>> this week on bill moyers journal. >> moyers: what stands between you and health care reform? >> the business that they are in is health care, certainly, but keep in mind that what they want to do is enhance their profits. >> moyers: an insider tells it like it is. stay tuned. captioning sponsored by public affairs television

>> moyers: welcome to the journal. the biggest medical drama on our tv screens this summer is not reruns of "house" or "grey's anatomy." it's a high stakes, life-and- death spectacle inside and outside the halls of congress, as lawmakers attempt open heart surgery on that most fragile and stubborn of patients, health care reform. on a bright summer day, these thousands of people have

traveled to washington from all around the country. they're here in good spirits, on a serious mission. >> senators and congress people around this land, it's time you listened to our demands. ♪ hear our voice, we want choice, ♪ we've come here today to make lots of noise! ♪ we want... we want health care! ♪ we want... we want health care! we want it now! >> moyers: they represent some 72% of all americans who have told pollsters they want health care reform to include a public insurance option that competes with private plans. many here are from the front lines, nurses like anita kuennen. >> everything is at stake from the perspective of providing healthcare. when people can't afford insurance, when they can't provide or afford, you know, to get care for themselves, it's a continuous loop. from a public health perspective, the fact that we have such poor outcomes in this country, it's abominable.

>> moyers: there were doctors on the march. >> a lot of people say america has the best healthcare system. and in many ways we do. we have the best hospitals, we have good training. we have so much good equipment. we have all the medicines. we do all of the good research. and the fact there's so many people in this country... this is america. it's not okay for so many people in this country not to be able to get healthcare. >> this is our best chance. we haven't had a chance like this in decades. and so we're hoping that legislators put in a reform bill that does look at quality of care, that does look at cost and cost containment, and basically what's best for our patients. >> what do you want? health care! when do you want it? now! >> moyers: reform's high on the agenda of organized labor, too. >> the problem is the skyrocketing costs of healthcare is making it... the ability for our employers to provide it to us is becoming more and more difficult. it was only about ten years ago, when i was representing groups in connecticut, the costs they were asking us to pay were 2%, maybe $10 a week. didn't seem like a big deal.

but here we are ten years later, and they're asking for 15%, 20%. we just can't afford it. it's time for health care reform. it has to happen now. >> moyers: even people content with their current coverage but concerned about the future were demanding reform. >> i have a very good plan right now. but with one whip stitch, i could lose it all through bankruptcy, through a job loss, through a medical injury or some tragedy. and i could be denied coverage. we need a public option where... that'll bring true competition and bring these people in line. do you think big pharmacy and big insurance is going to put anything on the table unless they are afraid? because they've had a lock on it forever? no, they're not going to give it up. we've got to take it from them. >> moyers: this is where protestors hoped their voices would penetrate-- the inner sanctum of the capitol. here, a congressional subcommittee investigated the

twisted tactics used by health insurance companies to dump customers and stick them with the bills. it's a practice known as recission. >> in may 2008, i went to a dermatologist for acne, pimples. a word was written down on my chart, which was considered to mean precancerous. in june 2008, i was diagnosed with invasive her-2 genetic breast cancer, a very aggressive form of this cancer. i needed a double mastectomy immediately. blue cross and blue shield pre- certified me for my surgery and for a hospital stay. the friday before i was to have my double mastectomy, blue cross and blue shield called me by telephone and told me that my chart was red-flagged. >> moyers: red-flagged. the insurer used inadvertent omissions on her original application-- data that had nothing to do with her current condition-- as an excuse to

cancel her health policy. without that insurance, she couldn't have the cancer surgery that she needed. >> i was frantic. i did not know what to do. i didn't know how to pay for my surgery. the hospital wanted a $30,000 deposit. i was by myself. i didn't have that kind of money. >> moyers: in despair, robin beaton turned to her texas congressman, joe barton. his staff tried and got nowhere, until barton picked up the phone and called the president of texas blue cross directly. but months were lost. >> my tumor grew from two to three centimeters all the way to seven. i had to have all my lymph nodes removed in my arm, everything. delay in cancer treatment, it only worsens the condition, costing more to treat, and treatment is much more intensive. also, the outcome is not as good. >> i think a company does have the right to make sure that

