Quelle Surprise! Health Insurers Pretended to Play Nice, Lobbied Against Reform

The headline above would normally be seen as “dog bites man” save for the fact that during the health reform debate, the insurers went to considerable lengths to profess they really, really had changed their ways and were now going to be good corporate citizens.

But it was pretty clear that this change of heart was just a charade. After all, if Obama was going to give the industry the store, they had to look like nice guys. You don’t give massive subsidies to people who are obviously predatory, unless they are from the financial services industry and thus can credibly threaten to destroy the economy. And from the insurance industry’s standpoint, what’s not to like about the new program? Tens of millions of formerly uninsured people will be required to buy policies from them, plus the percent of premiums they are mandated to pay out in benefits is considerably less than what they spend now (meaning the legislation in no way threatens their margins; in fact, it legitimates them and would even permit them to enlarge them). And as we will discuss soon, some of the advantages claimed for the bill are hollow.

We were very leery of the industry’s charm offensive. As we wrote last August:

My bullshit meter went into high alert earlier this week with this New York Times story, “For Health Insurers’ Lobbyist, Good Will Is Tested,” which was clearly a PR plant. It featured Karen Ignagni, a $1.6 million-a-year earning lobbyist to the health insurance industry as a heroine (I started getting nauseaous as soon as I saw the deliberately low-key picture of her in her office). And why should we see a representative of one of the biggest forces undermining democracy in America, the usually-successful efforts of well-funded industry groups to steam-roll legislative process, as a good guy, or in this case, gal? Because she supposedly talked a mean and obstructionist industry into playing nice.

This NYT article thus manages to be a two for one, trying to re-image both the health insurance industry and lobbyists. Consulting my Divine Comedy, I find lobbyists are relegated to the eight circle of hell no matter how you cut and slice it, as either flatterers (second bolgia) or false advisors (bolgia eight) or falsifiers (bolgia ten, along with alchemists and perjurers). This puts them on the same general level as corrupt politicians (bolgia 5), although one could make a case they belong in the ninth circle, traitors.

To the Times’ puff piece:

For the insurance industry, long an opponent of health care reform, it was a striking change: with a new administration coming to Washington, insurers agreed to abandon some of their most controversial practices, like denying coverage to applicants with pre-existing medical conditions.

The truly offensive bit of the piece was the Grey Lady running full bore with the line that they were being unfairly castigated, they really had turned a new leaf, and those people who were Calling Them Bad Names were risking breaking up Ms. $1.6 million woman’s fragile coalition:

For a while, it seemed to be working — until recently, when the insurance industry re-emerged as Washington’s favorite target. “Villains,” Nancy Pelosi, the House speaker, called health insurers. And Mr. Obama derided the industry for pocketing “windfall profits.”

Taken aback, Ms. Ignagni, the 55-year-old chief executive of the trade group America’s Health Insurance Plans, wondered on Tuesday why insurers were being singled out when, in her view, they had accepted that change was necessary.

“Attacking our community will not help get anyone covered,” she said.

The last statement was very revealing. It’s tantamount to “We still hold the whip hand.” And it appears they do.

Back to today’s update. Notice that the big concession that the industry supposedly made was its stand on pre-existing conditions. But the bill has a giant loophole: insurers can continue to cancel policies in the case of “fraud or intentional misrepresentation” as they do now. Readers have no doubt hear of or read about how low the permitted bar is now for insurers to rescind policies. And when are insurers most likely to look to find grounds not to pay for treatment? When you most need it, of course, when you have a serious, expensive ailment.

National Nurses United, a 150,000 member organization, opposes the bill. Some of its reasons:

As Jean Ross, NNU co-president noted, “the bill seems more likely to be eroded, not improved, in future years due to the unchecked influence of the healthcare industry lobbyists and the lessons of this year in which all the compromises have been made to the right.”….

Individual mandate was the top priority of the insurance industry, which also succeeded in fending off meaningful restraints of its predatory pricing practices. The likely outcome is that far too many people will still face healthcare insecurity or medical bankruptcy due to ever rising out-of-pocket costs, or continue to skip needed medical care because of the high prices.

Indeed, discouraging provision of care as the preferred way to control costs, rather than rein in the pricing practices of the insurance and drug giants, is a central tenet of the insurance industry and conservative policy wonks.

So the story thus far is that Team Obama was handing the insurance industry everything it wanted on a silver platter (recall the shameful incident in which the public option was dropped despite Congressional support; it was a mere trading chip, not something Obama was ever serious about). The industry was supposed to play nice.

Well it didn’t even hold up that part of the bargain. Admittedly, Congress started calling the insurers bad names. Please. The dealings with Team Obama had been so cozy that a little roughing up would have good PR value for both sides. It would create the appearance that the powers that be had not caved in to the insurers.

