Here Comes Trouble: Stories from My Life

"Outstanding…Moore Triumphs! Publishers Weekly

Mike & Friends Blog

Wendell Potter

Wendell Potter is a health insurance industry whistleblower and author of 'Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans'

May 19th, 2011 7:04 PM

Insurance Industry Flack Screws Up, Points Us to Report We Really Should Read

I turned 43 a couple of weeks after I joined CIGNA in 1993. One of the birthday gifts from my new colleagues was a framed three-word quote by E. B. White: "Be obscure clearly."

We laughed and laughed. It was an inside joke -- and a perfect present for an HMO PR guy who more than a few times had to be obscure when responding to media inquiries. Reporters always wanted more information than I dared give them, but I had to give them something. Hence the need to follow White's sage advice.

That quote, by the way, was in Elements of Style, the classic 1959 book on writing that White coauthored with William Strunk Jr. White was not actually recommending obscure writing. He was just saying that if for some reason you felt you could not tell the whole truth, if there was no choice but to be obscure, at least use the active voice and proper grammar while doing it.

Successful flacks know how to use a variety of public relations tricks to obscure the truth -- being selective in the disclosure of information, for instance, or using statistics in misleading ways. Or pointing the finger of blame at someone else or "reframing" the issue about which reporters are asking.

I have kept that framed quote all these years. Now, though, I'm thinking it would have a better home in the office of the chief flack for the health insurance industry.

Yesterday, Robert Zirkelbach, spokesman for America's Health Insurance Plans (AHIP) took aim at the health care advocacy group Health Care for America Now (HCAN). HCAN took issue with AHIP's assertion that the average profit margin for health insurance firms is just 4.4 percent. Zirkelbach did not explain how he came up with that figure, but considering the fact that the big for-profit insurers had significantly higher margins than 4.4 percent last year (according to Yahoo! Finance), AHIP's calculations must have included the insurers that, at least in theory, don't make profits at all, like the so-called nonprofit Blue Cross and Blue Shield plans.

In a memo to editors and reporters Thursday afternoon, HCAN took issue with the 4.4 percent figure and accused AHIP of trying to pull the wool over journalists' eyes.

"AHIP's focus on profit margins is misleading and designed to protect their massive income by shifting attention away from their return on equity -- a key measure of profits as a percentage of the amount invested," HCAN's executive director, Ethan Rome, wrote.

"That return is a phenomenal 16.1 percent as of today. By that measure, health insurers are ranked fourth highest of the 16 industries in the health care sector. The health insurance industry has a higher return for investors than cell phone companies, beer companies, mortgage companies, life insurance companies, TV broadcasters, drug store companies, or grocery stores."

Zirkelbach, the health insurers' flack, responded in a Reaganesque, "there you go again," fashion. "Shocking," he wrote. He said Health Care for America Now had "released yet another deceptive, ideologically based attack on health plan profits. The data continue to show that this is an efficient, low-margin industry. It's time for them to get over the fact that the American people rejected the government-run plan and to start focusing on what's really driving health care cost growth."

So what are the "real drivers" of health care costs? Zirkelbach sent reporters a link to a chart on AHIP's blog called "Putting Health Plan Profits in Perspective." The chart shows, surprise, surprise, that health plan profits of $13.1 billion pale in comparison to those real drivers. The biggest such driver by far, according to AHIP's chart, is "defensive medicine" as practiced by doctors worried about getting sued, followed closely by "fraud and abuse in the entire system."

The source of that chart, according to AHIP, is an October 2009 white paper by Thomson Reuters entitled, " Where Can $700 Billion be Cut Annually from the U.S. Health Care System?" The title of the report is hyperlinked, but when you click on it, you get a page of gobbledygook.

I actually searched for the report and read it closely. Guess what? There is no such chart in the Thomson Reuters white paper and no breakdown of cost drivers as depicted by AHIP. In fact, had AHIP executives actually read the paper, they surely would not have brought it to the attention of the media. The insurance industry does not fare well at all.

A major point of the Thomson Reuters paper is that up to $700 billion that we spend on health care in the U.S. is wasted and that a big reason for that waste is our multi-payer system of private health insurance companies.

"Health care providers must deal with dozens of health benefit plans to bill successfully for services rendered," the report said. "Health plans must support systems for underwriting, claims administration, provider network contracting, and broker network management... Simplifying our health care system's administration could reduce annual health care costs by almost $300 billion."

Then there were these bullet points that surely will never appear in a health insurance industry presentation:

• The average U.S. hospital spends one quarter of its budget on billing and administration, nearly twice the average in Canada. American physicians spend nearly eight hours per week on paperwork and employ 1.66 clerical workers per doctor, far more than Canada.

• In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada.

I guess we actually should thank Zirkelbach for drawing our attention to the Thompson Reuters report. You won't find the chart AHIP says is in it, but you will find a lot of other useful information that, to AHIP's horror, might make you wonder what value private insurers actually add to the American health care system.

You must log in to comment.

You must be logged in to leave a comment. Log in | Register

FBI Uncovers Al-Qaeda Plot To Just Sit Back And Enjoy Collapse Of United States www.theonion.com WASHINGTON—The FBI announced today that it has uncovered a...

Apr 15th
3:28 PM
Read More

Revealed: Rahm Emanuel's top donor bought stock in Marriott just before it was awarded huge contract pando.com As schools are closed and pensions cut,...

