The Corporate Profit Motive & Questionable Public Relations Practices during the Lead-Up to the Affordable Care Act

Beginning of article

I. INTRODUCTION

II. SKY-ROCKETING COST, LOSS OF COVERAGE, &
BANKRUPTCY

 A. Extremely High and Rising Costs Overall
 B. Rising Insurance Premiums, Deductibles, and
    Out-of-Pocket Expenses
 C. Rising Costs Hurt the Economy
 D. Personal Financial Ruin

III. HEALTH CARE FINANCING IN THE UNITED STATES

 A. Signing the Affordable Care Act
 B. Government Health Care Financing Programs
 C. Privately-Funded Medical Coverage
 D. The Underinsured & The Uninsured
 E. Financing Friction
 F. Corporate Interests Protected Through Public
    Relations Tactics
 G. Unsavory & Apparently Unlawful Public Relations
    Tactics
 H. The Challenges A head

IV. INSURANCE COMPANY RISK REDUCTION AND RISK
    AVOIDANCE TACTICS

 A. Dropping Beneficiaries Who Get Sick
 B. Padding Profit Through Coverage Denial
 C. Dr. Linda Peeno 's Testimony Before the House of
    Representatives

V. WIN-AT-ALL-COSTS PUBLIC RELATIONS TACTICS

 A. What Is Public Relations?
 B. Misleading Public Relations Tactics
 C. Specious Third-Party Front Groups
 D. Contrived Self-Serving Studies
 E. The Result of the Public Relations Gamesmanship

VI. POTENTIAL SOLUTIONS

 A. Congressional Hearings to Build a Record
 B. State-Based Licensing of Public Relations
    Professionals
 C. There Must Be Disclosure
 D. Existing Laws

VII. CONCLUSION

"IT IS A FACT THAT HEALTHY NATIONS ARE WEALTHY NATIONS. ... "(1)

Excerpt-1:

   ... This is the fatal flaw. Many of those charged to fund medical
   care are incentivized, by corporate and fiscal law, to find ways to
   deny coverage.

   This enticement has led each of the larger private health insurance
   companies to implement various morally unsettling, but often licit
   ways to deny payment based on technicalities and fine print. So
   doing positions the company to maintain a medical loss ratio in
   keeping with shareholder and investor expectations, not to mention
   mammoth executive compensation linked to stock performance.

   Meanwhile, somewhere else in America, a patient goes untreated even
   though the technology and the medical resources may be available.
   Attending physicians are embarrassed, even frustrated or outraged.
   The patient feels the despair of abandonment. The anxiety and pain
   family and friends already feel is worsened by the idea that their
   loved one has been devalued by an anonymous, aloof, and apparently
   disinterested medical director ensconced in a distant office
   building overlooking the green fields of Connecticut.

   Given the importance Americans place on individual rights, freedom,
   and the inherent value of each life, one would think that those
   charged to fund medical care would be incentivized by benevolence
   and good will rather than the bottom line, especially when those in
   need of care are at their most vulnerable in body and spirit. (2)

Excerpt--2:

   The time is now to clearly identify the extent of these two
   material problems: the elevation of profit over the financing of
   care on the one hand, and unchecked corporate duplicity guised as
   legitimate public relations on the other hand. Solutions must
   contemplate recalibration of the payment system so that those
   responsible for payment are motivated to fund medically necessary
   care rather than deny payment to increase profits. Solutions must
   equally embrace measures to require public relations firms to
   disclose the identity of their clients and certify the good faith
   basis of public claims so that debate about significant issues such
   as the health of America's citizens is free from disguise and
   unseemly manipulation. A problem identified is a problem half
   solved. (3) Until these two problems are taken up, each remains
   poised to produce high-stakes problems in the future. (4)

I.INTRODUCTION

The purpose of this Article is two-fold: first, to highlight two problems which threaten the effectiveness of the Patient Protection and Affordable Care Act of 2010 (Affordable Care Act), (5) and second, to invite civic and governmental dialogue to implement solutions to those problems. The Affordable Care Act is tailored to build upon what is good about the existing health care financing system in the United States. It is also calculated to maximize access to quality and affordable health care across the Nation. There remains, however, work that must be done to neutralize risks to the foundational requirements of consistency and predictability when it comes to payment for medical care.

First, for-profit health insurance companies will continue to occupy dominating and influential positions within the reformed framework. Because of legal obligations to shareholders to maximize profits, corporate efforts shall persist to implement cost-saving methods. If the past is prologue, these resource conservation devices will continue to inject inconsistency and unpredictability into whether or not care will be covered. The result is to all but incapacitate the security so indispensible to the legislative and executive intent behind reformed health care. Until America removes the incentive for third-party payors to limit or deny coverage altogether, actually paying for care will remain less important than corporate earnings. As one commentator observed, "[s]o, if the private sector of our health system continues to be dominated by for-profit insurance plans, the industry's well-financed lobby and its political influence will probably prevent any future reform proposals that might threaten its income." (6) It thus appears that payment for care will stay in the back-seat to profit.