there's no fraudulent information, but it's obvious to me, if a citizen acts in good faith, we should expect the insurance companies that take their money to act in good faith also. >> moyers: unfortunately, it's not that easy. the committee found other insurers pulling the same tricks. over the past five years, the companies-- assurant, golden rule and wellpoint-- had cancelled 20,000 individual policies. michigan congressman bart stupak asked their executives if they would change their ways. >> let me ask each of our c.e.o.s this question, starting with you, mr. hamm-- would you commit today that your company will never rescind another policy unless there was intentional fraud, fraudulent misrepresentation in the application? >> i would not commit to that. >> how about you, mr. collins? would you commit to not to rescind any policy unless there is an intentional fraudulent misrepresentation? >> no, sir. we follow the state laws and regulations. and we would not stipulate to that. that's not consistent with each state's laws.

>> how about you, mr. sassi? would you commit that your company will never rescind another policy unless there was an intentional fraud, misrepresentation? >> no, i can't commit to that. the intentional standard is not the law of the land in the majority of states. >> doesn't it bother you that people are going to die, because you insist on reviewing a policy that somebody took out in good faith and forgot to tell you that they were being treated for acne? doesn't that bother you? >> yes, sir, it does. and we regret the necessity that that has to occur even a single time, and we've made suggestions that would reform the system such that that would no longer be needed. >> moyers: with the new push for reform, health industry corporations are now pledging to clean up their act without government intervention. they'd stop charging women higher premiums than men. and, don't worry, a coalition of

the pharmaceutical, medical, hospital, and health insurance industries told president obama in may, they'll bring those soaring costs down voluntarily. "trust us..." >> these groups are voluntarily coming together to make an unprecedented commitment. over the next ten years, from 2010 to 2019, they are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year, an amount that's equal to over $2 trillion. >> moyers: but before the week was out, those health care c.e.o.s were backpedaling, suggesting that, perhaps in his enthusiasm, the president had overstated. they hadn't agreed to hit the $2 trillion target, but over time, they might aim at it. in the meantime, they are working relentlessly to kill off efforts to include a public insurance plan in the health care bill.

although three quarters of americans polled support a public option, the industry is spending more than $1.4 million a day to make sure it doesn't happen. >> what will happen to your family's health care? >> this government-run plan could crush all your other choices. >> it could put a bureaucrat in charge of your medical decisions. >> moyers: for extra firepower, the industry has hired more than 350 former members of congress and government staffers, who are up on capitol hill, back- slapping and glad-handing their old pals, hoping to preserve the huge profits in health care. but business as usual is being challenged by this man who knows the business all too well, from the inside out. >> i'm pleased to welcome mr. wendell potter to the committee today. he is a former insurance executive who is going to tell us about some of the tactics insurance companies use to keep insurance in the dark. i have a special respect for him, simply because he's doing something i think very courageous and very brave.

>> mr. chairman, thank you for the opportunity to be here this afternoon. >> moyers: until last year, wendell potter was head of corporate communications for cigna, the country's fourth largest health insurance company. altogether, potter spent nearly two decades playing for the side that has opposed health care reform from the clintons forward. he sat on policy committees, crafted executive messages, cajoled the press, and witnessed firsthand the promises made, and broken. take the case of nataline sarkisyan. >> the insurance company is denying our case. she needs a liver transplant. >> moyers: at the end of 2007, potter defended cigna when it refused to pay for the 17-year- old's transplant surgery, claiming the procedure was experimental. protests at a regional headquarters created a public relations nightmare. >> health care for all! health care for all! >> moyers: cigna reversed its decision, but by then, it was too late. nataline died just two hours

