Wendell Potter Warns: Co-op Kool-Aid Is Bad for Your Health

Submitted by Wendell Potter on

I'm beginning to think that the Kool-Aid being served at meetings of the Senate Finance Committee's soon-to-be infamous Gang of Six is coming from either fantasy land or the health insurance industry.

For those of you who might not be following the sorry machinations of health care reform in the Senate Finance Committee, the Gang of Six is a group of three Democrats and three Republicans hand-picked by Committee Chair Max Baucus, who is one of the three Democrats. The gang meets often, supposedly drafting a bipartisan bill. In reality, if such a bill emerges, it will be a gift to the insurance industry because the gang includes some of the industry's best friends on Capitol Hill.

Thanks to gang member Kent Conrad, a Democrat from North Dakota, the gang reportedly is giving serious consideration to replacing the good idea of a public insurance option with an idea that is sheer fantasy: a few nonprofit co-operatives that would be expected to compete with the cartel of giant for-profit insurance companies and "win in the marketplace," to use a favorite term of my former CEO and cartel heavyweight, H. Edward Hanway.

If you don't believe anything else I have said or written, please believe this: nonprofit co-operatives don't stand a snowball's chance of competing with those big companies and making a whit of a difference in the lives of the 75 million Americans who either have no insurance or have such marginal insurance they might as well have no insurance.

Kool-Aid came to mind as I was reading a story in the Wall Street Journal this week about Conrad's continuing and naive insistence that co-ops could work. I remembered sitting in a meeting of other insurance company executives a few years ago. A leading advocate of the high-deductible plans the industry is trying to force us all into these days (and out of the plans insurance industry pollsters and politicians say we are all happy with and can stay in--if we wish upon a star), grew so exasperated after failing to convince us that these plans would be good for most Americans, he finally said, "Look, you're just going to have to drink the Kool-Aid."

It looks as if the Gang of Six is about to offer its co-op Kool-Aid to the other members of the Senate Finance and to tell them to drink up.

The reality is there has been a tremendous consolidation in the health insurance industry over the past 15 years. A cartel of very large for-profit insurance companies now dominates the industry. One out of every three Americans is enrolled in some kind of plan offered by just seven of those large companies. Almost all metropolitan areas in the country—and states that are more rural than urban— are now dominated by just two or three insurers. It is impossible for even one of the other large insurers to break into a market dominated by its competitors.

Take Philadelphia, where I live and where CIGNA, my former employer is based, as an example. The lion's share of the insurance market in Philly is controlled by Independence Blue Cross and Aetna. CIGNA would love to be a big player in its own hometown but has never been able to scale up to be a serious competitor. It has some business there but not much compared to Independence and Aetna. If CIGNA can't overcome the huge barriers to entering that market, a nonprofit co-op wouldn't have a chance.

Advocates of co-ops point out that they work in a few other segments of the economy, and primarily in a few rural parts of the country, such as in the cranberry and raisin businesses.

Growing cranberries and raisins is a heck of a lot different from providing health care coverage to 50 million Americans who don't have it because they can't afford the overpriced policies from Big Insurance—or because they can't buy coverage at any price because of a "pre-existing condition."

To be sure, health insurers take every opportunity to badmouth co-ops, saying they are a backdoor to socialized medicine. Their criticism is disingenuous. Secretly, they would love to have a bill that creates co-ops that won't work instead of a single-payer or public option that has proven successful in other western countries.

Wendell Potter is the Senior Fellow on Health Care for the Center for Media and Democracy in Madison, Wisconsin.

