WP: Yes. For one thing, the media has lost interest in writing stories similar to the managed care horror stories they wrote in the 1990s, when insurers and employers were forcing people into HMOs. There is less coverage of the consequences to people resulting from insurance company practices. A lot of critical reporting is just not being done. Most reporters willingly accept a prepared statement that company executives and lawyers have written, and they feel their obligation is over. The calls we got were few and far between after the media lost interest in managed care.

TL: What insurance stories did reporters write most often?

WP: They wrote brief stories for investors, but wouldn’t go into the details of the important facts and numbers—such as a company’s medical loss ratio, which tells the percentage of premium dollars that the insurers pay out in claims. This is a closely watched measure by investors and Wall Street analysts, because it tells them how well a for-profit company is meeting investors’ earnings expectations.

TL: Did reporters ever ask about this?

WP: I can’t recall a reporter ever probing how insurers manage to meet Wall Street’s expectations through medical management and claims practices, which are key ways to manipulate the medical loss ratio and dump unprofitable accounts. Not once was I asked by a reporter what happens to people who work for small and mid-sized companies that get “purged” by insurers because their employees’ claims were causing the insurer’s medical loss ratio to move in the wrong direction from an investor’s point of view. No one ever asked me about the human consequences of satisfying Wall Street. Most reporters are happy to do a superficial job.

TL: How do companies manipulate the medical loss ratio?

WP: They look at expensive claims of workers in small businesses who are insured by the company, and the claims of people in the individual market. If an employer-customer has an employee or two who has a chronic illness or needs expensive care, the claims for the employee will likely trigger a review. Common industry practice is to increase premiums so high that when such accounts come up for renewal, the employer has no choice but to reduce benefits, shop for another carrier, or stop offering benefits entirely. More and more have opted for the last alternative.

TL: What tactics do they use in the individual market?

WP: They rescind policies when a review indicates that an individual has filed a lot of expensive claims. They will look for conditions that were not disclosed on the application. Often the policy likely will be canceled and the individual left without coverage. Sometimes people aren’t aware that they have a pre-existing condition. It might be listed in the doctor’s notes but not discussed with the patient.

TL: One way to end this practice might be to regulate it out of existence. Can we count on the industry to submit to more stringent regulation?

WP: The industry says it will accept more regulation, but the evidence is that it flaunts regulation on the books now. Insurers are often cited for violations of many state regulations, and they usually agree to settle with insurance commissioners or the attorney general and pay a fine. Fines are the cost of doing business, and even if the fine is several million dollars, it is inconsequential compared to profits insurers make.

TL: What can we expect from insurers as this reform discussion continues?

WP: Until there is actual legislative language, we will see the industry continue to be in favor of reform and portray themselves as coming to the table with solutions. They will try to persuade reporters that the industry has changed this time. They are saying the same things now that they said before. A lot of young reporters weren’t around then, and don’t know what they said in ’93-’94.

TL: What can we expect from insurers after the bill language appears?

WP: It’s what we won’t see—what goes on behind the scenes—that will be most important. The industry conducts what I call duplicitous PR campaigns—one of which I refer to as the charm offensive. They talk about how much they are committed to reform. But, behind the scenes, they are financing efforts to kill elements they are opposed to, or they kill reform entirely. They will work through what they refer to as “third-party advocates”—people and groups that are ideologically aligned with them—and use their PR firms and lobbyists to do that work. These surrogates will reach out to radio and TV talk show hosts and conservative editorial writers. Insurers will also activate their grassroots organizations—their employees, businesses, and political allies—and if their ability to make money in the Medicare program is threatened, they will reach out to senior citizens enrolled in their plans. Activities range from sending industry-written letters and e-mails to lawmakers and the media to flying people to Washington to lobby on their behalf. These are called fly-ins.

TL: Who are the industry’s grass tops, and how do they work?

WP: Grass tops are corporate executives and business leaders who develop relationships with elected officials. Insurance company executives routinely go to Washington to meet with members of the House and Senate. Companies’ lobbyists regularly meet with their staffs and bring plenty of “leave-behinds,” such as carefully crafted position papers and talking points.

TL: How much weight does that carry?

WP: Quite a bit. Even if an executive meets with a Democrat not perceived as an ally, just a meeting and an offer to be supportive is worthwhile. It improves or forms a relationship that might not otherwise take place. Executives want to be perceived as reasonable and cooperative—as people who have their constituents in mind. The executives don’t go to Congress to talk about medical loss ratios and profits.

TL: What else will we see?