after her surgery was approved. early last year, potter left cigna. this summer, before the senate commerce committee, he went public for the first time. >> recently, it became abundantly clear to me that the industry's charm offensive, which is the most visible part of a duplicitous and well- financed p.r. and lobbying campaign, may well shape reform in a way that benefits wall street far more than average americans. the industry and its backers are using fear tactics, as they did in 1994, to tar a transparent and accountable, publicly accountable health care option as, quote, "government-run health care." but what we have today, mr. chairman, is wall street-run health care that has proven itself an untrustworthy partner to its customers, to the doctors and hospitals who deliver care, and to the state and federal governments that attempt to regulate it. >> moyers: wendell potter joins us now. welcome to the journal. >> thank you very much for having me here. >> moyers: you worked for cigna 15 years and left last year. >> i did.

>> moyers: were you pushed out? >> i was not. i left... it was my decision to leave, and my decision to leave when i did. >> moyers: were you passed over for a promotion? >> absolutely not. no. >> moyers: had you been well- paid and rewarded by the company? >> very well paid. and i, over the years, had many job opportunities, many bonuses, salary increases. so, no, i was not. and in fact, there was no further place for me to go in the company. i was head of corporate communications and that was the ultimate p.r. job. >> moyers: did you like your boss and the people you work with? >> i did, and still do. i still respect them. >> moyers: and they gave you a terrific party when you left? >> they sure did, yeah. >> moyers: so why are you speaking out now? >> i didn't intend to, until it became really clear to me that the industry is resorting to the same tactics they've used over the years, and particularly back in the early '90s, when they were leading the effort to kill the clinton plan. >> moyers: but during this 15 years you were there, did you go to them and say, "you know, i think we're on the wrong side. i think we're fighting the wrong people here."

>> you know, i didn't, because for most of the time i was there, i felt that what we were doing was the right thing, and that i was playing on a team that was honorable. i just didn't really get it all that much until toward the end of my tenure at cigna. >> moyers: what did you see? >> well, i was beginning to question what i was doing as the industry shifted from selling primarily managed care plans to what they refer to as consumer- driven plans. and they're really plans that have very high deductibles, meaning that they're shifting a lot of the cost of health care from employers and insurers, insurance companies, to individuals. and a lot of people can't even afford to make their co-payments when they go get care, as a result of this. but it really took a trip back home to tennessee for me to see exactly what is happening to so many americans. i... >> moyers: when was this? >> this was in july of 2007. >> moyers: you were still working for cigna? >> i was. i went home to visit relatives. and i picked up the local newspaper and i saw that a

health care expedition was being held a few miles up the road, in wise, virginia. and i was intrigued. >> moyers: so you drove there? >> i did. i borrowed my dad's car and drove up... 50 miles up the road to wise, virginia. it was being held at a wise county fairground. i took my camera. i took some pictures. it was a very cloudy, misty day, it was raining that day, and i walked through the fairground gates. and i didn't know what to expect. i just assumed that it would be, you know, like a health... booths set up and people just getting their blood pressure checked and things like that. but what i saw were doctors who were set up to provide care in animal stalls, or they'd erected tents, to care for people. i mean, there was no privacy. in some cases... and i've got some pictures of people being treated on gurneys, on rain- soaked pavement. and i saw people lined up, standing in line or sitting in these long, long lines, waiting to get care. people drove from south carolina

and georgia and kentucky, tennessee-- all over the region, because they knew that this was being done. a lot of them heard about it from word of mouth. there could have been people, and probably were people, that i had grown up with. they could have been people who grew up at the house down the road... in the house down the road from me. and that made it real to me. >> moyers: what did you think? >> it was absolutely stunning. it was like being hit by lightning. it was almost-- "what country am i in?" i just... it just didn't seem to be a possibility that i was in the united states. it was like a lightning bolt had hit me. >> moyers: people are going to say, "how can wendell potter sit here and say he was just finding out that there were a lot of americans who didn't have adequate insurance and needed health care? he'd been in the industry for over 15 years." >> and that was my problem. i had been in the industry and i'd risen up in the ranks. and i had a great job, and i had a terrific office in a high-rise building in philadelphia.

