An insider dissects the health insurance industry

By Joshua Kendall
November 22, 2010

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To understand the hearts and minds of Americans, the scholar Jacques Barzun advised foreigners to learn the rules of baseball. That was in the 1950s. Today, a more fitting suggestion might be to study the curious manner in which we provide health care to our citizens. We remain the only industrialized country that links insurance with employment. Our unique blend of private and public plans governed by a crazy-quilt of federal and state regulations reflects our central ideological conflicts. While conservatives and liberals disagree violently about the specifics, both sides are convinced that virulent infections permeate the system.

In his compelling analysis of those ills, Wendell Potter, former director of media relations at the global health service company CIGNA, offers a blunt diagnosis. The health insurance industry, claims this whistleblower (whom President Obama cited in his health-care address to a joint session of Congress last year), is dominated by for-profit corporations that care much more about Wall Street that about patients.

With senior executives focusing on this core mission of serving investors, notes Potter, corporate balance sheets are healthier than ever. Between 2000 and 2008, as private insurers jacked up premiums by over 90 percent, payments to care providers grew by only 72 percent. The industry’s CEOs have looked out for number one. In 2007, the top dogs at the 10 largest publicly traded insurers took home in compensation a combined total of $118.6 million. Nor did the recent recession cause them much angst. Profits for the five biggest insurers totaled a staggering $12.2 billion last year, up 56 percent from 2008.

Potter doesn’t mince words. Based on his two decades in the industry, he is convinced that managed-care companies are fundamentally dishonest. In spellbinding Senate testimony in summer 2009, he explained how “insurance companies make promises that they have no intention of keeping, how they flout regulations designed to protect consumers . . . and how they ‘purge’ small businesses when their employees’ medical claims exceed what underwriters expected.’’

To justify and maintain these deceptive practices, Potter argues, Big Insurance relies on “spinmeisters’’ — well-paid PR executives — to obfuscate the truth. For example, he reveals how the industry’s lobbying arm, America’s Health Insurance Plans, worked overtime to discredit Michael Moore’s documentary “Sicko.’’ In May 2007, shortly after the film’s premiere, Potter participated in strategy sessions with AHIP’s senior brass that aimed to “push Moore off the cliff,’’ if necessary. The resulting PR campaign leaned on a front-group — a nonprofit advocacy organization secretly financed by the insurance industry — which fed the media horror stories about government-run programs in other countries.

Potter knew he had to leave his old job when he went to an early screening and found himself agreeing with much of what Moore had to say. But he is an even-tempered pragmatist not an agent provocateur. He was a steadfast supporter of the administration’s health insurance reform efforts, despite his concerns that the final legislation did not go far enough. Potter would have preferred a public option.

Spin has, of course, always been around. It’s also omnipresent. Insurers, Potter stresses, use the same playbook as Big Tobacco, Big Soda, Big Oil, and Big Banks. What alarms him is that in the wake of drastic cutbacks in the budgets of mainstream news organizations, there is precious little pushback. Reliable information on public policy issues is harder to come by than ever.

To get the country back on track, Potter exhorts consumers to adopt a healthy dose of skepticism toward corporate doublespeak. That’s a sound prescription, one which no American can afford not to have filled.

Joshua Kendall, who writes on health care issues for publications, can be reached through his website,

Correction: Because of a reporting error, this review of "Deadly Spin" incorrectly implied that writer and scholar Jacques Barzun is not alive. Also, because of an editing error, a biographical note on the reviewer incorrectly stated Joshua Kendall’s relationship with BusinessWeek. Kendall wrote pieces on health care for the publication for 11 years but no longer does so.


An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans

By Wendell Potter

Bloomsbury, 277 pp., $26