Deadly Spin (23 page)

In its unanimous decision in the case (
CIGNA HealthCare of Texas, Inc. v. Calad et al.
), the Supreme Court ruled that CIGNA’s refusal to pay for a longer stay in the hospital was a “benefit eligibility decision” rather than a medical-treatment decision. The consequence of the ruling was that Calad could not pursue her case against CIGNA in state court, where she could have been awarded punitive damages. Her lawsuit would have to be transferred to federal court and be subject to the restricted remedies provided under ERISA.

Corporate America and the insurance industry breathed a collective sigh of relief when the ruling was announced. Industry executives had known that whatever the final ruling turned out to be, it would have long-term ramifications for employer-sponsored plans—and insurance company profits.

The ruling in CIGNA’s favor was a big setback for consumer advocates, but my job was to spin the decision as a major win for consumers. I decided that the way to do that was to argue that ERISA helped employers and health plans keep coverage affordable.

So I wrote in a June 21, 2004, statement that ERISA “has for many years helped ensure that participants in health benefit plans have numerous protections, including access to quick resolution of any coverage disputes through internal and external appeals processes. By providing consistent standards for the administration of health plans, ERISA also has helped employers provide health care benefits for their employees at a reasonable cost.”

I went on to suggest that there was no need for health-plan enrollees to be able to sue CIGNA in state court because it had a “fair, efficient and equitable” appeals process in place to address any concerns that anyone might have regarding coverage interpretations. “Today’s decision,” I concluded, “supports this approach.”

The Sarkisyans viewed the CIGNA process quite differently. They certainly did not agree that it was fair, efficient, or equitable.

DON’T HOLD YOUR BREATH FOR CONGRESS
TO CHANGE
ERISA

Passing a 2,407-page health care reform bill has proved easier for Congress than amending ERISA, so far. The problem, of course, is that every time a member of Congress tries to change the law, big insurance and big business swing into action, pouring millions of dollars into public relations and advertising campaigns.

In 1998, when Senator Ted Kennedy (D-Mass.) and Representative John Dingell (D-Mich.) introduced a bill that would strip employers and insurers of their ERISA protections, the insurance industry launched another successful fearmongering campaign. The Health Insurance Association of America, one of AHIP’s predecessors, quickly commissioned an actuarial analysis that predicted that 160,000 people would lose their coverage because businesses, fearing costly legal settlements, would stop offering health care benefits. The fearmongering worked—and has worked every time ERISA has been under attack.

The National Coalition on Benefits (NCB), formed in 2007, was not the first group of its kind that the insurance industry had funded, at least in part, to defeat attempts to weaken ERISA. As noted earlier, they pooled resources in the late 1990s to pay the big PR firm Porter Novelli to create and run the Health Benefits Coalition, which had the same goal: protecting ERISA. The HBC helped scare members of Congress and their constituents away from the Patient’s Bill of Rights that Dingell had cosponsored with Representative Charles Norwood Jr. (D-Ga.). Like the Kennedy-Dingell bill, the Patient’s Bill of Rights would have allowed people enrolled in employer-sponsored plans to sue their insurers in state courts.

The HBC allied with the conservative group FreedomWorks to demonize the bill. FreedomWorks warned in a 1999 press release that the bill would “only take money out of consumers’ checkbooks and put it into the pockets of trial lawyers, making health insurance less affordable for all Americans.” Congress never passed a Patient’s Bill of Rights because the House and the Senate, which had passed different versions of the legislation, could never resolve their differences.

As Congress geared up for the health care reform debate in 2007, insurers and their big-employer customers launched the HBC’s successor, the NCB, to once again scare lawmakers away from changing ERISA in any meaningful way. The coalition’s key message: “Don’t erode what works to fix what’s broken.”

Representative Dennis Kucinich (D-Ohio) tried to amend the 2010 reform bill to change ERISA, but his amendment died after the U.S. Chamber of Commerce warned House leaders that it would oppose the entire bill if it included the ERISA amendment. While many provisions of the 2010 reform bill will apply to all insurance plans, including employer-sponsored plans, it keeps the ERISA protections for insurers and employers intact.