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Anonymous replied on

Thank you Wendell for being you and coming around when it was time to do so. I have been on the health care band wagon from as far back as I can remember. I am a 45 year old single woman that has been self employed my whole life with the exception of 1 1/2 yr. So I have always had to purchase my own policy at the average cost of $400.00 per month, but high deductable so only used it once in 25 years of having a private policy, when i needed surgery 10 years ago. I am too scared to ever show my ins card at the doctors office for fear of it, and my ailment being on my record and haunting me for life. So I have always paid cash for all appointments, and not bothered to send or file a claim.But being self employed and not making over 100K, some years I did my taxes, I had 5K in insurance policy bills and another 3 or 4 K in doctor and drug charges. That was 10% of my income right there. And I'm a healthy woman!!!! Go figure. So my most recent plight/gripe is this. I moved from Illiois to California and back again 4 years later. All the while carring a Blue Cross policy (never used) Had a 1 1/2 'job' in CA that offered health ins. I knew I was going to move back to Il so I kept my individual policy ( on the recomondation of Blue Cross) for ease of transer when I returned. So I come back to Il, call Blue Cross, am informed that I have to apply for new coverage because I'm in a different state. So I think, "no problem" I've had them for 8 years. And guess what?? They (Blue Cross) denied me coverage because i have PMS!!!!!!!! Yep< I'll send you the letter if you like. So 8 years of unused premiums, and denied for PMS. I was blown away to say the least. Do the math and 8 years at $400 dollars a month is WAY more than I have in my retirement fund. Can I get that back since it was never used?? So then in the midst of moving, I found a lump in my breast. Knowing now that I had to find a new Policy, I lied on the application and told my doctor not to worrie about it or put it in my records. So I found the lump about 9 months ago while looking for a new policy. I am 4 months into my new Individual Health Group policy and am patiently waiting the 6 month mandatory waiting period before I can see a doctor. So here I am, a single tax paying ( and having paid a minimun of $140,000 in health ins premiums - unused) fully insured woman, walking around with a lump in her breast for 9 months now waiting for the day I can get this looked at. And people ask and wonder and fight that nothing is wrong with our health care system. For the life of me ( and it may be my life) i don't understand the ignorance of my fellow Americans. And as I sat here with my 'plight', my boyfriends nephew from Texas came to visit. He is 23 years old, living in Denmark for last 2 years, studing Glass Blowing. He got hit by a car, broke his collar bone, rushed to the ER for surgury, and you know what? Not one bill, not one form, no paper work, no nothing. NOTHING. All taken care of. And he's never even paid a dollar into the tax system in Denmark. He's just a student. So as he's telling his story, I have my hand on my breast lump, thinking how nice it would be to live in Denmark, where I could just go to the doctor. This is also why I voted - for the first time in my life- for Obama. I really believed he was in on this. It brakes my heart to see him wavering in the shadow of "the big corporations' now. They are my enemy. I hate them. And yet they have all my money. I thought Obama could change all this. I really believed he was strong enough. Please help him Wendell.

Anonymous replied on

Anonymous, All of your points are very relevant to the plight of those like yourself regarding work and health insurance costs. Personally, I'm convinced we need single payer government health insurance for all, period. Please go to a doctor as soon as possible, have the lump tested, and proceed forward from there. Talk with your health care providers about your financial and insurance concerns. Perhaps they can even make recommendations to help you on that front. It is your life and that is the point. Say you go broke over this but have your life, you still live to see another day. What good is it to think in terms of money first here if you could end up dead? Money comes and goes in one's life, but we only have one life. If you go broke, but have your life in the process, you at least live to see another day. The health insurance issues of this country will take time to be settled. No illness will wait for any of us. I imagine it must be a difficult place that you find yourself in. I think your life needs to be the priority.

Wendy Fleet replied on

Thank you, Wendell, for the heads-up on the Co-op-flavored Kool-Aid. I so fear that the Nevilles like Messina (Rahm's assistant; Baucus's erstwhile toy-boy) in the Administration are unfurling a giant and as faux Mission Accomplished banner for the ceremony signing some bogus Bill over which the Insurance Corporations will slaver. I think that $24-million-dollar-per-year Aetna CEO Ron "Silver-Forked-Tongued" Williams has mesmerized Prez O. Williams sounds so earnest and caring and convincing -- and neglects to say that he gets All Those Bucks for instituting the brilliant (& evil) computerized Rescind the Sick systems.

