The Ultimate Irony: Health Care Industry Adopts Big Tobacco's PR Tactics

by Wendell Potter — July 9, 2009 - 3:31pm
  • Topics: Astroturf, Health, Public Relations
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    At first look, one might not think that the health insurance industry has much in common with the tobacco industry. After all, one sells a product that kills people and the other sells a product nominally aimed at putting people back together. But when it comes to deceitful public relations techniques, the health insurance industry has been learning well from Big Tobacco, which employed a panoply of shady but highly successful public relations tactics to fend off changes to its business for generations.

    One of the things I said in my testimony before the Senate Commerce Committee on June 24 is that the health insurance industry engages in duplicitous public relations campaigns to influence public opinion and the debate on health care reform. By that I mean there are campaigns they want you to you know about, and those they don't.

    When you hear insurance company executives talk about how much they support health care reform and can be counted on by the President and Congress to be there for them, that's the campaign they want you to be aware of. I call it their PR charm offensive.

    When you read or hear someone other than an insurance company executive -- including members of Congress -- trash some aspect of reform the industry doesn't like, such as the creation of a public health insurance option, there's a better-than-even chance that person is shilling for the industry. That's the PR campaign the industry doesn't want you to know about.

    The public relations and lobbying firms that work for the industry plan and carry out those deception-based campaigns, and supply the shills with talking points. One of many tactics they use is to get people who are ideologically in sync with the industry's agenda to turn those talking points into letters to the editor.

    An example of a letter that contained many of the industry's messages appeared in the June 27 edition of the New York Times.

    The writer, Pete Petersen, identified as an employee benefits consultant for small employers, took issue with a June 20 Times editorial, which noted that, like Medicare, "a public (health insurance) plan would have lower administrative expenses than private plans."

    Mr. Petersen claimed that the Medicare program is a poor example of an efficient government program, because it is administered by the private sector. While it is true that the government contracts with private companies to handle claims, the reason Medicare has such low administrative costs is because it does not have the unnecessary overhead expenses private insurers have, such as costs associated with sales, marketing and underwriting.

    Mr. Peterson also wrote that Medicaid, Champus and state CHIPs "that are administered by federal, state and municipal authorities" average 26 percent in administrative costs. What he did not mention is that in many if not most cases, those authorities have turned those programs over to the insurance industry to run. Private insurers' involvement in those programs is much greater than in the Medicare program. That helps explain why they have higher administrative costs.

    Mr. Peterson also claimed that, according to a 2006 PricewaterhouseCoopers study, "86 cents of every premium dollar goes directly toward paying for medical services." What he does not disclose is that America's Health Insurance Plans, the insurance industry's biggest trade and lobbying group, commissioned that study. A 2008 study by PricewaterhouseCoopers that was not paid for by the insurance industry tells a different and more revealing story. That study reveals that the percentage of premium dollars going to pay for medical care has fallen from more than 95 percent to slightly more than 80 percent since 1993.

    For another great example of how the insurance industry uses its allies to flood newspapers with letters to the editor, read Trudy Lieberman's April blog post for Columbia Journalism Review. She discloses how an alert editorial page editor at the North Andover, Massachusetts Eagle-Tribune caught the industry red-handed.

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

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    Mr. Potter, you are a true

    Submitted by Anonymous (not verified) on July 11, 2009 - 4:48pm.

    Mr. Potter, you are a true hero. Please continue to spread the word and to help us!

    Government Mis-manages Health Care Dollars

    Submitted by Anonymous (not verified) on July 11, 2009 - 10:20am.

    The U.S. Department of Health and Human Services reported in the latest HHS Agency Financial Report (Nov 2008) that the contracted insurance companies for Medicare, Medicare Advantage, Medicaid and SCHIP made $50 Billion in improper payments (overpayments) to health care providers in one year. See http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=3368

    The improper payments result from the complexity of health care billing and payment rules. They also are caused by fraudulent behavior by some doctors, hospitals, labs, and equipment providers billing for services not provided. The federal and state governments do not process health care claims themselves but contract with companies like BC/BS, Aetna, Amerigroup and many others to enforce government rules and pay claims. For the most part, these are the same insurance companies that handle health insurance claims for most Americans. If the insurance companies make such massive errors with our tax dollars, what mistakes do they make with our health care premium dollars? For a list of Medicare payers and their error rates, see http://www.cms.hhs.gov/CERT/CR/list.asp

    When calculating administrative costs for Medicare, Medicaid and SCHIP, be sure to add in the cost of improper payments. When you do, you will get a much higher percentage of premium dollars than previously calculated.

    The latest FBI Financial Crimes Report in 2007 estimated that 3 percent to 10 percent of total health care spending is attributable to fraud, overpayments, coordination of benefits and subrogation errors. This means that up to $260 billion a year in associated costs are due to health care fraud. Yet the government only assigned enough staff to recover about $1 billion. See http://www.fbi.gov/publications/financial/fcs_report2007/financial_crime_2007.htm

    Why does the government do such a poor job in managing health care dollars? After listening to Wendell Potter's interview on Bill Moyers Journal, I suspect it's due to the political power of the health care industry. Why do journalists do such a poor job of reporting the theft of our tax dollars and insurance premiums? I don't know!

    Reducing improper payments and fraud will provide enough money to ensure all Americans have health insurance without raising taxes. It will also eliminate the difference in health care inflation and overall inflation. Most importantly, it will provide enough money to increase the payments to honest providers without raising the overall cost of health care. If you agree, let your Congressperson know what you think. Only democracy can overcome lobbyists.