Apr 9th
2:00 PM
Read More

I'll be at First Time Fest today in New York City at the screening of my first film, Roger & Me. Loews Village 7 at 12:30 pm. Come see it on the big...

Apr 5th
9:48 AM
Read More

Revealed: Rahm Emanuel cuts public pensions, diverts money to benefit campaign donors pando.com If you've read the financial news out of Chicago the last...

Apr 4th
2:19 PM
Read More

Please take a moment today to think of Casey Austin Sheehan, son of Cindy and Patrick, who was murdered by U.S. foreign policy in Sadr City, Baghdad ten years...

Apr 4th
2:00 PM
Read More

ICYMI - I've joined this "thunderclap" to support the Connecticut legislators who voted yes on last year's Act Concerning Gun Violence...

Apr 3rd
7:38 PM
Read More

I've joined this "thunderclap" to support the Connecticut legislators who voted yes on last year's Act Concerning Gun Violence Prevention...

Apr 2nd
8:27 PM
Read More

I am opposed to the death penalty, but to every rule there is usually an exception, and in this case I hope the criminals at General Motors will be arrested...

Apr 1st
3:55 PM
Read More

How Long Some in the US Will Survive Under New Health Law ...by Donna Smith www.michaelmoore.com Those who must access care to live and can afford it are not...

Mar 31st
10:13 PM
Read More

Last night, The Good Wife on the East Coast started 40 minutes late due to the overrun of the NCAA basketball game. If you had your DVR set for the show, you...

Mar 24th
5:41 PM
Read More

Watching films today, looking for the ones I'm going to pick for my film festival this summer. I (and a whole bunch of others!) have this thing we put on...

Mar 23rd
4:48 PM
Read More

When the U.S. Health Care System Keeps Killing, Who Cares Enough to Fight? ...by Donna Smith www.michaelmoore.com We have largely forgotten that people are at...

Mar 21st
5:56 PM
Read More

Tell the White House not to give up on Dr. Vivek Murthy's nomination as Surgeon General despite the ferocious opposition from the NRA: Don't give...

Mar 21st
5:38 PM
Read More

This criminal would never see a jail cell, nor would his cronies. In fact, they'd later be rewarded with re-election: Presidential Address on War with...

Mar 19th
9:40 PM
Read More

The crime of the century -- our invasion & slaughter in Iraq -- started 11 years ago tonite in this 7pm (ET) hour, March 19th, 2003: CNN Coverage of...

Mar 19th
9:08 PM
Read More

Washington’s Back-to-the-Future Military Policies in Africa ...by Nick Turse www.michaelmoore.com Nick Turse is an award-winning journalist, historian,...

Mar 17th
4:59 PM
Read More

"I think democracy is the most revolutionary thing in the world." -- Tony Benn, 1925-2014 Tony Benn in 'Sicko'

Mar 14th
10:07 AM
Read More

RIP Tony Benn, one of the UK's greatest leaders: Tony Benn, veteran Labour politician, dies aged 88 www.theguardian.com Former cabinet minister died at...

Mar 14th
9:53 AM
Read More

Please read this important story from K. Ford K.: Am I the Face of the New American Middle Class? www.huffingtonpost.com I began to feel I had slipped so low...

Mar 13th
2:24 PM
Read More

Yesterday Dianne Feinstein revealed that the CIA has been spying on the Senate Intelligence Committee. This is all about the report the committee has produced...

Mar 12th
6:48 PM
Read More

Health Care for All Colorado has brought Mercy Killers, a show written and performed by Michael Milligan about our murderous for-profit healthcare system, to...

Mar 10th
1:08 PM
Read More

Health Care Dramas that Sting and Why We Have to Watch ...by Donna Smith www.michaelmoore.com The realities Milligan has written into the show cut deep into...

Mar 10th
1:02 PM
Read More

Did you know the Lehrer Newshour on PBS has been produced for 20 years by a company owned by conservative cable billionaire John Malone? Me neither. After...

Mar 7th
8:39 PM
Read More

Mr. Obama, if int’l law is so damn crucial . . . | RootsAction.org act.rootsaction.org The Russian intervention deserves criticism. But let’s be clear. The...

Mar 6th
1:21 PM
Read More

Enron billionaire John Arnold thinks everyone should believe him when he says we've got to cut pensions because he's so incredibly rich: John...

Mar 5th
4:20 PM
Read More

More in David Sirota's continuing series on the billionaire takeover of PBS: More PBS conflict woes as activists move to eject David Koch from board of...

Mar 3rd
12:35 PM
Read More

Ukraine: One ‘Regime Change’ Too Many? ...by Ray McGovern www.michaelmoore.com Is “regime change” in Ukraine the bridge too far for the neoconservative...

Mar 2nd
9:25 PM
Read More

Latest from David Sirota on Enron billionaire John Arnold smuggling anti-pension propaganda into "neutral" institutions like PBS and now, the...

Mar 1st
12:58 PM
Read More

Second Guessing a Life: US Health Care System Robs Security and Human Dignity ...by Donna Smith michaelmoore.com The dysfunction of the US health care system...

Feb 27th
1:40 PM
Read More

Subscribe to Mike's Blog RSS

Click here to suggest an article

Mike's Blog

See More Blogs

Vew the archives

View older articles