Jeremy Engdahl-... replied on

So much depends on the rules established to govern a co-op and how they compare to the rules governing other members of the healthcare system. More at http://www.healthcaretownhall.com/?p=1288#more-1288

Nina Braziel replied on

It is reassuring that you have a voice in this debate. I am one of those of people whose life is deeply affected by our private insurance companies control of health care both on a personal and profesional basis. I also live in Georgia and my Congessman is Tom Price and my Senators are Chambliss and Isakson all of whom are taking no action that will help me solve the complex problems on my plate in any way that is desirable or really even palatable. You affirm that I am not simply cynical or worse but do understand what is going on around me. Nina Braziel

Anonymous replied on

Thank you Mr. Potter for stepping up! I currently work in the industry for one of the big 7 as a claims adjuster in a specialized department. While I will never sit at the position you once did, I see the very practices you speak of every day I go to work. I do my best to educate the public about the industry and how it really works from an insider's perspective, all the while trying to do so without compromising my job or retaliation for speaking out. I never disclose Hipaa, reimbursement policies or company policy and procedure, but I feel we, the American people have a moral responsibility to take care of one another. I'm not talking about materialistic things or an "I'll scratch your back if you scratch mine" attitude, but rather personal well being. HEALTH BEFORE WEALTH is the way it should be. I know I personally was not put on this earth to look the other way when someone else is in need. Every day I go to work, I see the claims and names of those whose charges have been reworked for denials, whether in part or whole, but what I don't see are the faces to go with them. It saddens me, that we as a society have such a disconnect for compassion over those we do not know or cannot see. I don't want anymore Kool-Aid! I already have some given to me via my wonderful employer who seems to think, I, a single parent grossing less than 25K a year can afford the HSA they offered me with the $1300 and $3900 deductibles! I want the same coverage they get!

Kevin Holst replied on

What if the co-operatives were given a market advantage that leveled the competitive playing field? The provider community has proffered their help, now its time for them to step up. Every provider licensed in the United States should be required to participate in any non-profit, co-operative plan. This gives the co-op plan an immediate provider network which is one of the more difficult entry barriers to scale. The plans would be regulated and be required to pay claims at pre-set rates and within required timeframes just like private Medicare plans. Controls could be put in place that could manage provider panel size so as not to overwhelm any one point of delivery. Tiered payment schedules could be structured to incent providers for participation levels and positive outcomes.

Gail Nowacky replied on

Wendell, Once again, you raise some really strong points that America needs to listen to. Your words speak volumes. Having been an insurance insider myself for many years, sitting on many boards, and WAY too many Kool-Aid meetings, I echo your sentiments. If we shout loud enough maybe, just maybe, someone will listen. Seems at the moment that a public option has a majority of supporters in the USA, but the fear tactics raised by opposition are casting a large and growing shadow upon it. We can not afford to kill reform like we did in the 90's. The entire economy is at stake. The public option is the ONLY thing that has made any sense since in decades. For goodness sake America - it's time to end the BUCA cartel!!! "nonprofit co-operatives don’t stand a snowball’s chance of competing with those big companies and making a whit of a difference in the lives of the 75 million Americans who either have no insurance or have such marginal insurance they might as well have no insurance." "Almost all metropolitan areas in the country—and states that are more rural than urban— are now dominated by just two or three insurers. It is impossible for even one of the other large insurers to break into a market dominated by its competitors." "If CIGNA can’t overcome the huge barriers to entering that market, a nonprofit co-op wouldn’t have a chance." "To be sure, health insurers take every opportunity to badmouth co-ops, saying they are a backdoor to socialized medicine. Their criticism is disingenuous. Secretly, they would love to have a bill that creates co-ops that won’t work instead of a single-payer or public option that has proven successful in other western countries."

Wendy Fleet replied on

Great to see Kristof's column about Wendell. http://www.nytimes.com/2009/08/27/opinion/27kristof.html I wrote this comment there in hopes of getting some more people to come over here to read all of Wendell's articles. I follow Wendell Potter's blog https://www.prwatch.org/user/35267 because his articles have a diamond cutter's expertise and a whistleblower's brave, even haunting clarity. Thank you, Mr. Kristof, for bringing him to a wider audience. What we do with public option will be the great triumph or great tragedy of this century for America. As my Canadian businessman friend said to me recently, "What the Hell is the matter with you people?"

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