The Politicization of Pharma, and Other Health Care Corporations - Walk on the Dark (Money) Side

Introduction - Health Care Corporations Profess Social Responsibility

As we noted recently, large health corporations, which deal with patients, health professionals, and government regulators, usually profess their social resonsibility.  For example,

Giant health care insurance company Aetna advertises its social corporate responsibility, including

As a health care leader, we believe that our corporate responsibility starts with helping people live healthier lives. And that means using our resources to make the communities and world we live in better places.

and,

Our social responsibility efforts encompass how we treat our employees, improve the lives of customers, and effect positive change in community health.

Similarly, giant pharmaceutical company Merck advertises its corporate social responsibility,

Corporate responsibility is at the heart of our company's mission to discover, develop and provide innovative products and services that save and improve lives. It underscores our commitment to developing and rewarding our employees, protecting the environment, and operating with the highest standards of ethics and transparency.

Of course, in the policy arena, large health care corporations also tend to advocate for policies that are to their financial advantage.  Furthermore, top executives of large corporations have been known to donate to political candidates who favor their policy positions, although they often seemed to consciously spread their donations out to avoid any appearance of partisanship.

However, as the current US political chaos leads to more journalistic investigation, there is increasing evidence that large health care corporations have been secretly backing policy positions that do not correspond to their high-minded public statements about corporate social resonsibility, and are becoming quite political, even partisan in the process.  They do so through the use of dark money. 

Health Care Corporations Giving to Dark Money Organizations: Dark Money Illuminated

Dark money is meant to be secret, of course.  So it is not easy to find anything out about who gives to dark money organizations, and to whom they give in turn. 
 However, recently Issue One produced a report entitled "Dark Money Illuminated." It was based on an extensive attempt to pierce the veil hiding dark money. Its introduction states:

Dark money groups hold enormous sway over what issues are, and are not, debated in Congress and on the campaign trail. But the donors behind these groups rarely discuss their motivations for bankrolling these efforts, leaving the public in the dark about who funds these increasingly prominent and potent organizations.

To attempt to get the most accurate picture of the scope of dark money influence on US politics, its authors:

reviewed FEC filings, tax returns, annual reports submitted by labor unions to the Department of Labor, documents submitted to Congress by registered lobbyists, corporate filings, press releases and other sources.

This allowed them:

to be able to identify transactions — and donors — that have never previously been associated with these dark money groups.

So they were able to identify the 15 largest dark money groups in terms of donations received, and to get data on a substantial numer of donations to them, albeit likely only a fraction of the donations to dark money groups that have been made, from 2010 to 2017.  Health care corporations turned out to be major suppliers of funding to dark money group according to this data.  The report includes a summary of the top 67 donors to dark money groups, which included:

- Pharmaceutical Research and Manufacturers of America (PhRMA), the pharmaceutical industry trade association, donated over $13 million.

- Aetna, a large for-profit health insurance company, donated over $8.5 million.

- Merck, a large pharmaceutical firm, donated over $4 million.

- Anthem, a large for-profit insurance company, donated $2 million.

Perusal of the whole data base revealed significant donations by many more health care corporations (list below includes the three companies listed above).


Aetna - $3.3 million to the American Action Network

Express Scripts - $75K to Americans for Tax Reform

American Healthcare LLC - $5K to Patriot Majority USA

Abbott Laboratories  - $500K to US Chamber of Commerce (USCC)

AbbeVie - $250K to USCC

Aetna - $5.3M to USCC

Allergan - $55K to USCC

Amgen - $302K to USCC

Anthem - $2M to USCC

Celgene - $262.5K to USCC

Cigna - $325K to USCC

CVS - $825K to USCC

Eli Lilly - $350K to USCC

Express Scripts - $150K to USCC

Gilead - $13K to USCC

Johnson & Johnson - $475K to USCC

Merck - $4.4M to USCC

Mylan - $210K to USCC

Procter & Gamble - $500K to USCC

UnitedHealth - $252K to USCC

Zimmer Biomet - $75K to USCC

Where Does the Money Go?

As is evident above, health care companies donated to a limited number of the big 15 dark money organizations, the American Action Network, Americans for Tax Reform, Patriot Majority USA, but mostly the US Chamber of Commerce.

The first two organizations were all identified by Issue One as affiliated with right-wing / Republican/ pro-Trump causes.

American Action Network

the American Action Network was not publicly rolled out by high-profile Republicans until February 2010 — one month after the U.S. Supreme Court’s Citizens United decision.
The self-described 'action tank' was founded by veteran Republican fundraiser Fred Malek, the former Marriott Hotels president and CEO who has helped raise campaign cash for a number of GOP presidential candidates over the years.

Former Republican Sen. Norm Coleman of Minnesota served as the American Action Network’s first CEO and is still the chairman of the organization’s board of directors.

Brian Walsh — the former political director for the National Republican Congressional Committee who helped Republicans win control of the U.S. House of Representatives in 2010 — served as the president of the American Action Network between 2011 and 2015.

The group’s current executive director is Corry Bliss, who managed Ohio Republican Sen. Rob Portman’s successful re-election campaign in 2016.  

Americans for Tax Reform

Originally founded in July 1985 to promote President Ronald Reagan’s proposal for tax reform, Americans for Tax Reform remains a powerful lobbying organization today that also frequently spends money in elections to aid Republican candidates. The group’s founder and president is Grover Norquist, a conservative activist who once boasted that his goal was to get government 'down to the size where we can drown it in the bathtub.'

In 1994, Norquist was one of the co-authors of the 'Contract with America,' the campaign platform that helped the GOP win control of the U.S. House of Representatives for the first time in more than forty years and helped elevate Rep. Newt Gingrich (R-GA), another co-author, to the position of Speaker of the House.

Americans for Tax Reform’s primary advocacy tool is its 'Taxpayer Protection Pledge,' which asks politicians at the local, state and national level to “make a written commitment to oppose any and all tax increases.”

The third group, to which only one donor gave only $5K, was identified with Democratic / left-wing causes.

Patriot Majority USA

Patriot Majority USA, a 501(c)(4) 'social welfare' organization that often spends money in elections to aid Democratic candidates, was founded in March 2011 by political consultant Craig Varoga, a Democrat with strong ties to former Senate Majority Leader Harry Reid (D-NV). To wit: Varoga led an independent group that helped Reid win his contentious re-election race in 2010.

The fourth organization, the one to which most of the health care corporate donors gave the most money, is in a class of its own.  The Issue One description of it was

US Chamber of Commerce

the U.S. Chamber of Commerce ranks as one of the nation’s largest and most powerful lobbying groups, with an ornate headquarters in Washington, D.C., just a block from the White House.

A trade association organized under Section 501(c)(6) of the tax code, the U.S. Chamber of Commerce mostly endorses Republican candidates, although it occasionally supports business-friendly Democrats. The group says it represents more than 3 million businesses across the country and has a membership of approximately 300,000.

The USCC has received much - probably unwanted - publicity about its efforts to help President Trump's controversial nomination of Brett Kavanaugh to the Supreme Court.  An October 4, 2018, article in the Intercept included:

Business groups with interests before the U.S. Supreme Court have orchestrated a multifaceted campaign to pressure the Senate to swiftly confirm Judge Brett Kavanaugh to the nation’s highest court. The advocacy reaches across the influence economy of Washington, D.C., with the largest corporate lobbying groups and billionaires working in concert with Republican operatives to elevate Kavanaugh to a lifetime posting atop the judiciary.

Few businesses, however, have stamped their names on the effort. Most major corporations and wealthy donors are instead using 501(c) nonprofit groups that do not require donor transparency to air upward of $15 million in reported advertising spending in order to convince the public to support Kavanaugh’s nomination. Other conservative groups contributing to the ad war have not disclosed how much they are spending, likely bringing the total much higher.

Among the groups publicly campaigning for Kavanaugh to be confirmed are the giants of pro-business lobbying — organizations like the U.S. Chamber of Commerce and the Koch brothers-funded Americans for Prosperity. Lesser-known, business-funded political groups, such as the Republican Attorneys General Association, are also spearheading campaigns.

The article also said this specifically about the US Chamber of Commerce

The powerful lobby announced in August that it would mobilize support for Kavanaugh, claiming it would score support for Kavanaugh as a 'key vote' in evaluating members of Congress. The Chamber spends tens of millions of dollars every election cycle against lawmakers who cross them on major votes.

