reform which engaged the country in debate.

On one side progressive forces in politics, the unions and activist groups. On the other a well-funded insurance industry and its allies including the Republican Party which saw an opportunity to damage their opponents by casting ‘socialist’ aspersions.

Front groups flourished, powerful images and words constructed, myths created, and racist slogans directed at Obama. Fox News obliged with abundant coverage of the anti-reform messages and carried a plethora of anti-reform ads. Congressman showered with political contributions and visits by an army of lobbyists. From 2007 to 2009 this activity totalled $586 million.

Insurers feared losing policy holders to a public alternative with lower overheads and executive compensation packages.

UnitedHealth bought it’s own think tank, the Lewin Group, a respected health-policy consulting firm, which in April 2009 released a report claiming the public option would force 119 million Americans out of their employer health plans. These projections were gross exaggerations compared to the nonpartisan report which put the figure around 11 million. Lewin’s figures were still regularly quoted by the fearmongering Republicans and other pro-corporate players.

The dispute in the progressive camp was between a single-payer system and a public option. Health Care for America Now (HCAN) a progressive umbrella group, sided for a public option claiming this was a more realised political ambition. Physicians for a National Health Program (PNHP) and CNA were both committed to a single payer solution.

The political battled so became heated and polarised. WP contemplated entering the fray. He was concerned about being attacked by his former colleagues in the insurance industry. He approached HCAN, PNHP but had no take up of his offer to speak out. The Centre for Media and Democracy (CMD) invited WP to join them as a researcher. Through HCAN contacts he was asked to give evidence at a public hearing which took place 24th June 2009, the scariest day of his life. Following his evidence he was the centre of media attention. There was no retaliation from the industry but instead silence.

The August Washington recess was preceded by the previous anti-reform AMA backing of a public option. Legislators faced crowded town hall meetings on return to their states. Much anger and misinformation was on display thanks to AHIP and allies campaigning. The objective was to convince congressmen that the people did not want Obama’s reforms. Polling was starting to show anti-reform gains until Obama clarified that illegal immigrants would not get public cover.

The reforms were watered down in Washington, removing the public option.

AHIP hired PricewaterhouseCoopers (PWC) to produce a report showing the reforms would hurt most Americans. The White House came out strongly against these findings forcing PWC to back away from their own report and admitting the data was based on a narrow analysis. The Washington Post concluded the report was ‘nothing short of deception’.

The Obama Administration finally realised the AHIP were not acting in good faith. Another industry blunder followed with WellPoint announcing a 39% premium hike for 800,000 customers.

March 21st 2010 the Affordable Care Act was passed. It did not include a public option but extended cover to another 16 million people.

The Playbook

The methods used by the tobacco industry to influence the political process, regulation and public opinion have established a set of tactics increasingly adopted by corporate America. Philip Morris (PM) led the industry in fostering doubt about health concerns relating to tobacco, encouraging distrust of government, manipulating legislation, distracting people from negative effects, attacking opposition, organising allies, undermining science and common knowledge.

The Regulatory Strategy Project by PM sought to influence the Food and Drug Administration (FDA) into tobacco friendly regulation. PM started driving the creation of the FDA bill in 1999 to achieve its ‘core principles’

  • FDA could not alter the basic cigarette design or marketing
  • Keep ingredients secret
  • Prevent FDA from removing nicotine
  • Gave existing tobacco products ‘grandfather’ status preventing the development of newer safer products by PM competitors

The bill was passed and dubbed the ‘Malboro Protection Act’ by rivals and public health advocates.

Organisations like the American Lung Association, the American Heart Organisation were increasingly loud anti-tobacco voices. In response PM and R. J. Reynolds (RJR) quietly set up ‘smokers’ rights groups’ across the country to seem like a spontaneous uprising. Spending $10 million and recruiting 300,000 members by July 1994. Members were stirred into action against local anti-tobacco moves which were infringing their smokers’ rights.