i was insulated. i didn't really see what was going on. i saw the data. i knew that 47 million people were uninsured, but i didn't put faces with that number. just a few weeks later, though, i was back in philadelphia, and i would often fly on a corporate aircraft to go to meetings. and i just thought that was a great way to travel. it is a great way to travel. you're sitting in a luxurious corporate jet, leather seats, very spacious. and i was served my lunch by a flight attendant who brought my lunch on a gold-rimmed plate, and she handed me gold-plated silverware to eat it with. and then i remembered the people that i had seen in wise county. undoubtedly, they had no idea that this went on at the corporate levels of health insurance companies. >> moyers: but you had, all these years, seen premiums rising. people purged from the rolls, people who couldn't afford the health care that cigna and other

companies were offering. and this is the first time you came face to face with it? >> yeah, it was. you know, certainly, i knew people, and i talked to people who were uninsured. but when you're in the executive offices, when you're getting prepared for a call with an analyst in the financial medium, what you think about are the numbers. you don't think about individual people. you think about the numbers, and whether or not you're going to meet wall street's expectations. that's what you think about, at that level. and it helps to think that way. that's why you... that enables you to stay there, if you don't really think that you're talking about and dealing with real human beings. >> moyers: did you go back to corporate headquarters and tell them what you had seen? >> i went back to corporate headquarters. i was trying to process all this, and trying to figure out what i should do. i did tell many of them about the experience i had and the trip. i showed them some pictures i took while i was down there. but i didn't know exactly what i

should do. you know, i had bills of my own. and it was hard to just figure out. "how do i step away from this? what do i do?" and this was one of those things that made me decide, "okay, i can't do this. i can't keep... i can't." one of the books i read as i was trying to make up my mind here was president kennedy's "profiles in courage." and in the forward, robert kennedy said that one of the president's... one of his favorite quotes was a dante quote that, "the hottest places in hell are reserved for those who, in times of moral crisis, maintain a neutrality." and when i read that, i said, "oh, jeez, i... you know. i'm headed for that hottest place in hell, unless i say something." >> moyers: your own resume says, and i'm quoting: "with the chief medical officer and his staff, potter developed rapid response mechanisms for handling media inquiries pertaining to complaints." direct quote. "this was highly successful in

keeping most such inquiries from becoming news stories at a time when managed care horror stories abounded." i mean, you knew there were horror stories out there. >> i did. i did. >> moyers: you put these techniques to work, representing cigna doing the nataline sarkisyan case, right? >> that's right. >> moyers: and that was a public relations nightmare, you called it, right? >> it was. it was just the most difficult. we call them high profile cases, when you have a case like that-- a family or a patient goes to the news media and complains about having some coverage denied that a doctor had recommended. in this case, nataline sarkisyan's doctors at ucla had recommended that she have a liver transplant. but when the coverage request was reviewed at cigna, the decision was made to deny it. it was around that time, also, that the family had gone to the media, had sought out help from the california nurses

association and some others to really bring pressure to bear on cigna. and they were very successful in getting a lot of media attention, and nothing like i had ever seen before. >> shame on cigna! shame on cigna! >> it got everyone's attention. everyone was focused on that in the corporate offices. >> moyers: you were also involved in the campaign by the industry to discredit michael moore and his film "sicko" in 2007. in that film, moore went to several countries around the world and reported that their health care system was better than our health care system-- in particular, canada and england. take a look at this. >> i went across the city to a crowded hospital waiting room. how long did you have to wait here to get help? >> 20 minutes. >> 45 minutes. >> i got helped right away. >> you can see how crowded this is. they really do an amazing job. >> did you have to get anyone's permission to come to this hospital? >> no. >> no. >> no. >> we can go anywhere we want. >> you don't have to get pre- approved? >> no, no. you just... >> by your own insurance company? >> oh, no. oh, heavens, no.