And a general rule: in a good negotiation, both sides come out feeling a little bruised and unhappy. No one gets everything they want. But the insurers weren’t about to adhere to the new posture they had pretended to adopt to win over the public. As soon as they started encountering opposition, they cranked up the attack ads. But rather than fund them directly, they channeled money through the Chamber of Commerce. From the National Journal:

Just as dealings with the Obama administration and congressional Democrats soured last summer, six of the nation’s biggest health insurers began quietly pumping big money into third-party television ads aimed at killing or significantly modifying the major health reform bills moving through Congress…

The fundraising started last September and continued through December using AHIP as a conduit to avoid a repeat of the political flak that hit the insurance industry after it famously ran its multimillion-dollar “Harry and Louise” ads to help kill health care reforms during the Clinton administration….

Publicly, the group has stressed repeatedly that it supports health care reform legislation…

Since last summer, the chamber has poured tens of millions of dollars into advertising by the two business coalitions that it helped assemble: the Campaign for Responsible Health Reform and Employers for a Healthy Economy.

In late October, the chamber helped cobble together a larger coalition, Employers for a Healthy Economy, which became the key advertising vehicle for attacking provisions in the House and Senate bills being developed…The ads sharply criticized the high costs of the separate bills, especially the House version. The commercials warned the legislation would raise taxes for Americans and hurt the economy as it tries to recover from the recession. And some chamber-financed commercials attacked setting up a government run plan to compete with private insurers — a special sore point for the insurance industry — which is part of the House measure.

The U.S. Chamber has spent approximately $70 million to $100 million on the advertising effort….Sources say that the chamber-backed ads will likely continue as the two bills are combined in coming weeks.

Yet if any bill passes, the industry will show greater earnings, which will allow them to spend even more on lobbying and advertising, which will enable them to secure even more favorable legislation.

Print Friendly, PDF & Email


  1. Ray Duray



    WASHINGTON (Reuters) – President Barack Obama will announce plans on Thursday to raise up to $120 billion from major U.S. financial firms to cover expected losses from a taxpayer-funded bank bailout, a senior administration official said on Tuesday.

    Ray here. There’s magic afoot in this disneyesque announcement. I’m a naif. I expect you to ferret out the ferret. Or Obama as the case may be.

    This is a PR/psyops/Orwell special. Complete crap, as usual.

    By the way, I’m still looking for your review of “The Imperial Cruise”.


    You are my Alice Roosevelt and I expect good things from you, my dear.

  2. attempter

    This was never a negotiation but a concerted corporatist assault on the people by the rackets and the Democrats. The phony wrangling over the “public option” scam and the “progressive bloc” scam were bait-and-switch charades.

    (Meanwhile the Republicans basically got away scot free and amazingly will be able to run as the anti-corporate giveaway party in 2010 and 2012; it just goes to show how incompetent the Dems are, that they can’t even sell out the right way. WTF were they thinking with that “mandate”? It wasn’t necessary; just leaving the status quo intact would’ve sufficed. What a gift to the Reps. Heckuva job.)

    I agree they all belong in the lower levels of the Inferno. They’re all traitors to America, although Obama and the opportunist “progressives” in Congress and among “activists” are even worse than the lobbyists. At least the lobbyists are in fact loyal to those who they nominally serve, unlike these lying “public” servants and “public” interest advocates.

    Health care reform is a clear, easy issue.

    1. Basic decent health care is a human right and not a commodity.

    2. Corporatism is the scourge of our time, and corporate tyranny is the great death which looms before all of us.

    It’s very clear where this bill lies vis these two truths. And therefore it’s clear where one stands in relation to these truths, depending upon where one stands in relation to this bill.

    1. Anonymous Jones

      [Begin Full Disclosure] I am in favor of single payer, universal health care until it is conclusively proven to be less efficient and less effective than our current system. [End Full Disclosure]

      OK, with my personal preference out of the way (disagree all you want!), I find it highly unproductive to make statements like, “Basic decent health care is a human right and not a commodity.” This would be all well and good if basic decent health care was “not a commodity.” Alas, it is. The service has to be provided by someone and that person is going to demand market compensation or the service will not be provided. Also, this statement would be all be well and good if basic decent health care was a “human right.” Alas, it is not. Of course, there are no basic “human rights,” only those things that the collective chooses to hold up as “rights” and attempt to enforce through the violent collective power of the state and/or community (usually with the idea of deterrence and/or vengeance). Watch “The Road” or “Le Temps du Loup” and let me know what you think are really the basic “human rights” that transcend time, community, and circumstance. They simply do not exist.

      1. attempter

        You probably shouldn’t reply to political advocacy if you’re just going to be a nihilistic pedant, which is all I’ve ever seen you be.

        Obviously anything is a human right if a community coheres to make it so, and not otherwise. Tell us something we don’t know. I want to call upon people to rediscover community and make it so.

        What you want to do, I have no idea.