Another more deceptive tactic was to set up ‘youth smoking prevention’ program in response to increasing smoking bans. With the cover of social responsibility a network of groups and retailers was developed to promote the message against underage smoking for political good will whilst simultaneously establishing a network of local intelligence briefed by company representatives to report back to industry Tobacco Institute. These paid informers would report any local anti-smoking activity to which coordinated strident opposition could be started. Foreign governments were so impressed that PM partnered with 70 setting up 130 other smoking prevention programs. The deception that big tobacco was a reformed entity was widely accepted.

Social engineering – Science was clear on the damage of smoking. Big tobacco needed to soften the impact by manipulating hard science and polluting the public space with ‘soft science’ it funded to confuse and distract people. Sociologists, psychologists, philosophers and others were employed to influence public opinion. ‘Studies’ produced to show smoking bans hurt business and then widely disseminated.

In 2002, Roger Scruton a professor of philosophy was exposed for payments from Japan Tobacco to write articles attacking health advocacy and warning about moves to a ‘nanny state’. He spread scepticism about government public safety efforts and claimed benefits of risk taking.

Promoting Junk Science – The dangers of second-hand smoke were exposed in 1993. PM then set up The Advancement of Sound Science (TASSC) securing funding from other environmentally dubious industries. TASSC ‘experts’ would publicly discredit scientific warnings which were against the industries activities. Three talking points for TASSC were

  • Science should not be corrupted for political ends
  • Economic growth must not be damaged by paternalistic overregulation
  • Improving indoor air quality will not be achieved with its sole focus on tobacco smoke

The tobacco industry has injected its negative, manipulating DNA into corporate culture worldwide.

CEOs have effective PR tactics to employ when defending corporate interests:

  • Hire a big and well connected PR firm for public deception and a conduit for funds to front groups
  • Set up front groups – Use words like ‘American’ ‘freedom’ and ‘choice’
  • Recruit third parties as advocates
  • Write letter to editors
  • Cultivate editors and publishers
  • Influence tone and content of articles
  • Conduct bogus survey or slice and dice data
  • Feed talking points to TV pundits
  • Develop and conduct duplicitous communications campaign. Corporate charm offensive and front group dirty work

Big Oil – In 2010 the oil spill in the Gulf of Mexico saw BP launch a PR offensive recruiting the local tourist board and officials to play down the environmental damage and create the perception that it was acting as a responsible corporation. It led a massive propaganda campaign leafletting, adverts, media, promoting itself as environmentally friendly ‘Beyond Petroleum’ whilst lobbying Congress to loosen environmental protection laws. With partners in other polluting industries campaigned to discredit science on global warming.

Big Soda – The obesity epidemic is increasingly being put down to sugar consumption. The beverage industry set up front group Americans Against Food Taxes (AAFT) which received funding from big food and beverage producers. Their propaganda focussed on distraction blaming portion size and other factors not their products.

Big Banks – conflated regulations with another bailout to confuse people. Publicly calling for change to change ‘too big to fail’ banks whilst fighting increased regulation and ban on derivatives trading in Washington.

Spinning Out of Control

Credible news sources are in decline in particular newspapers. Spin and opinion is expanding making it difficult to decipher truth. Most cities in America had 1 or 2 daily papers but due to declining sales and advertising revenue these are closing. The iron core of ‘accountability news’, that which holds those in power to account, is an essential ingredient for democracy. Some journalists are concerned that the demise of print media threatens this core news gathering. Investigative journalism is expensive so more content is opinion based or spin.

The three arguments most likely to sustain popular apathy towards a problem

  • Denying the issue exists
  • Insisting the issue is a good thing not a bad thing
  • Conceding the problem but claiming it can’t be solved

Spotting spin – be sceptical. If it sounds too good to be true it probably is.

  • Any for-profit company claiming it has no self-interest
  • Misdirection or distraction away from the issue
  • Adverts that do not identify a clear product are designed to paint the company in a vague positive light
  • Front groups have a website but no real physical address or phone number
  • Avoid mentioning funding sources
  • Feel good names

A Summary of ‘Deadly Spin’ by Wendell Potter by Dr Bob Gill

Further Reading

A Century of Spin: How Public Relations Became the Cutting Edge of Corporate Power

David Miller and William Dinan

http://www.amazon.co.uk/Century-Spin-Relations-Cutting-Corporate/dp/0745326889

 

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