>> can you choose your own doctor? >> oh, sure. oh, yes. >> what's your deductible? >> nothing. >> i don't think we have any. >> i don't know. i don't think there's any, as far as i know. >> it's really a fabulous system for making sure that the least of us and the best of us are taken care of. >> oh, really, it's not like that in the u.s. no. not at all, no. >> so, what do you pay to stay here? >> no one pays. they're asking, "how do people pay? and i said, "well, there isn't. you don't, you just leave." >> it's just the insurance. there's no bill at the end of it, as it were. >> even with insurance, there's bound to be a bill somewhere. so where's the billing department? >> there isn't really a billing department. >> there's no such thing as a billing department. >> what did they charge you for that baby? >> sorry? >> you've got to pay before you can get out of here, right? >> no. >> no, no, no. everything's on n.h.s.

>> this is n.h.s. >> you know, it's not america. ( laughs ) >> moyers: so what did you think en you saw that film? >> i thought that he hit the nail on the head with his movie. but the industry, from the moment that the industry learned that michael moore was taking on the health care industry, it was really concerned. >> moyers: what were they afraid of? >> they were afraid that people would believe michael moore. >> moyers: we obtained a copy of the game plan that was adopted by the industry's trade association, a.h.i.p. and it spells out the industry strategies in gold letters. it says, "highlight horror stories of government-run systems." what was that about? >> the industry has always tried to make americans think that government-run systems are the worst thing that could possibly happen to them; that if you even consider that, you're heading down on the slippery slope towards socialism. so they have used scare tactics

for years and years and years to keep that from happening. if there were a broader program like our medicare program, it could potentially reduce the profits of these big companies. so that is their biggest concern. >> moyers: and there was a political strategy. "position 'sicko' as a threat to democrats' larger agenda." what does that mean? >> that means that part of the effort to discredit this film was to use lobbyists and their own staff to go onto capitol hill and say, "look, you don't want to believe this movie. you don't want to talk about it. you don't want to endorse it. and if you do, we can make things tough for you." >> moyers: how? >> by running ads, commercials in your home district when you're running for reelection, not contributing to your campaigns again, or contributing to your competitor. >> moyers: this is fascinating. you know, "build awareness among centrist democratic policy organizations..." >> right. >> moyers: "...including the democratic leadership council." >> absolutely. >> moyers: then it says, "message to democratic insiders: embracing moore is one-way ticket back to minority party status."

>> yeah. >> moyers: now, that's exactly what they did, didn't they? they... >> absolutely. >> moyers: ...radicalized moore, so that his message was discredited because the messenger was seen to be radical. >> absolutely. in memos that would go back within the industry... he was never, by the way, mentioned by name in any memos, because we didn't want to inadvertently write something that would wind up in his hands. so the memos would usually... the subject line would be... the emails would be, "hollywood." and as we would do the media training, we would always have someone refer to him as "hollywood entertainer" or "hollywood moviemaker michael moore". >> moyers: why? >> well, just to... hollywood, i think people think "that's entertainment, that's movie- making. that's not real documentary." they don't want you to think that it was a documentary that had some truth. they would want you to see this as just some fantasy that a hollywood filmmaker had come up with. that's part of the strategy. >> moyers: so you would actually