One wonders whether patients or health care professionals who must deal with large health care corporations have any idea that these companies are promoting partisian causes, mostly right-wing/ Republican/ pro-Trump causes?  One wonders whether the employees and small stockholders of these corporations likewise have any idea about this?

Summary and Discussion

This is now the fourth time we have discussed the role of dark money in health care.  In 2012 we discussed a case of "dark money" being used to conceal sources of support for particular health policy and political positions.  Earlier this year,  we discussed the case of huge pharmacy chain CVS,which proclaims its "social responsibility," and its policy of only making charitable contributions to improve "health and healthcare nationwide."  Yet CVS was donating to America First Policies, a supposed non-profit group devoted to promoting the partisan agenda of President Trump, including "repealing and replacing Obamacare," and immigration policies such as building the "wall" and deporting  "illegal immigrants." (Note that these CVS dark money contributions were separate from those discussed above.)  Ten days ago we discussed how the pharmaceutical trade organization, PhRMA, and some large drug companies donated money to a dark money organization to combat a state initiative to limit pharmaceutical prices, but also to the American Action Network (see above) to "repeal and replace" the Affordable Care Act (ACA, "Obamacare") despite their previous support for and then current neutrality on the ACA.

Now it appears that health care corporations often donate large amounts to dark money organizations, and as best as we can tell now, nearly all the donations and all the money go to organizations that support right-wing/ Republican/ and now pro-Trump causes.  Many of these causes seem to openly conflict with the corporations' promises of social responsibility.  The slanting of these efforts towards one end of the political spectrum, one party, and now the current president suggest that these corporations may have partisan agendas.

Note that without the various ongoing investigative efforts mainly inspired by the actions of the Trump administration, we would have little idea that this was going on.

I hope that such investigations continue.

Furthermore, the increasing knowledge of these corporate actions raises a big question: cui bono? who benefits?

It is obvious why a pharmaceutical company, for example, might want to defeat legislation that would lower its prices.

It is not obvious why it would want to consistenly support actions by one party, or by people at one end of the political spectrum.

The obvious hypothesis is that these donations, which must be orchestrated by top corporate management, and which are not disclosed to employees or smaller corporate shareholders, are likely made to support the top managers' self interest.

Thus not only is more investigation needed, at the very least, "public" corporations ought to fully disclose all donations made to outside groups with political agendas.  This should be demanded by at least the corporations' employees and shareholders, but also by patients, health care professionals, and the public at large.

Meanwhile we are left with the suspicion that top health care corporate management is increasingly merging with the current administration in one giant corporatist entity which is not in the interests of health care, much less government by the people, of the people, and for the people. 

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Musical interlude: "On the Dark Side," Eddie and the Cruisers

Welcome to the DOG Patch: first in a series?

Lately my dander is up so often and so copiously, over what's happening in health care and the world at large, I'm exhausted. Covered with nasty dander. Cowering under the sheets. Others seem to share this dysphoria. But I found if not a cure, at least a palliative. There's so much dander I can scrape it off with a great big shovel and toss as much as I can your way. Here's my first Dander Omnium Gatherum, or DOG, from the Cetona DOG Patch. Remember, these stories are all DOGs.

• Litmus Test for New HHS Secretary. The new sheriff at Health & Human Services, Alex Azar, has barely had a chance to wipe his feet in front of the now ironically-named Hubert Humphrey Building in DC. And already the attorney and former Eli Lilly big shot gets his big shot at letting us know whether he'll go up against his fellow plutocrats when it comes to the Affordable Care Act. WaPo has a good story on how, in Idaho, Azar's fellow rich white guy, multi-million dollar livestock owner and red state governor Butch Otter, is considering a truly insidious gem of a way to gut sick folks' access to health care in the Gem State. Allow insurors to sell ACA-noncompliant policies, which, if the sheriff doesn't come to town and say not on my watch, allows risk pools to be invidiously divided. Which of course drives up sick folks' premiums to untenable levels. What's it going to be, Alex?
• Opioid Addiction Industry: the Gift that Keeps On Giving. Hard to be snarky when so many people are dying including my own patients. But I'll try anyway. Actually, this is a slightly more hopeful comment than my recent ones on the depredations inflicted by this industry, especially Purdue Pharma and its founders from the Sackler family. Can you guess the cost to society of this crisis? Oh, about a trillion dollars in the past decade and a half. I'd not seen it quantified heretofore, but Altarum has given it a go here. In any case, pressured by who knows who--for sure not HCRenewal, but maybe some inordinately publicity-shy latter generation Sackler family members--Purdue just announced they'd no longer promote OxyContin to providers. Oh, wait. Could it have anything to do with the fact that doctors are sick of them? Or, even more likely, that earlier this week Senator Claire McCaskill (D-MO) released a report on the back-door support this industry's been slipping to advocacy groups. A telling quote: "'The question was: Do we make these people suffer, or do we work with this company that has a terrible name?' said U.S. Pain founder Paul Gileno, explaining why his organization sought the money." Read McCaskill's report here.
• The Soul of the Texas GOP. What's it got to do with health policy and HCRenewal? Antivax, folks, antivax. In Houston--not exactly the most rabidly extreme, left or right, among Texas cities--a PAC and Facebook (surprise surprise) offshoot called "Texans for Vaccine Choice" is mounting a challenge to Republican Sarah Davis, re-election candidate for the state legislature. (This is in the heart of Texas medicine: Baylor, M. D. Anderson, etc. Seems an awful lot of ultraconservatives go to Harvard Law then come back to Texas. This challenger edited an in-house law review featuring Ted Cruz and Neil Gorsuch.) Seems Davis committed the mortal sin of opposing a proposal to prevent physicians from vaccinating foster children. I guess this is normalized. In Texas we already knew there's a rift between business moderates and ideologues. And anti-vaccination is rampant nationwide, backed by celebrities. Rugged individualism, and resistance to empathic concern for one's neighbors, has brought us antivax, the gun death epidemic, and so so much more. It's all about choice, folks. Texas GOP seems to be divided on this matter, actually, so again, Watch This Space.
• California Probes Aetna Medical Director. Funnily enough, I can easily see how and why this happens. But it don't make it right. The insurance commissioner in the Golden State is investigating Aetna after one of its medical directors (who's now moved on) admitted to CNN that he never looked at any of the patient files he was adjudicating for health care approvals. (Aetna, of course, denies.) How could this happen, you ask? Guy (under direction from non-physician bosses) sits there and judges patients' futures without a glance at their records? If you ever sat on hold for an hour waiting for one of this guy's lieutenants, typically nurses or even lower-rung than that, you wouldn't ask. Then you argue for an hour with the nurse. Sometimes (s)he sees the light and coaches you in how to game the system--which didn't really need to be gamed in the first place--but you end up outraged at the arbitrariness. Then this guy, in the present instance family physician Jay Ken Iinuma MD, pushes out the denial letter to your patient. You appeal. Eventually, if you had your act together in the first place, on behalf of your patient, you win. The inefficiency of it of course is just the point. I appeal. Many don't. Aetna makes out. And our system costs double anyone else's.
• Tech Industry: the Impossible Dream. It's fun to tilt at windmills a la Don Quixote. Tech entrepreneurs--I know a lot of them--come up with a lot of great ideas. Most are DOGs. But a few are pretty neat. Here's one just maybe in the latter group. Year before last, in the Research Triangle of North Carolina, some IBMers came up with a patient-centered navigation tool whereby sick folks could look up symptoms and see their options. The company is already defunct. “'The short answer is nobody really used [it],' according to Ateev Mehrotra from Harvard. 'For a variety of reasons, they just forgot about it. This is what I would say in my defense: I still think it’s a good idea.'” But this one's a little bit complicated. Mehrotra, who spends a fair amount of time investigating such tools, had previously authored a BMJ article showing that a whole bunch of these tools, net net, are right about half the time at best. A Kaiser article on the matter noted that "[h]alf the sites had the right diagnosis among their top three results, and 58 percent listed it in their top 20 suggestions." Jury's out on this one. On top of which, the only tech applications, thanks to ACA and HITECH, that've really made it in the health care marketplace are EHRs (see InformaticsMD's many great pieces in this blog) and--actually a little better--patient portals. For now, they may just be crowding everything else out.
• When are Ted Cruz and Diane Feinstein on the Same Team? Rarely. But WaPo now reports an instance of "real change to drug pricing being ignored by Congress." The so-called CREATES act is procompetitive in the generic space. It's supported by the ultraconservative FreedomWorks caucus, AHIP, and AHA. So why not pass it? It got left out of the recent deficit-swelling spendthrift legislation that broke the back of the threatened Can you spell Big Pharma? What's there to be said. The drug lobby and the gun lobby together practically run this country. Is it a democratic country? Do patients, who're also voters, count? Or do lobbyists' contributions to the characters writing the legislation? Oh, wait.... Why do I even pose that as a question?
• Postmodernism Yet Again. Dr. Poses, your editor, has written eloquently and often in this blog about the baleful effect of pomo thinking on modern science and medicine, especially in the scientific and medical education spaces. This writer has stayed away from the topic, mostly because they believe the postmodern "turn" since the 1970s has been confined largely to the realms of architecture and the academy. (Lots of the academy.) But the topic is suddenly very much in the news again of late, mainly because of the truthiness--or lack thereof--on the part of so many political actors. A recent NY Times piece by Thomas Edsall, entitled "Is President Trump a Stealth Postmodernist or Just a Liar?", is especially juicy. Edsall has a truly admirable Rolodex of people to whom he can reach out and ask the question embodied in his title. If "truth is not found but made," than who among us can be righter than the next guy--say our president? Some on Edsall's Rolodex made the point that pomo just made it a lot harder to rely glibly on western "grand narratives." That much we can concede, for sure. But the truth (whoops) is: we're left in a state of ambiguity. A decade or so ago historian Charles Rosenberg, in a superb essay based on his book Our Present Complaint, said this of the "inconveniently subjective object, the patient [creating] the characteristic split screen that faces today’s clinician": we're left with "a feeling of paradox, the juxtaposition of a powerful faith in scientific medicine with a widespread discontent at the circumstances in which it is made available. It is a set of attitudes and expectations postmodern as well as quintessentially modern." But maybe the last word should go to New Republic columnist Jeet Heer, who quotes Fredric Jameson in characterizing pomo as the "transformation of the ‘real’ into so many pseudoevents." In other words, the fractionation of our political and cultural understandings of policy and society. As Roger Cohen recently wrote, the fact that politicians and lobbyists have so successfully divided us into warring tribes, where everything and everyone is self-serving and convinced of its own reality, there's the real danger. And many traditional institutions, outside of those still harboring Received Truth, have abdicated their former bridging roles along with in loco parentis.

