Former insurance executive, 'whistleblower' to discuss health care with consumers

Wednesday, June 19, 2013 | 9:40 p.m. CDT; updated 2:54 p.m. CDT, Thursday, June 20, 2013

COLUMBIA — Wendell Potter says the health care system in the U.S. is so complicated, it makes even your hair hurt.

Potter acknowledges there's confusion among average Americans about the Affordable Care Act — dubbed "Obamacare" — and that furthers the belief that the new law has made health care even harder to understand. However, Potter said the changes brought on by the act will help end a lot of the cost shifting that goes on in the health care field.

If you go

What: Wendell Potter explains the U.S. health care system

When: 7-8:30 p.m. Thursday, June 20

Where: 204 S. Ninth St.

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Potter spent 20 years working for health insurance companies, most recently as the head of corporate communication for Cigna, a major health insurance provider. He left the industry in 2008 and became one of the primary critics of his former employers. Potter has since testified before Congress multiple times about abuses by health insurance companies.

Potter talked to the Missourian on Wednesday about health care reform, Medicaid and what recent changes mean for Missourians. He will give a presentation at 7 p.m. Thursday at the Missouri United Methodist Church in downtown Columbia. The event is open to the public.

Was there a seminal moment when you decided that staying in the health insurance industry wasn’t something you wanted to do?

Potter: I was becoming increasingly disillusioned with what I was doing. I was a spokesman for one of the biggest health insurance corporations in the country and I worked at the industry level with a lot of my peers at other companies. So I was very invested in that industry. I spent 20 years there. Towards the end of that 20 years ... I also began to see what these companies do to earn the profits that Wall Street expects and what the consequences were to consumers. I saw how they were refusing to sell coverage to those who needed it, how they were canceling policies of people who got sick and how the company didn’t want to pay for their care.

I guess the thing that really pushed me to make a change was going back home to Tennessee where I grew up. I found out about and went to an outdoor health care fair not too far from where I grew up; people were lined up by the thousands to get care that was being provided in barns and animal stalls by doctors who were volunteering. These were not people who were on Medicaid or Medicare. They were hardworking people for the most part, but they didn’t earn enough money to buy insurance. I realized when I saw that scene that what I was doing for a living was, in some way, making that happen. It opened my eyes to something; it was an epiphany for me. I realized too that I could have been one of those people. I just got lucky.

Is it a mistake for Missouri not to expand its Medicaid program? If so, why?

Although the debate is ongoing, Missouri has so far chosen not to expand its Medicaid program. Medicaid expansion was one of the main tenets of the Affordable Care Act when it was passed in 2010. However, a Supreme Court ruling overturned the portion of the act that requires states to expand coverage. Instead, states are deciding for themselves.

Potter: It’s a big mistake from two main perspectives. You’re not doing what’s in the best interest of hundreds of thousands of state residents who would otherwise qualify for care or access to care they really need. Also, from an economic point of view, those people get sick, they get injured and they wind up in the emergency room. So you have the problem of overcrowded emergency rooms. It’s one of the reasons to expand the Medicaid program. A lot of the people who end up there are of low or moderate income and (Medicaid expansion) would alleviate the overcrowding of emergency rooms.

Also, many people that go to emergency rooms don’t have the money to pay for it. ... All of us who have insurance are paying more than we otherwise would to cover that uncompensated care. The rates insurance companies negotiate with hospitals takes into account that bad debt, so we’re paying for it. One way for the rest of us to get a break on our premiums is to expand the coverage for people so they can get care in the most appropriate setting … (rather than) going to the hospital when they don’t have the money to pay for it.

Last week we saw a number of layoffs at hospitals in Columbia. Do you feel that is directly tied to the lack of Medicaid expansion?

Potter: I do think that. Hospitals are going to be among the biggest losers. Other than the individuals who will not get coverage, hospitals and people who work for them are going to be among the biggest losers. I think you’re seeing the beginning of what will be more layoffs at hospitals. They will not be getting some of the payments from the federal government they have been getting in the past in the form of disproportionate share payments* because Medicaid expansion was supposed to take the place of those payments. So hospitals are between a rock and a hard place. Who is going to suffer? It will be the people that work for them. You can rest assured that there will undoubtedly be more layoffs and perhaps even hospital closings in some areas where their operating margins are pretty slim already.

*Disproportionate share payments are payments given to hospitals to help offset the costs of providing care to those who cannot pay for it. These will end in 2014.

What would you say to those who feel that expanding Medicaid in Missouri is just pouring money into a broken system?

Potter: Well, it’s not a broken system; it meets the needs of a lot of people. It’s almost an arrogant argument to say, “Why do we want to care for our poorest?” We need to do that, because they’re not as fortunate as a lot of folks. They’re not as fortunate as most politicians are. We have — I think — an obligation to consider their needs, and the Medicaid system is a pretty efficient system. It operates far more economically and efficiently than private insurance companies do, I can guarantee you that. The amount of money that is wasted by the private insurance companies is astonishing. Americans would really be outraged if they understood how much of their premium dollars go to things other than to provide their care. You don’t have that in the Medicare and Medicaid programs. They’re not nearly as broken as the private system is.

Missouri elected to not have a state-run exchange. Is there any difference between a state-run and a federal-run exchange in how participants will be covered?

Beginning Oct. 1, Missouri residents will be able to access an online health insurance exchange. By Jan. 1, all residents will be required to have health insurance or will face a fine.

Potter: I don’t think so, I think some states that are operating their own exchange have gone further than the federal government will go with the exchanges. In California, for example, the state will select which plans to include based on the value. In other words, they will evaluate each plan that is proposed to be offered on the exchange and they will choose the ones that they think are of greatest value. So Californians might have fewer choices than folks in Missouri do, but the folks in California can rest assured that at least what they choose there will have been vetted. The plans offered in the federal exchanges won't have that type of vetting. All the policies do have to meet the essential set of benefits.

Because of the implementation of exchanges, how do you expect insurance companies to change how they operate in order to maintain profit margins?

Potter: Their investors expect a certain profit margin and their margins are going to be squeezed in the individual market in particular. They will have to abide by the consumer protections, obviously, but it means they will be facing some lower profit margins. It doesn’t mean that their overall revenue will decrease. In fact, quite the opposite. With the requirement that we have to buy coverage they’re going to get a new revenue stream that they otherwise wouldn’t. … So they’re going to get an infusion of cash. Their profit margins on the individual market might compress some, but they will be able to convert that new revenue into additional earnings. Don’t cry for them.

Supervising editor is Katherine Reed.

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