The second problem involves the ease with which private health insurers employ the questionable tactics of public relations practitioners to mislead the public and lawmakers in important fiscal and health matters. Together, they spend millions of dollars to draw from a catalogue of proven schemes to misrepresent the facts to the public and lawmakers intending to secure public dollars for private gain. As discussed more fully below, in the heated debate preceding enactment of Affordable Care Act, this was done on a scale heretofore unseen.

Presently, there is no enforcement mechanism to compel honesty, fair dealing, and disclosure of the real parties-in-interest in public relations. To date, there has been no penalty for placing untrue sound-bites, discrediting attacks, and self-serving studies in television, radio, Internet, newspaper, and other media for dissemination throughout the country. (7) Likewise, there has been no sanction for providing falsehoods to individual Members of Congress, their staffs, and the Presidential Administration to induce the authorization and appropriation of public dollars for private interest. (8)

These ploys are more than mere rhetoric. Their falsity coupled with the intent to deceive for private financial gain crosses both moral and legal lines. They are material misrepresentations designed to steer fiscal and policy decisions away from other viable alternatives, i.e., a single-payor system or a public insurance option.

An old college professor often noted in terms of critical thinking, "[a] problem identified is a problem half-solved." (9) Unless governmental corrective action is taken, health care financing in the United States will never truly get over Mu, that is, the coefficient of friction, (10) between for-profit corporate interest and the moral imperative to care for the Nation's sick. (11) Until states regulate public relations professionals, state and federal disclosure requirements are enacted, and the federal government enforces civil and criminal penalties to protect society from widespread and well-heeled campaigns of deceit, the health insurance industry and its compatriots in public relations remain ready to once more abuse the public trust for their private economic gain.

Symptomatically, any movement to challenge the health insurance industry's reign will likely be met with the very tactics this type of reform seeks to remediate. Currently, the Secretary of the United States Department of Health and Human Services (HHS) is engaged in extensive administrative rulemaking to implement the new legislation. (12) At the same time, private insurers are using their resources to "reframe the debate" in the hope of securing industry-friendly regulations. (13)

The economic health of the Nation and the health of its people compel Congress to hold hearings and take appropriate action to prevent public relations abuses from negatively affecting health care, and other industries for that matter, again. When oversight and enforcement measures are in place, the path will be clearer to tackle the fiscal misalignment where those charged with financing health care are incentivized to deny payment to increase profit.

The balance of this article:

i. discusses the drivers making American health care the most expensive in the world;

ii. outlines the patchwork of public and private fiscal arrangements that comprise the American health care financing system;

iii. reveals the legal means by which private insurance companies reduce or eliminate risk, through rescission, cancellation, coverage denials, and other methods;

iv. evaluates the behind-the-scenes campaign America's Health Insurance Plans (AHIP), the public relations and lobbying arm of the health insurance industry, waged to thwart reform without exposing its self-serving profit motive;

v. explains how the Affordable Care Act was enacted despite stiff opposition; and

vi. concludes with a call to open a dialogue with a view toward focusing efforts to implement solutions, among them:

a. that Congress conduct hearings to develop the record and take action in light of the unvarnished facts;

b. that states adopt licensing and enforcement procedures for public relations;

c. that federal law require public relations practitioners to disclose the real-parties-in-interest who fund spin efforts and certify the good faith basis of claims placed into the media; and

d. that law enforcement authorities evaluate the suitability of using existing laws to address apparent fraudulent misrepresentations.

II. SKY-ROCKETING COST, LOSS OF COVERAGE, & BANKRUPTCY

"The system is broken; it costs too much, excludes too many, and delivers substandard care." (14)--Senator Tom Daschle

A. Extremely High and Rising Costs Overall

As former Senator Daschle observes, cost is a problem. "The United States spent nearly $2.1 trillion on health care in 2006, twice as much as in 1996 and half as much as forecasters predict for 2017." (15) In 2009, the United States spent 17.3% of its gross domestic product, or $2.5 trillion, on health care, the highest rate in the world. (16) The United States spends nearly two times as much per person on health care as other industrial countries do on average, and more than 50% more than the next biggest-spender. (17) The American "health care system is the most expensive in the world, more than twice as much per capita as the average among member nations of the Organisation for Economic Co-operation and Development." (18)

B. Rising Insurance Premiums, Deductibles, and Out-of-Pocket Expenses

Both beneficiaries and employer-sponsors feel the escalating cost of premiums. Between 1999 and 2009, premiums rose 131%, with a worker contribution increase of 128%. (19) That is, workers premiums rose from $1,543 in 1999 to $3,515 in 2009. (20) Equally wearisome, the employer contribution rose from $4,247 to $9,860 for the same period. (21)