Cetona looks forward to hearing your responses to any of these emanations from the DOG Patch.

More Dumb Things Leaders Say About Health Policy

These days, legislative efforts to change US health care, especially to "reform and replace" the Affordable Care Act [ACA or "Obamacare"] seem to inspire displays of jaw dropping ignorance by political and sometimes business leaders on behalf of "reforming" health care.  We last posted examples on July 7, 2017.  Now there is a new game afoot to reform and replace, and it is generating new - not to put too fine a point on it - foolishness.

So herein is a roundup of a two more examples from July after our last post, plus two more revently "ripped from the headlines," actually ripped from relatively obscure media articles, because the anechoic effect persists, and the media still does not cover these sort of things much.  In chronological order:

Vice President Pence Makes "False" Statement About Ohio Medicaid Problems, Per Ohio's (Republican) Governor

Reported by the Hill on July 15, 2017...

Ohio Gov. John Kasich's (R) office has flatly rejected Vice President Pence's claim that nearly 60,000 disabled Ohioans are on waiting lists for Medicaid’s home and community-based services.

Kasich spokesman Jon Keeling told The Washington Post that such an assertion is 'not accurate' and that suggesting Medicaid expansion hurt the developmentally disabled system 'is false, as it is just the opposite of what actually happened.'

At that time, while the previous push to "repeal and replace" was still going on, and Vice President Pence was apparently trying to make a point about how bad "Obamacare" is:

'I know Gov. Kasich isn’t with us, but I suspect that he’s very troubled to know that in Ohio alone, nearly 60,000 disabled citizens are stuck on waiting lists, leaving them without the care they need for months or even years,' Pence said in a speech Friday at the National Governors Association summer meeting in Providence, R.I.

But,

According to the Post, waiting lists for such Medicaid services are common and are typically longer in states that did not take ObamaCare's Medicaid expansion than in those that did.

Ohio was among a number of Republican-controlled states that took the ACA's Medicaid expansion, which dramatically expanded the number of people who qualify for the program.

President Trump Makes Multiple Misleading Claims About His Efforts to Reform the Veterans Administration

We know that interesting things often happened at Mr Trump's campaign events, and at his later "campaign style" events as President.  Stat reported on July 28, 2017:

President Trump paints a rosy picture of an improved Department of Veterans Affairs under his watch, where accessing electronic medical records is 'so easy and so good' and health care is freely available without any delays.

The problem: It’s not true.

At a campaign-style event in Ohio this week, Trump’s claims of progress were so overstated that even his own VA secretary, David Shulkin — who stood right next to him — would have to disagree.

The article went on to list a number of specific claims which were false or misleading, including:

- Claims of huge improvements in VA information technology.  Unfortunately, a multiyear effort to improve health care IT "has barely even begun."

- Claims that the VA had doubled the number of veterans given approval to see  a "doctor of their choice" outside of the system.  In fact, the troubled VA Choice program increased the number by only "26 percent", and the program was facing new budget problems at the time Mr Trump made the claim.

- Claims that the administration had published wait times for all VA sites.  This actually started more than a year previously, under the Obama administration.

- Claims that the VA now offers same-day mental health services.  "This may be the case, but it happened before Trump took office."

In the "good old days," vice presidents and presidents who spoke publicly about issues like health care, about which one could not expect them to be expert, might have sought detailed briefings and/ or deferred some issues to their own experts.

White House Economic Advisor Misstates Basic Concept of Health Insurance

Reported by RawStory on September 19, 2017:

Donald Trump’s top economic advisor Stephen Moore on Tuesday demonstrated an apparent lack-of-knowledge of just how insurance works, telling CNBC’s John Harwood 'people want insurance for their own families, not other peoples.' Moore was explaining why it’s unfair to have an insurance system where healthy people subsidize sick people.

Trump adviser Moore on unfairness of the healthy subsidizing the sick: 'people want insurance for their own families, not other peoples' — John Harwood (@JohnJHarwood) September 19, 2017

Moore's implication seemed to be that people should not pay for insurance programs which might pay for health care for other people.  Yet the simple minded notion of insurance is that it is a tool to pool the resources of the many to pay for costs that only some will incur during a given time period.

The article went on to describe the withering responses on Twitter.  But for those who do not follow Twitter, I could only find a clear explanation of the problem with Mr Moore's statement in a column by Jodine Mayberry in the Delaware County (PA) Daily Times:

U.S. Sen. Ted Cruz, R-Texas, believes that people should be able to buy only the insurance that suits their needs. But there is no way anyone can ever know exactly what their needs will be, tomorrow, six months from now or six years from now.

You may not have diabetes or heart disease today, but a year from now, who knows?

A Trump economic adviser, Stephen Moore, said earlier this week, 'People want insurance for their own families, not other people’s families.'

He knows he is distorting how insurance works.

Our insurance premiums go to cover other people’s disasters as well as insure against our own.

That’s known as spreading the risk – the more people you can have in a pool of insureds, the more likely you’ll have affordable coverage for your own family.

I had a bad house fire in 1987 that cost about $50,000 to repair.

I certainly had not paid anywhere near $50,000 in homeowners’ insurance premiums up to that point (or ever).

Other people paid for my fire and I have helped pay for other people’s over the years.

We must have home and auto insurance, unless we don’t live in a house or drive.

We are all born and we all get sick and we all die, without exception, which is all the more reason for all of us to have affordable health insurance.

 So here we had the example of a top executive branch adviser who apparently provides input about health insurance, yet who does not seem to understand what health insurance is.