        1. Anonymous Jones

          I don’t usually respond to responses, but this one was so surprising, I just had to jump back in. I guess I never expected anger and invective in response to what I thought was a relatively innocuous comment. I guess I can cop to being a pedant…a nihilist not so much. I also guess I find ‘pedant’ probably a lot less pejorative than you do. I actually find pride in my level of learning and my constant struggle to root out the cognitive biases that I and my fellow humans have.

          As to my comment in general, what about my interest in a single payer, universal health care system makes you think I’m against rediscovering community? Seems incongrous when I put that way, no? I very much want to live in a strong, vibrant and educated community.

          Also, you want me to “tell us something we don’t know”…yet you clearly don’t even understand what I was trying to say. I’m not saying that a community defines “human rights.” I’m saying that the community “tries” to define something that *cannot exist*. These are two very different things. At least from my perspective. I’m sorry that you don’t find any merit in my thoughts. I generally think I will continue to share them. Sorry.

          1. sgt_doom

            AnonymousJones is highly representative of the typically mentally oblivious and befuddled indidividual (who, if they are being honest, most likely just recently came to such a philosophy or political attitudes).

            Attempter is completely spot on and is a self-aware, and doesn’t belong on the matrix.

            ‘Nuff said….

          2. Valissa

            Well AnonJones, like you I don’t normally respond in situations like these either… but I happen to agree with all you’ve said here and props to you for it.

            Guess I’m just another “oblivious and befuddled” thinker, LOL. Or perhaps I’m just older and wiser, more sceptical and less idealistic than I used to be.

          3. attempter

            In that case I suppose a “community” doesn’t exist either. Isn’t that just inventing a collective concept to describe what’s in reality an aggregation of atoms?

            Since you didn’t mind the term pedant then I’ll go with it to say that, yes, from a strictly pedantic point of view there’s no such thing as a “community” or “human rights”. These are political metaphors or terms of experession. Such metaphors are all we have for communication purposes.

            If you’ve seen from my comments how I’m a Nietzsche afficionado then you know how well aware I am of the uses of language.

            But this is not primarily, at least to me, a philosophical symposium. It’s a political arena. We are in a highly contested political situation here today. Trillions are being stolen. Corporate tyranny is consolidating.

            (Yes, yes, there’s “no such thing” as a “corporation” in actuality. And there’s no such thing as “tyranny” either. And no such thing as “politics” or “philosophy”. I concede all that. Gosh darn this pesky language we have, it keeps coughing up metaphors and descriptors!)

            So when I used the term “nihilism” I wasn’t being “angry” at all. I was objecting to having a political communication in (what’s to me) a political forum responded to with the equivalent of a spell check.

            I guess it goes to the question, which commentors sometimes come onto these blogs to sneer, “What’s the point of all this?” There used to be a guy at Baseline Scenario who was always chiming in to scoff. Everybody commenting, and no progress seeming to be made. A year ago I used to consider him a troll, but by now I think someone like that would have a good point.

            That’s what I meant in my response, which may have sounded more harsh than I intended, and was not meant to convey anger, but to express, I grant, some impatience on this score.

            How would you defend against a goon when he quotes Thatcher, “there’s no such thing as society”? It seems to me you’ve already agreed with him. You have no basis to demand single payer, since there’s no “body” in existence who can be that single payer.

            Unless it’s a group who come together to constitute a body and invest it with such a function. Then it would have that level of reality. And if they choose to call the function a “human right”, that would have the same level of reality. Such an idea is part of the reality people create for themselves and realize through their actions.

  3. Freemon SandleWould`

    You speak as though Obama was not a dictator only interested in power. Knowing who Obama is and calculating from there gives the correct result:

    Obama == power at any cost > means pass “health care bill” > it is anything but that – you will pay your premiums and get no health care for 4 years > bribe all relevant parties enough that this power take over gets done. QED

    This “health care” thing of Obama’s is just as real as man made global warming. Which is just another way of saying: “A COLOSAL SCAM”….but then what would you really expect out of a community organizer? They do not create GNP….they expropriate it.

  4. joe

    Stop lobbyists from writing the laws, we need publicly funded elections!

    No wonder why we have a 2000 page health care bill. The health insurance lobby writes the law; Of course with all the loopholes they want!

    We have a facist society, it’s gettng worse, and need to wake up people!

    1. alex

      Hear, hear!

      Discussion of why our health care “reform” or financial “reform” is so corrupt should focus on the elephant in the living room: bribes (euphemistically called “campaign contributions”) are legal. With billions in bribes openly being handed out (see opensecrets.org) it would be a miracle if our system wasn’t thoroughly corrupt.

  5. Craig

    Fact is, over 30% of your health insurance premium is used to cover care for people covered by medicare and medicaid. Add to that you state medicaid costs and your property used to provide care for uninsureds and you quickly discover the true problem. We can no longer afford government involvement in heathcare.

    1. alex

      “We can no longer afford government involvement in heathcare.”

      Then why can every other developed country in the world afford it?

Comments are closed.