Former Insurance Executive Blows Whistle on 'Wall Street-Run Healthcare,' Only 4 Senators Out of 25 Show Up to Listen

A BUZZFLASH NEWS ANALYSIS
by Meg White

For a hearing headlined by a whistle-blowing former insurance company executive on a topic which is consuming nearly the entirety of Congress these days, the hearing on "Consumer Choices and Transparency in the Health Insurance Industry" at the Senate Committee on Commerce, Science and Transportation sure was sparsely attended.

Only Chairman John D. Rockefeller IV (D-WV) and Sens. Amy Klobuchar (D-MN), Tom Udall (D-NM) and Mike Johanns (R-NE) participated in the full committee hearing this afternoon.

The star witness was Wendell Potter, who spent more than 20 years as a public relations executive for CIGNA and then Humana Inc., having last year "left the industry after witnessing practices he felt harmed American healthcare consumers," according to a press release announcing his forthcoming testimony. Potter is now a senior fellow at the Center for Media and Democracy, a nonprofit focused on "exposing corporate spin and government propaganda... by engaging the public in collaborative, fair and accurate reporting."

Potter said in his opening statement that he "did not intend to go public" when he left his job as the chief corporate spokesman for CIGNA, a global health insurance company. But he said that after he saw the "charm offensive" being deployed by an industry afraid of wholesale reform, he felt he had to speak out and warn lawmakers of the deceptive practices of health insurance companies.

"I saw how they confused their customers and dumped the sick," Potter said, adding that while insurance companies are "using fear tactics, as they did in 1994" to paint government-run healthcare in a negative light, "what we have today is Wall Street-run healthcare."

There was a bit of the standard partisan bickering over the divisive issue of healthcare reform and whether it should include a public option.

Johanns, as the sole Republican at the hearing, took the opportunity to rail against current public plans.

"If you look at Medicare, that's not a balanced budget situation. Now that's not very good either, is it?" Johanns asked Potter. "We should pay for the healthcare we have already."

Potter responded that the cost-benefit analysis is different than a straight budget, noting that Medicare can be seen "also as an investment in our country and our people."

Johanns said he is proud of the Midwest's "healthy suspicion of those who say that government will solve all our problems."

Rockefeller had a message for his colleagues "who say that a public option... is unfair somehow:"

"It is the free enterprise system."

But the basic question to be answered at this particular hearing -- according to Rockefeller -- was, "Why is it so hard for consumers to get clear, reliable information?"

Before Potter testified, his former employer was already on the defensive over his assumed attack on their use of intentionally-confusing language in customer relations. From a CBS preview of the hearing:

Cigna spokesperson Chris Curran told CBS that Potter retired from Cigna over a year ago. Curran says the company launched an effort to simplify its language with consumers a year and a half ago, "We do feel it is important that individuals understand what they have and what they are entitled to," he said.

Curran says the company's efforts are part of a program they call "Words We Use" which for example includes using "process" instead of "adjudicate". Another example, instead of using "after a comprehensive appraisal of the circumstances" they now tell consumers, "after reviewing your case."

Potter said he believed that insurance companies intentionally make their consumer literature difficult to understand. He admitted that even as a health insurance executive who served on a "health literacy" board, he didn't understand his own explanation of health insurance benefits (EOB) forms. Potter said that when he was on the literacy board, he suggested making EOBs more understandable but was told "it wasn't a priority."

"They realize that most people are baffled by these EOBs... and throw them away," Potter said. He further refuted his former employer's claim of increasing transparency, saying "there's been no evidence of it because the EOBs I've been getting are no more clear now. In fact, their getting worse."

"That's the secret, knowing that people will give up?" Rockefeller asked Potter.

"You're absolutely right, Senator," Potter replied.

As if to underscore Potter's charges, the committee also released the preliminary results of a three-month investigation into underpayments by major insurance providers. The report reveals widespread use of two faulty systems created by Ingenix, Inc. in order to "under-pay millions of valid insurance claims" all over the U.S.

The committee's report charges Ingenix of using "flawed data" to come up with its own idea of so-called "usual and customary" reimbursement rates for out-of-network healthcare services, allowing its clients in the insurance industry to under-pay providers with impunity. The committee also uncovered a cyclical conflict of interest backing up the corrupt system, where Ingenix used data that was "scrubbed" by the insurance agencies to formulate the database upon which reimbursements were based:

While insurers presented Ingenix as an independent source of medical charge information, Ingenix was actually a wholly-owned subsidiary of UnitedHealth Group, one of the largest health insurance companies in the country, and therefore had a financial incentive to produce charge data that shifted costs from insurers to their customers. Furthermore, all of the data Ingenix used to calculate its benchmark products came from the very same health insurers that purchased Ingenix's products, forming a "closed loop" of information between Ingenix and the insurance industry.

Since the public disclosure of the above information earlier this year, the two companies separated and promised $50 million to establish an independent nonprofit to create and administer a new database for reimbursements in New York state. But insurance companies across the nation continued to use Ingenix's faulty numbers, including state regulators in New Jersey and California. The investigation is ongoing.

"Ingenix is going to cease to exist in a few months. Someone will take their place, and we'll find them too," Rockefeller pledged.

Johanns attempted to use the purpose of the hearing to illustrate why there should not be a public option in healthcare reform. He noted the confusing paperwork consumers encounter when buying a house or financing an automobile purchase, which he said was caused by federal regulation.

"In our effort to try to simplify this, we've made it hopelessly complicated," Johanns said.

The one thing all involved could agree upon is the need for more understandable contracts between insurers and consumers. The demand for clear language in contracts, one that is currently changing the credit card and student loan industries, was clearly on the mind of Rockefeller when he called the hearing.

"Consumers can't make real choices because the insurance industry doesn't use standard language or definitions. And consumers can't challenge insurance companies' decisions because the companies don't explain the terms of coverage in clear, understandable language," he said in a written statement released prior to the hearing.

Karen Pollitz, a project director at the Health Policy Institute at Georgetown University, was also a witness at the hearing. She said that Johann's fear that government intervention would make EOBs and contracts more confusing was largely unfounded. The evidence? His own health plan.

"Reading through your health plan is such a relief to me, after reading these other[s]," Pollitz said. "There are [transparency] requirements, and all of the companies meet them."

Johanns agreed with the sentiment that making all Americans' healthcare plans as understandable (if not as generous or comprehensive) as those which federal lawmakers receive is a "no-brainer."

A BUZZFLASH NEWS ANALYSIS

For more recent BuzzFlash coverage of the healthcare reform debate raging on Capitol Hill, see Christine Bowman's article titled, "Single-Payer Gets Face Time Before House Ways and Means: 'Everybody's In, Nobody's Out' Says Quentin Young."