Aetna CEO Wrongly States Canada Has a De Facto National Health Service in Which the Government Owns and Runs Hospitals and Physicians' Practices

This example is of a top corporate health care executive, not a politician or government adviser.  As reported by Lee Fang writing in the Intercept on September 20, 2017:

[Aetna CEO Mark Bertolini] asked the room of investors and analysts to 'name a country that has single payer.'

When several participants named Canada, Bertolini disputed the answer and claimed that Canada has a 'government-run health care system. They’re not single payer, they’re single everything.'

But,

The suggestion, however, that Canada has a completely government-run health care system under which all medical professionals 'work for the government' is false. In Canada, medical claims for virtually all non-dental health care are paid by the government, but doctors and hospitals work in the private sector.

'Doctors in Canada are not employed by the government. They are self-employed, they are independent business people,' said Karen Palmer, an adjunct professor at Simon Fraser University. 'The system is publicly funded but privately delivered.'

Bertolini appeared to be confusing single payer with a single-provider system, such as the National Health Service in the United Kingdom, under which doctors and providers work directly for a government entity.

Bertolini is the CEO of a huge for-profit health care insurance company, so one would think we might know the difference between national health insurance and a national health system.  The example of Canada is a one often used by those who promote "single-payer" health insurance in the US, an idea which Mr Bertolini opposes.  So one would think we would be familiar with the Canadian example. 

Summary

It would be too much to expect that health care policy debates would be rigorously evidence-based.  However, lately they seem to include loudly expressed views devoid of facts or rationality.  We have proposed that this is the result of "managerialism."  We have discussed this doctrine, promoted in business schools that people trained in management should lead every type of human organization and endeavor.  Management by people from the disciplines most relevant to the mission and nature of particular organizations should be eschewed.  So managers, not physicians or other health care professionals, should lead health care organizations.  Following that theme, managers, or those like them, rather than health care professionals and health policy experts should lead health policy. 

However, managers who run health care organizations, or make policy, have an unfortunate tendency to be ill-informed (as well as unsympathetic if not hostile to health care professionals' value and the health care mission, and subject to perverse incentives that often put short-term revenue ahead of the health of patients and the population.)  And in the latest health care reform debate, some of the politicians and political appointees who are the de facto managers of health policy have disdained the advice of health care professionals and health policy experts.  (And above we presented an example of a true managerialist corporate health care executive who also - to put it bluntly - did not seem to know what he was talking about in a discussion of various country's health insurance systems.)

Ignorance and falsehood in the health care debate could also be part of a broader trend toward anti-intelletualism or what has recently been termed "The Death of Expertise" (see this New York Times review of a book with that title.)  Managerialism could be part of that trend.  And the extreme relativism of post-modernism, which we also discussed in the context of the current debate on health care reform, could be another.  

Facts, however, are stubborn things.  Evidence is evidence, no matter what politicians or corporate executives it might offend.  Basing legislation on the sorts of alternative thinking displayed in the cases above could lead to real life, or life and death consequences for the sick, injured and vulnerable.  True health care reform requires clear thinking and the input of people who actually know something about health care.

Haunted by US Healthcare Inc - $27.9 Million/Year Aetna CEO Threatened Obamacare Pullback in Apparent Retaliation for Government Anti-Trust Litigation

We do not write about health insurance and managed care as much as we used to.  Dysfunction in this area now gets much media attention.  US Physicians frequently complain that bureaucratic impediments imposed on them by health insurance and the government  are major causes of health care dysfunction. 

However, managed care was at the sharp edge of the movement to change the focus of health care from individual patients cared for by individual professionals and at local hospitals, to an (unregulated) business dominated by huge corporate entities.  The wedge with that sharp edge has now driven very deep.  So it may be instructive to look at what is going on now.

The Proposed Aetna-Humana Merger

In 2015, the big news in the US health insurance sphere were big mergers.  One example was the proposed merger between Aetna and Humana.  An Aetna press release trumpeted that the

Combined Entity ... [would] Drive Consumer-Focused, High-Value Health Care

That it would have the

Ability to Lead Effort to Transform Health Care Delivery to a More Consumer-Focused Marketplace

And that it will

Improve Affordability, Quality and Convenience for Consumers

What could possibly go wrong?

Up to now, mergers that created ever bigger drug/ device/ biotechnology companies, hospital systems, and health insurance companies got little US government opposition.  After all, the fashion among health care managers and health policy experts as been to extoll all the efficiences and advantages large organizations could provide, usually absent much evidence in support of this contention. (See, for example, the press release above, and see what we have written about concentration of power.)

The Government Wakes Up to the Anti-Trust Issue

But this time, the government eventually indicated it might push back.  In July, 2016, as reported by the NY Times,

United States Attorney General Loretta E. Lynch announced that the government had filed lawsuits to block the deals, between Aetna and Humana and Anthem and Cigna.

The proposed mergers, she said, 'would leave much of the multitrillion-dollar health insurance industry in the hands of three mammoth insurance companies.'

'If these mergers were to take place, the competition among insurers that has pushed them to provide lower premiums, higher-quality care and better benefits would be eliminated,' she said.

The companies responded by vowing, in varying degrees, to fight the government’s challenge. Aetna, which had hoped to gain an advantage by being the first to reach a deal, aggressively defended its proposed merger, which it contended was different from the larger Anthem-Cigna deal that followed.

'I like my chances in front of a judge,' Mark T. Bertolini, chief executive of Aetna, said in an interview.

 Parenthetically, I wonder what evidence she had that previous competition had led to "lower premiums, higher-quality care and better benefits" up to now, but I digress.

Aetna Suddenly Abandons ACA Exchanges

Soon after that, Aetna announced it was pulling out of the "markets" created by Obamacare, aka the Affordable Care Act (ACA), e.g., per CNBC.

Aetna is sharply cutting its participation in Obamacare exchanges for 2017.

The health insurer said it will offer individual Affordable Care Act exchange plans in just four states, down from 15 this year, in an effort to reduce its losses.

'As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision,; Chairman and CEO Marc Bertolini said in a statement.

This despite the fact that

as recently as April, Aetna's Bertolini had expressed strong support for the exchanges, telling analysts that it would have cost the company more than a $1 billion to acquire the million new customers it had signed up on Obamacare exchanges.

Cut to Michael Hiltzik writing for the Los Angeles Times. As he noted,

Aetna’s announcement this week that it was pulling out of most of the states where it was serving the Obamacare individual exchanges was a head-scratcher; after all, just three months earlier, Chief Executive Mark Bertolini was calling its participation in the market 'a good investment,' despite near-term losses.

Bertolini also had tried to tamp down speculation that its withdrawal was anything like a payback for the government’s move to block its $37-billion merger with Humana. That was 'a separate conversation' from its evaluation of the exchange business, he said during an Aug. 2 conference call with Wall Street analysts.

However,

Now evidence has emerged that Aetna was lying. The smoking gun is a July 5 letter from Bertolini to Ryan Kantor of the Justice Department, unearthed by Jonathan Cohn and Jeffrey Young of the Huffington Post via a Freedom of Information Act request. In the letter, sent before the DOJ formally announced it would sue to block the Humana deal, Bertolini explicitly ties the two issues together.

'Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses,' Bertolini wrote. 'Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint. We currently plan, as part of our strategy following the acquisition, to expand from 15 states in 2016 to 20 states in 2017. However, if we are in the midst of litigation over the Humana transaction, given the risks described above, we will not be able to expand to the five additional states.'

So to review, Aetna and Humana, already large for-profit managed care organizations/ health care insurance companies announced a merger, proclaiming it was all about better, higher value care for patients .  The government begged to differ.  Aetna suddenly announced its retreat from government backed insurance markets.  Its CEO denied that move was retaliation, but was allegedly "lying."

Why am I not surprised by Aetna's apparent untrustworthiness?

The History of US Healthcare Inc

As we just discussed, many large health care organizations are the products of mergers, acquisitions, and other kinds of financial engineering.  This makes their corporate history and culture much harder to comprehend.

In particular, let us not forget that the current Aetna is a product of the merger of US Healthcare Inc and Aetna in 1996.  Many readers may not remember much about this merger, and it may have occurred before others' time.

Promises of Wonders to Come

In short, US Healthcare Inc was one of the earliest for-proft managed care companies.  A 1996 Philadelphia Inquirer story described its origin.  It was started by Leonard Abramson, based on work done in the early 1970s. 