Still, Hilda Sarkisyan has no intention of backing down.

In 2008, with help from family and friends, she organized Nataline’s Legacy Fashion Show to raise money “to stop for-profit insurance companies from being allowed to decide who gets to live and who gets to die.”

They decided to do a fashion show—and to hold it every year on or near Nataline’s July 10 birthday—because of her dream of being a fashion designer.
4

“We found drawings of twenty-two gowns in Nataline’s room,” said Sarkisyan. “My daughter wanted to go to the Fashion Institute of Design after she graduated from high school.” At the second annual show, in 2009 (which attracted nearly five hundred people to the showroom of the Mercedes-Benz dealership in Calabasas, where Nataline’s father still worked), Beverly Hills haute couture designer Pol’ Atteu, himself an Armenian American, brought one of Nataline’s designs to life.

A story in the
Armenian Reporter
newspaper—covering the 2009 fashion show and the Sarkisyans’ battle with CIGNA—quoted Hilda Sarkisyan as saying, “CIGNA insurance denied my daughter the liver transplant she needed and I lost her. But I’m not going to let this go. I’m not going to let insurance companies get away with murder again. I don’t want Nataline’s death to be in vain.”

I was mentioned in that same newspaper story: “CIGNA’s disastrous decision even prompted a high-ranking company executive to resign. The CIGNA official who quit told CNN that CIGNA’s decision about Nataline prompted him to walk away with disgust and pursue health care reform on Capitol Hill.”

I finally met the Sarkisyan family in their home in January 2009, six months after the second fashion show. An NBC
Dateline
crew was there to film what turned out to be a tense and emotional but ultimately cordial meeting. Before I left, I promised the Sarkisyans that I would help them in their campaign to change ERISA.

This book is a start.

C H A P T E R   X

A Victory, of Sorts

A
FTER
nearly a century of failed attempts to enact universal health care, everyone knew that the fight that began when Barack Obama took office would be arduous. I knew better than most, but even I didn’t foresee the ferocious warfare we would endure for more than a year.

The struggle eventually did put our country on a new path toward remedying injustice in health care. But thanks to the shrewd and well-funded operatives of the health insurance industry and its allies, not one inch of this ground was gained without political turmoil.

Obama’s election in 2008 electrified the nation and much of the world. It left him well positioned to take on the big challenges if he acted quickly, and he wasted no time. Even as he moved into the White House pushing a stimulus bill to counter the economic disaster created by the collapse of investment banks and other financial institutions, his staff geared up for a quick start on health care reform.

His opponents portray him as a “socialist” and a “radical,” but in truth Obama is not even a hard-core liberal. He is a moderate centrist who often leans to the left. He may be socially liberal when it comes to reform—he once said that if we could start from scratch, he would support a publicly financed single-payer system—but he is also a pragmatist who understands the political realities of Washington.

Obama rose to power partly on the strength of his ability to adapt to different audiences. “My experience being able to walk into a public-housing development and turn around and walk into a corporate boardroom and communicate effectively in either venue means that I’m more likely to be able to build the kinds of coalitions and craft the sort of message that appeals to a broad range of people,” he said in a 2000 interview.
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Obama’s fervent supporters often thought they heard more than they really did. Still, his 2008 campaign promises about health care were fairly clear. Crafted with the help of Harvard economist David Cutler, Obama’s original plan called for employer mandates, federal coverage of catastrophic-care costs, and tax credits to help low- and middle-income families afford private health insurance. As I noted previously, he opposed any requirement that everyone buy insurance, one of the few points on which he disagreed with rival Hillary Clinton. His platform also called for the creation of a public health plan to compete with private insurers—as did Clinton’s and that of his other early opponent, John Edwards—but Obama never promised to fall on his sword for a government-run plan.
2

In the end, Obama produced a legislative victory that will accomplish much of what the Clintons had hoped for in their earlier effort: expanded coverage and controlled costs. It will add sixteen million people to state Medicaid programs through expanded eligibility rules. It will offer tax credits to about sixteen million more people in families earning up to 400 percent of the federal poverty level (about $88,000 for a family of four). And, according to the Congressional Budget Office (CBO), it will reduce the federal deficit by $143 billion over ten years.