Even those who appear to be covered by an employer or individual insurance policy can suffer financially if serious illness strikes because "another 16 million are underinsured or lack coverage for catastrophic medical expenses." (22) As of 2007, 25 million American adults were underinsured to the extent that they have insurance, but not enough to cover high medical expenses, thereby forcing them to increase personal expenditures for health care service. (23) In recent years, the proportion of insured persons who are underinsured has grown by 60% since 2003, reaching nearly 25 million in 2007. (24) Each year, the uninsured receive an estimated $56 billion in uncompensated care, and those costs are shifted to policyholders largely via increased premiums. (25)

A significant number of Americans lack access to coverage because they are medically uninsurable, meaning that insurers refuse to sell them coverage at any price because of preexisting conditions. (26) Their costs would almost inevitably exceed high-deductible plan maximums, so any plan available to them would require extremely high premiums. (27)

Due to the cost of co-payments and deductibles, some insureds forego medical care. (28) As an overall negative impact, as rising costs cause many to forego medical insurance, health care providers are confronted with even more uncompensated care. (29) This is then shifted back to the remaining insured, only exacerbating the problem and forcing others to drop coverage. (30)

The lack of health care creates additional problems for insured and uninsured American families. The uninsured are likely to forego or postpone medical visits (31) and "[p]ersons that delay or fail to receive timely health care are more likely to develop serious illness, become hospitalized for conditions that could have been avoided, and ultimately die." (32) The consequences extend beyond the ethical or moral, as all Americans, regardless of health status at any point in time, have a stake in how health care financing treats people in poorer health. As one study noted, "we simply cannot prevent illness and manage chronic disease if one in three Americans cycles in and out of coverage for at least one month over the course of two years." (33)

The uninsured generally have access to medical care at emergency rooms. (34) But emergency rooms cannot provide routine preventative care or deal with ongoing conditions. (35) Emergency rooms are supposed to be available for sudden crises and emergency care is really no substitute for affordable normal care. (36) Hospital bill collectors may hound nonpaying patients for years thereafter, and, if the bills cannot be collected, costs are shifted to others. (37) Hospitals charge paying clients higher rates; governments raise taxes to subsidize public and teaching hospitals; physicians have to forgive fees to help needy patients without insurance; and insurance companies hike premiums for everyone. (38) For those Americans who are not covered by a large employer's plan or by a federal government program, hospitals normally charge their highest rates for tests and procedures because the citizen lacks the bargaining power of a large employer or the federal government. (39)

C. Rising Costs Hurt the Economy

These great expenses hurt the American economy in many ways. Domestic businesses are negatively impacted, for example, because they are forced to absorb the rising health care costs of their workforce while trying to compete with international companies. "Businesses directly finance about one-fourth of all health system spending." (40) In 2007, health care costs constituted $1,525 of the price of every General Motors vehicle. (41) Put another way, General Motors spent $4.6 billion on health care in 2007, an amount greater than what the company spent on the steel used to produce its cars. (42)

This annual expenditure for medical care "puts the company at a $5 billion disadvantage against Toyota, which spends $1,400 less on health care per vehicle." (43) In the face of staggering annual expenditures that compromise domestic competition with international rivals, it can be no surprise that the "percentage of employers providing insurance to their employees has dropped from nearly 70 percent to 60 percent." (44)

These ever increasing costs limit businesses' ability to invest, to improve workers' wages, and increasingly, to offer coverage in the first place. Businesses cited rising cost as the number one reason for the elimination of offered coverage. (45) As Federal Reserve Board Chairman Ben Bernanke noted, "improving the performance of our health-care system is without a doubt one of the most important challenges that our nation faces." (46)

D. Personal Financial Ruin

The lack of affordable, quality health coverage has meant that many Americans with medical needs are driven to financial ruin. Indeed, because people value health and life so much, they do all they can to pay the price for care, and can even go bankrupt in the process. (47) In 2007, for example, medical debt was a central factor for 62% of personal bankruptcy filings. (48) Equally startling, among insured Americans health care costs now account for nearly 75% of personal bankruptcies related to medical care. (49) "[T]he hard truth about this country's health-care system: just about anyone could be one bad diagnosis away from financial ruin." (50)

III. HEALTH CARE FINANCING IN THE UNITED STATES

A. Signing the Affordable Care Act

On March 23, 2010, President Barack Obama signed into law a milestone in American social legislation. As he placed his signature on the Affordable Care Act during a crowded White House ceremony, the President pointed to history and American values when he said "the bill I'm signing will set in motion reforms that generations of Americans have fought for and marched for and hungered to see," preserving "the core principle that everybody should have some basic security when it comes to their health care." (51) To help provide that basic security, "the main thrust of this extensive legislation is to provide federal aid for mandatory expansion …