    This article uses the same tactics as the tobacco industry

    Submitted by Sheldon Hall (not verified) on July 11, 2009 - 9:08am.

    This article uses the same tactics as the tobacco industry that it purports to criticize.

    It refers to the insurance companies as being the "health care industry". It ignores the fact that the "health care industry" consists of, guess what, health care providers; doctors, nurse, hospitals, etc, etc.

    By attacking the insurance companies, which are easy targets, and referring to them as the "health care industry", they seek to generate criticism of the whole industry. Demonize one, demonize all.

    From what I've seen, so far, the political debate has been all about money, and only pays lip service to the actual patients, and providers.

    A rational health care system should be centered on the needs of the patient, and the actual providers. How can we ever have any effective health care system without the cooperation of the providers themselves ?

    Personally, I think the notion that the government can provide a better health care system, cheaper, is not even rational.

    It's about the insurance industry

    Submitted by AndrewDavies (not verified) on July 13, 2009 - 8:53am.

    Sheldon -

    You're the one bringing doctors, nurses, etc into it. I don't see anyone else doing that.

    My guess is that you want (for whatever reason) to shift the debate from being about the insurance industry (which everyone tends to hate) to being about doctors and nurses (which everyone tends to like).

    Let's keep the focus on the insurance industry as the topic.

    My suspicion is that health care workers (ie. people actually treating us) are as much the victim as patients.

    Wendel -

    Thanks for speaking out. I especially love hearing about the dirty tricks and tactics the PR industry uses when a client gets desperate. I'd love more information about how to spot these tactics - so, as US citizens, we can be more conscious and informed participants in the debate.

    Insurance Industry

    Submitted by Anonymous (not verified) on July 13, 2009 - 11:26pm.

    Keep up the good work. You and the founder of united patients of America have a lot in common. She was on the receiving end, you were on the other. Perhaps together you can make the difference.

    Insurance Industry vs. Health Care Industry

    Submitted by Lynn Dee (not verified) on July 11, 2009 - 11:36pm.

    The problem with referring to the insurance industry as the health care industry is that it misses the reason why the free market doesn't work to bring health care to people. Unlike food or clothing or any other commodity, where if the seller doesn't sell the product it won't make money, insurance companies aren't in the business of selling health care. They're in the business of selling insurance. So they don't give a damn if people are provided health care so long as they're paying for insurance. In fact, as Mr. Potter points out, the portion of any dollar that goes to pay for medical claims has dropped from 95 cents to about 80 cents in just the last 15 years.

    We need a public option. The only alternative would be government rulemaking, and that's not gonna happen.

    It's tough not to conclude that anyone who thinks government won't work must be working for the insurance companies.

    Thank you

    Submitted by Mbuya Nehanda (not verified) on July 11, 2009 - 7:54am.

    I watched you on bill moyers show yesterday and I would like to say thank you.
    I applaud your courage in speaking the truth moreso now at a time of distorted
    information. and half truths. May you continue the work.

    Bill Moyers' Journal

    Submitted by John V. (not verified) on July 11, 2009 - 7:06am.

    Your appearance on Bill Moyers' Journal was terrific--extremely informative. But while you said that you are a capitalist, you did not clearly say that the healthcare insurance industry is anti-capitalist. As you stated, they are anti-competition and monopolism is not capitalism. Competition is the heart of capitalism, and they openly reject it.

    "Letter to Editor" Machine

    Submitted by Bob Greene (not verified) on July 11, 2009 - 3:12am.

    I have seen several samples of issue-advocacy software used to generate letters to a publication.

    The software is designed to obtain an endorsement from the person who reads a motivational cover message, usually sent by email. The message entices the reader to initiate the process by clicking on a hyperlink in the message text to "learn more" or some equally non-committal motive.

    After reading the cover letter and starting the hyperlink, the reader is led to a page where he "composes" a letter to his congressman and/or senator from a one of three or four prepared bodies of text. To the assembled "letter" is attached the reader's name, postal address and email address. Sometimes, along with phone number.

    In some variations of this software, there is a box in which the reader actually composes his own free-form response.

    At some point, the reader who expects his message will be sent to the appropriate parties already named is asked to name his local newspaper of record. Here is where the software has been deliberately deceptive-- the early versions, at least, never explicitly state the reader's "letter" also will be sent to the local newspaper.

    That is to say, many of those readers said to have sent a message to an editor never knew they sent the message!

    Health Care Reform

    Submitted by Lynn Dee (not verified) on July 10, 2009 - 11:07pm.

    Mr. Potter, I just saw your interview with Bill Moyer and was very heartened to know you're helping to get health reform through. It's been discouraging to watch the back and forth, the various "trial balloons" sent up by the Administration or this or that faction of Congress. I have no idea whether reform will happen this year or not. (In fact, do you have any sense of the likelihood of reform getting through? Perhaps you could say something about that.)

    I have heath care through my employer and thus far have no complaints. But my 22 year old son has had diabetes since he was 14 months old. I used to hope for a cure. Now I just hope for health care reform before he's out of college and can no longer be on my health care plan.

    BTW, I meant to say I can well understand what a shock it must've been to see the lines of people at the Wyse County Health Fair in Virginia. It was a shock to watch it on T.V. It's easy to imagine that the uninsured are somehow managing to find health care somewhere, if perhaps having to scrimp and save -- and quite depressing to realize in this country of wealth that people are traveling for hundreds of miles to be seen by a doctor they've never seen before and will likely never see again, and who knows nothing of their history.

    Anyway, thank you for your work and for your profile in courage.