The legislation falls short in other respects—most disappointingly in that it does not include a government-run public option to compete with private insurers. But politics is the art of the possible, as Otto von Bismarck said, and in the end, President Obama and his chief of staff, Rahm Emanuel, calculated that sacrificing the public option was a price worth paying to nail down other significant gains in the bill.

Obama’s victory is really just a pit stop in an ongoing, contentious battle that split the country wide open while showcasing the skill of corporate America at getting what it wants in a white-hot, polarized media and political environment. The stakes were high, and clashes over health care reform erupted in every corner of the nation, opening wounds and reviving tribal grudges from generations ago, like a dormant volcano brought back to life.

Health insurers and other special interests opened their pocketbooks to frustrate reform and protect huge profit streams. Political front groups flourished, nurtured with millions of dollars from shadowy corporate sponsors, including insurers. Powerful images and words were unleashed. Antireform operatives concocted myths, libeled Democratic leaders, used racist slogans and pictures, and questioned the patriotism of people supporting a just health care system. Fox News eagerly broadcast these antics and messages—morning, noon, and night. And, perhaps most important, the health insurance industry showered members of Congress with political contributions—and overwhelmed them with thousands of lobbyists to push its propaganda.

Guided by professional political organizers with deep roots in the Republican Party and the lobbying world, notably former House majority leader Dick Armey of Texas, opponents of health care reform mounted shrill protests that led to the formation of the Tea Party. The GOP made the political calculation that killing health care reform—at least as envisioned by the Democrats—was its leading hope of regaining power. This belief was crystallized in a quote from Senator Jim DeMint (R-S.C.), who said that the defeat of the initiative would be Obama’s “Waterloo.”

Opponents were handed the first round when Obama tapped former Senate majority leader Tom Daschle of South Dakota to be his secretary of health and human services. He intended to put Daschle in charge of health care reform, but this plan fell apart when Daschle ran into difficulty in the Senate Finance Committee after the members learned he’d failed to report free use of limousine services offered by a corporate donor. Jokes flew about “limousine liberals,” and only weeks into the new administration Daschle withdrew from consideration. It was merely the first speed bump Obama would hit on his tortuous path to health care reform.

Obama recovered quickly, submitting his initial budget and saying in a speech to Congress that health care reform was his number-one legislative goal. He proposed the creation of a $634 billion health care “reserve fund”—a down payment based on new taxes and savings, including cuts of Medicare subsidies to private insurers for optional managed care plans. Obama’s initial plan outlined insurance coverage for tens of millions of Americans while reining in fast-growing medical costs that burdened middle- and lower-income families and strained budgets at every level of government.
3

His idea was to stimulate discussion among his Democratic allies on Capitol Hill without being too detailed—a lesson from the Clinton debacle sixteen years earlier. Unless he won congressional buy-in, he thought, his plan would crash and burn, too. And sure enough, over the next thirty days, Washington crackled with health care reform activity.

When Daschle asked that his nomination be withdrawn, Obama replaced him with Kansas governor Kathleen Sebelius, who had had that rare experience of successfully defying the health insurance industry.

When Obama officially kicked off the health care reform debate with his March 5, 2009, summit—to which he invited more than 150 members of Congress, health-policy experts, and leaders of groups representing doctors, hospitals, unions, big business, insurance companies, and consumers—one of the people sitting in the East Room was the health insurance industry’s point person in Washington, AHIP president Karen Ignagni. Ignagni’s challenge was daunting, sort of like playing three-dimensional chess. She had to woo the media, deploy hundreds of lobbyists, enforce message discipline among the rich and powerful insurance CEOs on her board of directors, and generate impressive, “mediagenic” data—all while posing among gullible politicians as an honest broker. All these things she did, and in the process revised the public’s archetype of a Washington insider—you don’t have to be a round-faced, cigar-chomping, aging white man to be the capital’s top lobbyist.