By the early 1970s, Abramson had shifted gears and gone to work for R.H. Medical Inc., a small but innovative hospital-management company then headquartered in Cheltenham.

Abramson held the title of vice president for corporate development. But even colleagues didn't know what that meant. `Nobody knew him,' one former R.H. Medical executive says. 'He was running some project nobody knew anything about.'

The project Abramson was running turned out to be a prototype of the health maintenance organization a prototype of the health maintenance organization: a new form of health plan that turned a la carte medicine on its head by paying doctors and hospitals set, all-inclusive fees for their services, instead of paying each and every time they treated a patient.

The idea was to change the incentives from doing more to doing only what was appropriate and kept the patient healthy, Abramson once said. In short, it was a lower-cost alternative to the inflationary fee-for-service medicine then in vogue.

Managed care has been promising lower costs for patients and society, better access, and higher quality for a long time.  Yet, there was never any good evidence that it ever really was "a low-cost alternative" for patients, and while it helped enable the decline of fee-for-service medicine, its alternative was not obviously less "inflationary."

Making the Insiders Rich


On the other hand,  US Healthcare Inc was good at extracting a large amount of money from the health care system to benefit its founder and CEO, and his family tremendously wealthy. Again per the Inquirer in 1996,

Abramson's 1993 salary of $3.52 million, based on a 40-hour week, worked out to $1,692.30 an hour. That's not including his $6.3 million in stock options.  [That would be total compensation of at least $9.82 million in 1993.]

A 1995 proxy listed Abramson's 1994 base salary at $1.8 million, plus a bonus of $1.6 million.

Forbes magazine estimated his 1994 worth at $780 million, making him No. 110 among the 400 richest people in America. He was ranked that year as the Philadelphia area's highest paid CEO of a publicly traded company.

In addition,

He's made sure his children haven't had to struggle. A proxy report showed U.S. Healthcare paid daughter Nancy Wolfson $239,999 in salary and bonuses in 1993, and her husband, Richard, who directs the pharmacy and dental operations, $270,000. Another daughter, Marcy A. Shoemaker, made $280,000.

Company shares also are held in trust for Abramson's grandchildren.

Angry Doctors and Allegations of Worse Care

While the company provided monetary advantages to its insiders, but not clearly to patients or society, I remember US Healthcare Inc from my days as a fellow and then junior faculty member in the Philadelphia area as rather a nasty player.  At the time of the 1996 merger, a Philadelphia Inquirer story about the CEO of US Healthcare Inc stated

U.S. Healthcare is considered one of the nation's toughest HMOs....

And retold

a joke making the rounds in Philadelphia-area doctors' lounges:

[US Healthcare CEO Leonard] Abramson dies and goes to heaven, where he compliments God on what a great place he has. 'Don't get too comfortable,' God advises. 'You're only approved for a three-day stay.'

The Philadelphia Inquirer separately described Mr Abramson thus:

to his detractors in the health-care industry, Abramson is anything but charitable. They view him as a ruthless, bottom-line-oriented executive who has made himself and his Blue Bell company fabulously wealthy while ratcheting down payments to hospitals and skimping on patient care.

For years, some of the most prestigious hospitals in Philadelphia refused to sign contracts with U.S. Healthcare. Those that did often complained bitterly about the hard-line negotiating style of Abramson and his colleagues, which resulted in lower reimbursement rates for the hospitals.

The story concluded,

 Abramson continues to receive heavy criticism from some in the health-care industry. These critics say his HMOs have stressed profits and shareholder value over quality patient care.

So US Healthcare Inc was one of the first important US for-profit managed care organization.  It promised lower costs for patients and society, and better health care.  While there is no evidence these promises were fulfilled, it made its top insiders very wealthy, while alienating health care professionals, many who thought it led to worse health care for their patients.

This pattern repeated when Aetna merged with US Healthcare.

The Aetna - US Healthcare Merger

 Promises of Wonders to Come

When the merger between Aetna and US Healthcare Inc was proposed, according to the Philadelphia Inquirer in 1996,

The deal would put the new company in a position 'to redefine the way in which medical care is delivered in the country,' said Aetna chairman Ronald E. Compton, who would serve as the combined firm's chief executive. 'U.S. Healthcare was the best possible partner for Aetna. . . . This is, no kidding, a once-in-a-lifetime opportunity to create a model for exceptional' health care.

Yet in retrospect there is no evidence that the merger produced "exceptional health care," at least not exceptional in terms of being exceptionally good for patients.

Making the Insiders Rich

But like the old US Healthcare Inc, Aetna did succeed in making its CEOs very wealthy.  In 2012, we noted that the first new CEO of the combined entity, Dr John Rowe, was to get an initial salary of $1 million and bonuses of $1 to $3 million to start in 2000.  And by 2010, as we posted here, according to its 2010 proxy statement, Aetna CEO Ronald A Williams' total compensation in 2009 was a mere $18,058,162. Other top executives made proportionate amounts, from more than $1 million to more than $12 million.

In 2015, as noted by the Hartford Courant,

Aetna Chairman and CEO Mark Bertolini received $27.9 million in compensation last year, according to a filing Friday with the Securities and Exchange Commission.

About $24.8 million of the package was due to gains in value on restricted stock that vested in 2015 and on stock options he was awarded 10 years ago and exercised in 2015.

The total was up from $15 million in 2014.

His compensation also included $1,034,483 in salary, $1.84 million in cash bonus, and $271,908 in perks, mostly from the cost of his using the corporate aircraft for personal use.

Angry Doctors and Allegations of Worse Care


Also, once Aetna and US Healthcare Inc merged, Aetna acquired a bad reputation among physicians.  As we wrote in 2012, by 1998, an American Medical News article documented the "rocky relations" between Aetna and physicians. By early 2000, Aetna CEO Richard Huber was known as "the managed care executive physicians love to hate," per the American Medical News. His departure was characterized by then American Medical News Street Smarts columnist Dr Scott Gottlieb, as partly due to how

Huber talked out of one side of his mouth about his company's obsessive quest for 'quality' health care -- while out of the other he was screaming at doctors, hospitals and drug firms about controlling costs. Yet Aetna's medical costs were still creeping up. As Richard Huber learned, you can't talk the talk if you don't walk the walk.

So once again, after US Healthcare merged with Aetna, the combined, larger company did not deliver on promises of lower-cost, higher-quality care, while it made its insiders very wealth, angered health care professionals, and allegedly led to poor health care.


Conclusion

So the story of US Healthcare Inc, and its merger with Aetna showed a repeating pattern: unfulfilled promises of wonders to come, angry health professionals complaining of bad health care, while the corporate insiders become rich.  So do we really think that the proposed Aetna Humana merger would "Drive Consumer-Focused, High-Value Health Care?"  If so, could I sell you a bridge from Brooklyn to Manhattan?

This case shows how we have turned health insurance over to large for-profit corporations, in an era of laissez faire capitalism and light touch regulation, and in an era in which managerialism enables the leadership of health care organizations by business trained people with little understanding of or sympathy for the health care calling, but who can get rich by pursuing short-term revenue, and can deploy armies of marketers and public relations specialists to obfuscate what is going on.

Why on earth should we expect by continuing in the same direction we will now actually produce lower-cost, higher-quality care?

One big problem is that many people in the US now think of commercialized health care as the norm, and cannot conceive of any alternatives.  Even our recent attempt at health care reform, the Affordable Care act, depended on the continued dominance of health insurance by for-profit corporations.

True health care reform would consider alternatives.  At least we could start with much tougher regulation of commercial health care.  For example, in his article noted above, Michael Hiltzik suggested

We’ve mentioned before that the government isn’t entirely powerless to goad big insurers like Aetna into greater participation in the ACA exchanges. Among other things, the companies make money hand over fist by serving Medicaid expansions in many states and in Medicare managed-care plans. Why not tie their access to those lucrative markets to sticking with the exchanges until they’re finally stabilized?

Bertolini implicitly tied Aetna’s participation in Obamacare to a green light from the government on the Humana merger. But two can play that game.

That would not go over well with neoliberals who believe all corporate regulation is bad.