The soft-spoken Ignagni was the public face of an eight-hundred-billion-dollar-a-year industry, and her mission was to see health care reform passed that would benefit insurance company shareholders and executives and to help them avoid increased public accountability. For Ignagni, it was the biggest challenge in a career that had taken her on a remarkable path from protecting the health benefits of middle-class workers to protecting corporate titans who abused and overcharged their sick customers.

Ignagni grew up in Providence, Rhode Island, the child of a firefighter and a city hall worker. After graduating from Providence College in 1975 in the first class that included women, she was hired as a research analyst at the Social Security Administration. Two years later, she went to work for a group promoting national health insurance that was backed by Walter Reuther, the legendary president of the United Auto Workers. After two years, she joined the professional staff of Senator Claiborne Pell (D-R.I.) and worked on a panel that later became the Health, Education, Labor, and Pension (HELP) Committee. During her three years on Capitol Hill, Ignagni often worked with the staff of Senator Ted Kennedy, the nation’s leading advocate of universal coverage.

While working for Pell, a social liberal and a labor favorite, Ignagni came to the attention of the AFL-CIO, and the huge labor federation hired her in 1982. For eleven years, she worked on pensions and health care, rising to director of the health benefits department, which served more than eleven million members. She reportedly spent much of her time helping negotiate new managed care plans.
4
During this period, she also completed an executive MBA program at Loyola University, in Baltimore.

In 1993, a headhunting firm recruited Ignagni to be the president of the Group Health Association of America (later renamed the American Association of Health Plans, or AAHP). Suddenly, she turned her back on years of progressive politics and became the leader of one of two rival trade groups that would eventually merge to make AHIP. Her first job was successfully fending off President Clinton’s Health Security initiative.

As you may recall, a headhunter also recruited me to my new job at CIGNA in 1993, and I would work with Ignagni on the same side of many battles for the next fifteen years. Not only were we allies in the fight against the Clinton plan, but we were also allies in subsequent fights with lawmakers (who tried for years to pass a Patient’s Bill of Rights) and lawyers (who tried to force managed care companies to deal more fairly with both patients and their doctors). I also worked closely with her communications team in developing PR plans and talking points and coordinating countless media interviews.

Ignagni quickly made a name for herself. She was frequently listed among the “top guns” and most influential lobbyists in Washington. In 2003, when AAHP merged with the Health Insurance Association of America to form AHIP, Ignagni prevailed over HIAA’s Chip Kahn to become CEO of the new group. Her compensation soared to $1.94 million in 2008,
5
up from $400,000 in 1998.
6

Within months after Obama’s White House summit, AHIP, despite Ignagni’s promise to help the president pass health care reform, unleashed its sophisticated, multipronged attack to undermine it. The relationship between the White House and the industry changed from cordial and collaborative to hostile when it became clear to Obama and his reform team that AHIP was conducting a duplicitous campaign—saying one thing and doing another. Instead of further pledges of cooperation from the industry, the American people got fearmongering, misleading ads, coordinated attacks by conservative opinion columnists and health-policy experts for hire, deceptive studies and reports, and front groups that ran antireform ads or orchestrated Tea Party events, funded at least in part by insurers.

From 2007 to mid-2009, insurance and HMO political contributions and lobbying expenses totaled a jaw-dropping $586 million, according to Public Campaign. At the height of the battle, the industries were spending nearly $700,000 a day to influence the political process.
7

The key goals of health care reform—and the battle lines—had been delineated by the end of March 2009. Top House Democrats pledged to pass a health care bill before the August recess. Democrats also favored reserving the right to use a common parliamentary budget maneuver called “reconciliation” to pass the bill in the Senate by majority vote rather than the sixty votes needed to block a filibuster. But Senator Max Baucus (D-Mont.), chairman of the Finance Committee, and Senator Kent Conrad (D-N.Dak.), chairman of the Budget Committee, said they opposed reconciliation, preferring to find the necessary votes from the GOP side to get the sixty supporters needed.