Furthermore, mabye we should reconsider whether most, or any health insurance should be provided by for-profit corporations. The "government option" is no longer a taboo topic in conversations about "Obamacare." There are other options. Other countries rely on tightly regulated, accountable non-profit organizations to provide health insurance. Such organizations may not enrich insiders as well as big for-profit health insurance companies, but maybe for once we should think of putting patients' and the public's health ahead of these insiders' enrichment.

Fool Us Once, Shame on You, Fool Us Twice, Shame on Us - The Untrustworthy Pronouncements of Aetna's Former CEOs

A small tempest in the larger US health care reform teapot was produced a few weeks ago when Ron Williams, former CEO of Aetna, declared in a Wall Street Journal op-ed that he no longer supported the health insurance mandate.  The "mandate" for all US citizens to buy health insurance, actually a relatively small tax that would be imposed on people without health insurance, was the central point of contention in the lawsuit before the US Supreme Court challenging the Affordable Care Act (ACA). 

Immediate Past-CEO of Aetna Ron Williams' Abrupt Change of Mind on the Individual Mandate

Williams wrote,

Soon the U.S. Supreme Court will rule on the constitutionality of the Affordable Care Act. I am not a lawyer, or an expert on the Constitution. But as the chairman and CEO of a major health plan, I had a ringside seat to the entire health-care reform process. After much reflection, I have concluded that the federal individual mandate, which requires all Americans to purchase health insurance starting in 2014, will not be upheld.

On this, Williams was soon proven wrong. The Supreme Court upheld the law. However, the tempest was not due just to Williams' reversal of his former opinion, but the role he actually played in pushing his former opinion into the passage of the law, which was really far more than being a "ringside" spectator.

In an August 24, 2009 article, "Aetna's Ron Williams on Health Reform," Forbes' Dan Whelan noted,

Williams, 59, is taking a surprisingly visible role in arguing for change in the health care system. He has met with Obama a half-dozen times (he shrugs off the surname gaffe), has testified four times in front of Senate committees this year and participates in shindigs set up by the many trade groups for which he's a director.

Williams' position echoes that of the HMO industry generally: He's against a government-run plan but favors universal coverage and forcing insurers to take all comers.

As Wendell Potter, the former head of public relations for large health for-profit health insurance company Cigna, who is now a strong industry critic, put it on his blog,

Ron Williams who possibly more than anyone else had persuaded the President to reconsider his campaign pledge to enact reform without making people buy coverage from a private insurer. Candidate Obama’s reform platform differed from those of Hillary Clinton’s and John Edwards’ in only one significant way: both Clinton and Edwards embraced the mandate, which Williams was championing, first behind the scenes and then publicly, on behalf of the insurance industry. Candidate Obama said he didn’t believe it was right for people to be forced to buy something they couldn’t afford.

Williams was the industry’s most visible CEO on Capitol Hill during the debate on reform. He testified at numerous congressional hearings about how essential it was to move the millions of uninsured Americans into private health insurance plans and how an individual mandate was necessary to make that happen. He also never missed an opportunity to trash the idea of a 'public option' to compete with private insurance companies, which candidate Obama had said was essential 'to keep private insurers honest.'

Capitol Hill was not the only place Williams was frequenting during the reform debate. In an August 2009 article in Forbes, Williams was quoted as saying that he already had met with the President six times. When I called the White House to confirm that, a top aide told me it was true Williams had been there many times, adding, 'We’ve found him to be one of the more reasonable ones.'

Williams' recent seeming disavowal of the individual mandate raises the question of why anyone, much less President Obama, trusted him in the first place. After all, he was CEO of Aetna.

2001 Aetna CEO John Rowe Blamed Everyone Else for Health Care Problems

In fact, perusal of my memory, and a few file folders suggested several previous cases in which Aetna CEOs issued pronouncements that should not have been trusted.

First I recalled a meeting in 2001 at Brown during which the then Aetna CEO was honored by giving the Paul Levinger Lecture on "Good Health: Can We Afford It?" (See original Brown news release here.) My memory is that of Dr Rowe blaming just about everybody other than the for-profit health care insurance companies for health care's ills. A Brown Daily Herald article (not currently on line, Baskin B. Health care getting harder to afford, Aetna chief tells Brown U. Brown Daily Herald, November 30, 2001) recounted him blaming "cost inflation," (presumably due to doctors and hospitals), and employers, for whom "quality doesn't matter." He only allowed that insurers were to blame for not giving "better service," but not either rising costs or poor quality. I also recall Dr Rowe being treated with great respect by the audience. After all, this was a prestigious lecture.

However, his talk seemed just the least bit self-serving. If the audience had been aware of his record at the time, maybe we would have been more skeptical.

Mount Sinai CEO Dr John Rowe Extolled Merger with New York University, Jumped to Become Aetna CEO as Merger Began to Fail

By 1993, Dr Rowe was CEO of Mount Sinai Medical Center, and was seemingly at the vanguard of the movement for health care CEOs to be paid a lot. The New York Times reported that the 1993 Chronicle of Philanthropy survey showed him to be the country's best paid non-profit CEO, bringing in total compensation of over $800,000 in 1993 dollars. By 1998, Dr Rowe's big project was pushing concentration of power in health care in the form of a proposed merger between New York University Medical Center and Mount Sinai. According to the New York Times, the plan would be for Dr Rowe to become CEO of the combined entity. At the time, he said,

The advantages of merging hospitals are so great, they far outweigh any hypothetical potential negative impact.

The bond issue needed to finance the merger, however, ran into trouble by early 2000.  Soon after that, Dr Rowe seemingly demonstrated his lack of faith in it by jumping to the leadership of Aetna. It turned out, according to the Hartford Courant, Aetna's offer was just to rich to turn down.

Rowe got a $2 million sign-on bonus to leave Mount Sinai NYU Health and become chief executive of Aetna's health business, the document says. He will also get a $1.4 million retention bonus on July 3, 2001.

Both bonuses are designed to replace money that Rowe forfeited by leaving the giant New York hospital system, Aetna spokeswoman Joyce Oberdorf said.

In addition, Rowe will get an annual salary of at least $1 million and an annual bonus of $1 million to $3 million, depending on how well goals are met, under a three-year employment agreement with two possible one-year extensions.

Rowe, who already received 25,000 shares of restricted Aetna stock and options on 500,000 shares, will get another 100,000 options. The new options will be granted when Aetna spins off its health business to shareholders, or on Jan. 1, 2001 -- whichever comes first. The exercise price will be about $72.73, or whatever price Aetna stock is trading at the time if it's higher than that.

By 2001, the New York Times referred to the merger as existing "in name only." That year, the campuses resumed separate administration. The merger was officially terminated in 2008. Its failure was documented in an Academic Medicine article. (Kastor JA. Failure of the merger of the Mount Sinai and New York University hospitals and medical schools: part 2. Acad Med 2010; 85: 1828-32. Link here.)

If the Brown audience had known that the merger Dr Rowe extolled with such confidence was already failing, but that he was able to leverage his role in its development to go from the country's best paid non-profit CEO to a multi-million dollar a year insurance CEO, maybe we would have felt less guilt about our responsibility for health care's high cost, low access and poor quality.

Aetna CEO Richard Huber's Failure to "Walk the Walk"

In fact, searching through the files showed an even earlier example of an Aetna CEO talking out of two sides of his mouth.

By 1998, an American Medical News article documented the "rocky relations" between Aetna and physicians. By early 2000, Aetna CEO Richard Huber was known as "the managed care executive physicians love to hate," per the American Medical News. His departure was characterized by then American Medical News Street Smarts columnist Dr Scott Gottlieb, as partly due to how

Huber talked out of one side of his mouth about his company's obsessive quest for 'quality' health care -- while out of the other he was screaming at doctors, hospitals and drug firms about controlling costs. Yet Aetna's medical costs were still creeping up. As Richard Huber learned, you can't talk the talk if you don't walk the walk.

Summary

So the unreliability of recent Aetna CEO Ron Williams' advocacy of the "patient mandate," was presaged by similarly untrustworthy pronouncement by two former Aetna CEOs. In each case, the remarks of the particular CEO seemed more designed to promote his immediate self-interest than to provide trustworthy opinion or policy advice.

By the way, this summary should not be viewed as particularly an indictment of Aetna. I am sure I could find equally untrustworthy but self-serving pronouncements from the leaders of many other health care organizations. (Recall the visionary pronouncements of the failed and ultimately jailed CEO of the now vanished Allegheny Health Education and Research Foundation, see post here.)

The recent Ron Williams reversal should serve, however, as a stark reminder that we, meaning physicians, other health care professionals, those who study health care and health policy, policy makers, and the public at large, should be very, very skeptical about any pronouncements about health policy by top executives of health care organizations. They as a group have shown themselves to be remarkably good at doing whatever it takes to buttress their immediate self-interest, including making apparently oracular but ultimately foolish policy pronouncements.

The real question is why these pronouncements continue to be treated with reverence, if not as "visionaries,"  by health care professionals, health care and policy researchers, the news media, health care and medical journals, policy makers, politicians, and the public at large? Why has hardly anyone, besides yours truly, gone back to check the accuracy of their previous pontifications before swooning over their latest ones? Why has hardly anyone examined the accuracy of their predecessors' opinions, given that most executives these days seem to be subject to the same incentives to make things look good in the short term, and never mind the consequences?

Health Insurers Sanctioned, Fined

It has not been a good few weeks for big US health insurance companies.  First was a report (e.g., per the Wall Street Journal) that three companies had been suspended from selling Medicare Advantage plans:

The U.S. government's Medicare program has ordered three health insurers--Universal American Corp. (UAM), Health Net Inc. (HNT) and Arcadian Health--to stop marketing to and enrolling new members in their Medicare Advantage health and prescription-drug plans, saying the companies violated regulations.

In particular,

Universal American was told to stop marketing to and enrolling people in its Medicare Advantage plans effective Dec. 5. The action doesn't affect current members or the enrolling of beneficiaries in the company's stand-alone Medicare prescription-drug plans.

Health Net had to suspend the marketing of and enrollment in its Medicare Advantage plans and stand-alone Medicare prescription-drug plans as of Friday, as the government said the company's conduct poses a 'serious threat' to enrollees. The sanction doesn't affect the status of current enrollees, however.

In a letter Friday to Theodore Carpenter, head of Universal American's Medicare Advantage business, the Centers for Medicare and Medicaid Services alleged the company has a 'longstanding pattern of prohibited marketing practices targeted to highly vulnerable populations in violation' of federal law and guidelines as well as contractual terms with CMS.

Universal American is a 'chronic poor performer' with respect to the regulations, according to CMS, which said the company's agents engaged in aggressive sales tactics and abusive behavior, and misled or confused beneficiaries or misrepresented the plan.

The agency's letter to Health Net government-programs executive Scott Kelly said the company's conduct 'poses a serious threat to the health and safety of its enrollees,' as a result of the company's 'intractable failure to provide its enrollees with prescription drug benefits in conformance" with laws, guidelines and contract terms.' CMS cited a 'history of non-compliance.'

Then, the state of California fined and ordered restitution from multiple companies, as reported by the San Francisco Chronicle:

State regulators Monday fined seven of California's largest health insurers nearly $5 million for systematically failing to pay doctors and hospitals fairly and on time.

The California Department of Managed Health Care issued the fines following an 18-month audit in which investigators looked at a small but statistically significant sample of claims. The investigation found the plans were paying on average about 80 percent of the claims correctly, far below the legal threshold of 95 percent.

'Our clear and consistent message is that California's hospitals and physicians must be paid fairly and on time,' said Cindy Ehnes, director of the Department of Managed Health Care, which is charged with regulating the states' health maintenance organizations, or HMOs.

In addition to the fines, the companies must pay the doctors and hospitals restitution that is expected to run into the "tens of millions of dollars," Ehnes said. The plans will also be required to come up with a plan to correct the problem and submit to future audits.

Failing to pay providers properly makes it tougher for them to survive in the struggling economy, Ehnes said. 'If providers are not paid, patient care and access suffer,' she said.

Regulators fined Anthem Blue Cross and Blue Shield of California $900,000 each. United/PacifiCare was fined $800,000 and Kaiser Foundation Health Plan and Health Net were both hit with fines of $750,000.


The fines for Cigna and Aetna were $450,000 and $300,000, respectively, for a total of $4.85 million.

Please note that some of these companies have become "frequent flyers" on the Health Care Renewal blog.  Anthem Blue Cross in California is a subsidiary of WellPoint. WellPoint, in particular, just appears again and again on Health Care renewal.  A list of all posts about that company is here, and see this post for a list of past ethical and management missteps.  Health Net appeared in both stories above, and appeared on Health Care Renewal here.  Posts on Aetna are here.

Having been writing for this blog now for several years, I am struck by how often the conduct of particular health care organizations has been discredited, without any discernible effect on the organization's leadership or course.  It is particularly striking how the attention paid and pay given to the leaders of some health care organizations contrasts with the public record of their organization's bad behavior.

In particular, contrast the long catalog of misbehavior by WellPoint, noted above, with the enormous earnings of the company's CEO (more than $13 million in 2009), and her status as a prominent speaker on health care policy (see post here). 

In the laissez faire, anything goes, wild, wild west economy of today, spearheaded by the financial service companies that lead us to the global economic collapse, it seems that ethical leadership counts for nothing.  This is bad when it applies to the leadership of financial services, whose bad leadership can cost us all a lot of money.  It is worse when it applies to health care, whose bad leadership can cost us our health and our lives.

As I have said ad infinitum, to really reform health care, we will need to get accountable, ethical, transparent leadership of health care organizations.

WellPoint: Don't Know Much About Computer Programming; Aetna: Don't Know Much About Mathematics

Big US based health care insurance companies have not been covering themselves in glory in the last week.

Aetna's Math Errors

First, there was the case of Aetna's mathematical prowess, e.g., as reported by the Los Angeles Times:

A second insurance company in California has killed plans for double-digit rate hikes for individual policyholders because of errors in its filing that would have inflated premiums, state regulators said Thursday.

Connecticut-based Aetna Inc. had sought an average 19% increase in rates for its 65,000 individual customers, but pulled back after multiple math errors in its paperwork were found by its own staff and by an independent consultant working for the state.

Aetna's decision follows a similar move by Anthem Blue Cross, which canceled a rate increase of as much as 39% for many of its 800,000 California policyholders in April after the state consultant found calculation errors in its filing with the California Insurance Department.

Of course, Aetna tried to minimize the story:

An Aetna spokeswoman said the company found 'a miscalculation not previously detected' when it conducted a third round of internal reviews.

'This was a simple human error,' said spokeswoman Anjanette Coplin, who did not elaborate.

However,

'There were multiple errors … in the way [Aetna] annualized premiums and in the compounding of the rate increase,' said state Insurance Department spokesman Darrel Ng.

Of course, somehow the errors all were in Aetna's favor:

Even with the new disclosure requirements, regulators have limited authority to block rate increases. They can do so only if insurers fail to spend at least 70% of their premiums on medical claims.

In Aetna's recent rate filing, the insurer said its plan met the 70% minimum. But once the errors were identified, medical-claim spending fell below the 70% requirement. The proposed rates were higher than they should have been, officials said.

WellPoint's Computer Errors

A few minutes ago, the Associated Press reported:

WellPoint Inc. has notified 470,000 individual insurance customers that medical records, credit card numbers and other sensitive information may have been exposed in the latest security breach of the health insurer's records.

The Indianapolis company said the problem stemmed from an online program customers can use to track the progress of their application for coverage. It was fixed in March.

Spokeswoman Cynthia Sanders said an outside vendor had upgraded the insurer's application tracker last October and told the insurer all security measures were back in place.

But a California customer discovered that she could call up confidential information of other customers by manipulating Web addresses used in the program. Customers use a Web site and password to track their applications.

Note that this security breach was potentially serious:

WellPoint's security breach doesn't crack the top 10 in terms of number of people who may have had information exposed, said Paul Stephens, the [Privacy Rights Clearinghouse]organization's director of policy and advocacy. Even so, he labeled the breach 'very serious' because it possibly involved both financial and medical information.

This is not the first time WellPoint's computers and software have violated the privacy of its applicants or customers:

Two years ago, WellPoint offered free credit monitoring after it said personal information for about 128,000 customers in several states had been exposed online. In 2006, backup computer tapes containing the personal information of 200,000 of its members were stolen from a Massachusetts vendor's office.

Summary

Of course, everyone makes mistakes.  However, one would expect that at least health insurance companies/ managed care organizations ought to be able to do the math necessary to support their rate proposals correctly, and keep their policy-holders' and applicants' personal information confidential.  These would seem to be fundamental competencies that such organizations ought to display.  Of course, one can find other examples of lack the lack of competency (and worse) displayed by both Aetna and WellPoint. 

Furthermore, anyone can make mistakes, but in the real world, those who preside over such mistake-prone enterprises often do not do too well.  However, in the bizarre world of large health care organizations, the executives who preside over the ongoing bumbling just make more and more money, under the pretense that their continuing brilliant leadership just leads to one triumph after another. 

As we noted here, WellPoint CEO Angela Braly's total compensation increased in 2009 to an outsized $13.1 million, with the executives just underneath her paid proportionately well.  Per its 2010 proxy statement, WellPoint's

Total Rewards compensation program is designed to attract, engage, motivate and retain a talented team of executive officers and to appropriately reward those executive officers for their contributions to our business and our members. We seek to accomplish this goal in a way that is closely aligned with the long-term interests of our shareholders and the expectations of our members and health care providers.

I suspect that WellPoint's members' expectations did not include the three computer security breaches noted above.

Similarly, according to its 2010 proxy statement, Aetna CEO Ronald A Williams' total compensation in 2009 was a mere $18,058,162. Other top executives made proportionate amounts, from more than $1 million to more than $12 million. The rationale underlying executive compensation includes:

We seek to implement a pay-for-performance philosophy by tying a significant portion of our executives’ compensation to their achievement of financial and other goals that are linked to the Company’s business strategy and each executive’s contributions towards the achievement of those goals.

To me, avoiding mathematical errors in calculating policy premiums ought to be part of the company's goals linked to its business strategy.

An old rock song that starts with "don't know much about history," may have a certain charm.  Health insurance companies that cannot accurately calculate premiums or protect the confidentiality of policy-holders' computerized data has none. 

As long as "imperial CEOs" can continue to get extremely rich while presiding over incompetence and stupidity, if not worse (see here), we can expect the foolishness to continue.  Meanwhile, the foolishness drives up costs and drives down quality of health care for the poor suffering patients, let alone the physicians and other health care professionals who must deal with it.

To really reform health care, we need to provide incentives for competent, honest leadership, and make that leadership accountable for its shortcomings.

Aetna Government Contract Discredited

Last week, the Sacramento Business Journal reported on irregularities in how health insurance/ managed care giant Aetna obtained a contract with the US military health plan Tricare:

Aetna Inc. hired a former high-level Tricare employee with access to proprietary information about Health Net Inc.’s performance that could have given Aetna a competitive edge in its bid for a lucrative military health care contract, the U.S. Government Accountability Office has concluded.

The GAO details six flaws in the procurement process in new documents posted online Tuesday and recommends that Aetna should be excluded from the competition, leaving Health Net 'as the only viable awardee.'

The agency recommends Tricare officials perform a thorough review of what sensitive information the former Tricare employee had access to and decide what action to take to address the problem. The GAO also recommends that Health Net be reimbursed the cost of filing the protest, including attorneys fees.

The Business Journal described the details of the irregularities:

The GAO decision pointed to six flaws in the in the bid evaluation process, including:

* The agency credited Aetna with past performance of its parent and corporate affiliates but did not record which entities were involved or establish the roles they would play in the contract
* The evaluation gave Aetna the highest past performance rating without considering that its past performance was small compared with the size of the Tricare contract
* The price evaluation did not consider whether Aetna’s proposed staffing reflected a lack of understanding of the technical requirements of the contract — or showed a willingness to take a risk on the business
* The agency failed to consider the risk involved with Aetna’s proposed plan to hire large percentages of Health Net’s work force at lower pay rates
* The agency did not consider Health Net’s network provider discounts when assessing its pricing information for the program and
* The agency failed to protest Aetna’s hiring a former Tricare official with inside knowledge of Health Net’s performance on the previous contract.

'The contracting officer never considered the matter — because the awardee did not bring it to his attention— and the record shows that the individual had access to non-public proprietary information,' the decision states.

The Montgomery Advertiser added:

Though it doesn’t allege that procurement integrity law was broken, the GAO said contracting agencies like TMA have an obligation 'to avoid even the appearance of impropriety' in government procurement. This time it failed.

It's been only about nine months since we discussed legal or regulatory issues for Aetna.  In February, 2009 we discussed its settlement of accusations it underpaid claims in part through its use of a now discredited database marketed by Ingenix, a subsidiary of its supposed competitor, UnitedHealth Group.

Aetna boasts that it is

Helping to manage health care, one of the most important things in life

We believe we can help create a better health care system. This belief drives our daily decisions as one of the nation's leading health care benefits companies. We work hard to provide our members with information and resources to help them make informed decisions about their health.

Furthemore, it boasts of its mission

We help people achieve health and financial security by providing easy access to cost-effective, high-quality health care. And we continue to be a leader in building a stronger, more effective health care system by working with doctors, hospitals, employers, patients, public officials and others.

It seems one way in which Aetna works with public officials is to hire those that might have some inside knowledge of specific government contracting processes, and then take advantage of that to boost their chances of obtaining lucrative contracts, if I am reading the summary of the GAO findings correctly. 

Maybe most people have grown cynical about health care organizations', especially commercial health care insurance companies' mission statements, and may dismiss them as marketing fluff, if not complete balderdash.  However, to improve health care quality while controlling costs, facilitating access, and restoring professionalism, would be health care reformers need to make health care organizational leaders live up to their noble-sounding proclamations of corporate social responsibility. 

Aetna Settles

As reported by the Hartford Courant:

Aetna will reimburse more than $5.1 million on 73,000 health claims for college students it underpaid between 1998 and April 1, 2008, under a nationwide agreement announced Monday by New York Attorney General Andrew M. Cuomo.

The claims involved out-of-network care in which Aetna Student Health — formerly called Chickering Student Health — paid physicians what it considered reasonable and customary. Doctors whose charges were higher could bill students for the balance.

Aetna will reimburse students if they paid such a balance. If a student wasn't balance-billed, Aetna will reimburse the doctor. The company says its under-payments averaged $25 each nationwide.

The inadequate claim payments stem from outdated information that Aetna and other insurers used from the databases of Ingenix, a UnitedHealth Group unit.

The $5.1 million agreement is in addition to the $20 million Aetna agreed to pay in a settlement last month of Cuomo's investigation of the out-of-network payment system.

We had posted earlier here about a settlement UnitedHealth made related to its use of the database run by its Ingenix subsidiary.

Note first that Aetna and UnitedHealth are supposed to be fierce competitors. Yet they used the same database, a database constructed by a UnitedHealth subsidiary. This is a reminder that although many have promised that a competitive, market-based health care system would decrease costs, improve access and improve quality, the system that was supposed to be competitive mostly was not. In this example, multiple, supposedly competing managed care organizations/ health insurance companies all appeared to use one company's database. (We have also noted how nearly all managed care organizations/ health insurance companies all basically use a payment schedule for physicians provided by the US government.) Various such anti-competitive practices by managed care organizations / health care insurance companies have to date mostly elicited yawns from health care and policy researchers, the press, government regulators, and the legislature.

Second, note that Aetna's use of the UnitedHealth Ingenix database allowed it to underpay physicians, sometimes resulting in excess out of pocket expenses for students. That does not seem to square with Aetna's high-minded mission statement:

Aetna is dedicated to helping people achieve health and financial security by providing easy access to safe, cost-effective, high-quality health care and protecting their finances against health-related risks.

Aetna surely was not protecting these students' "finances from health-related risks."

This is, of course, just one of many examples we have discussed of cynical marketing techniques by health care corporations. Every big health care organization seems to boast about how it enhances high-quality, accessible, reasonably priced care. But few really seem to do so.

Paul Trossel defined organizational integrity as "how top management of an organisation lives by its own standards." Here again is an example of a failure of organizational integrity in health care, and its (in this case) financial adverse effects on patients.

For a company the size of Aetna, a $25 million settlement is practically petty cash. And like many previous settlements we have discussed, it enacts no penalties on the leaders who actually made the decisions in question. Thus it is unlikely that further settlements like this will promote better organizational integrity, more competition in the health care "market," lower costs, better access, or better quality.