hear politicians mouth the talking points that had been circulated by the industry to discredit michael moore. >> absolutely. >> moyers: you'd hear ordinary people talking that. and politicians as well, right? >> absolutely. >> moyers: so your plan worked. >> it worked beautifully. >> moyers: the film was blunted, right? >> the film was blunted. it... >> moyers: was it true? did you think it contained a great truth? >> absolutely did. >> moyers: what was it? >> that we shouldn't fear government involvement in our health care system. that there is an appropriate role for government, and it's been proven in the countries that were in that movie. you know, we have more people who are uninsured in this country than the entire population of canada. and that if you include the people who are underinsured, more people than in the united kingdom. we have huge numbers of people who are also just a lay-off away from joining the ranks of the uninsured, or being purged by their insurance company and winding up there. and another thing is that the

advocates of reform... or the opponents of reform are those who are saying that we need to be careful about what we do here, because we don't want the government to take away your choice of a health plan. it's more likely that your employer and your insurer is going to switch you from a plan that you're in now to one that you don't want. you might be in the plan you like now. but chances are, pretty soon, you're going to be enrolled in one of these high deductible plans in which you're going to find that much more of the cost is being shifted to you than you ever imagined. >> moyers: i have a memo from frank luntz. he's the republican strategist who we discovered, in the spring, has written the script for opponents of health care reform. "first," he says, "you have to pretend to support it. then, use phrases like, "government takeover," "delayed care is denied care," "consequences of rationing," "bureaucrats, not doctors prescribing medicine." that was a memo, by frank luntz, to the opponents of health care reform in this debate. now watch this clip. >> the forthcoming plan from democratic leaders will make health care more expensive,

limit treatments, ration care, and put bureaucrats in charge of medical decisions rather than patients and doctors. >> americans need to realize that when someone says "government option," what could really occur is a government takeover that soon could lead to government bureaucrats denying and delaying care, and telling americans what kind of care they can have. >> washington-run healthcare would diminish access to quality care, leading to denials, shortages and long delays for treatment. >> how will a government-run health plan not lead to the same rationing of care that we have seen in other countries? >> we don¡t want to put the government, we don't want to put bureaucrats between a doctor and a patient. >> moyers: why do politicians puppet messages like that? >> well, they are ideologically aligned with the industry. they want to believe that the free market system can and

should work in this country, like it does in other industries. so they don't understand from an insider's perspective, like i have, what that actually means, and the consequences of that to americans. they parrot those comments, without really realizing what the real situation is. i was watching msnbc one afternoon, and i saw congressman zach wamp from tennessee. he's just down the road from where i grew up, in chattanooga. and he was talking... he was asked a question about health care reform. i think it was just a day or two after the president's first health care reform summit. and he was one of the ones republicans put on the tube. and he was saying that, you know, the health care problem is not necessarily as bad as we think-- that of the uninsured people, half of them are that way because they want to "go naked." >> half the people that are uninsured today choose to remain uninsured. half of them don't have any choice, but half of them choose to, what's called, "go naked," and just take the chance of

getting sick. they end up in the emergency room costing you and me a whole lot more money. >> he used the word "naked." it's an industry term for those who, presumably, choose not to buy insurance because they don't want to. they don't want to pay the premiums. so he was saying that half... well, first of all, it's nothing like that. it was an absolutely ridiculous comment. but it's an example of a member of congress buying what the insurance industry is peddling. >> moyers: back in 1993, the republican propagandist william kristol urged his party to block any health care proposal, in order to prevent the democrats from being seen as the quote, "generous protector of the middle class." but today, you've got some democrats who are going along with the industry. max baucus, the senator from montana, for example, the most important figure right now in this health care legislation that's being written in the senate-- he's resisted including a public insurance option in the reform bill, right? >> that's right.

>> moyers: why is the industry so powerful on both sides of the aisle? >> well, money and relationships, ideology. the relationships... an insurance company can hire and does hire many different lobbying firms. and they hire firms that are predominantly republican and predominantly democrat. and they do this because they know they need to reach influential members of congress like max baucus. so there are people who used to work for max baucus who are in lobbying firms or on the staff of companies like cigna or the association itself. >> moyers: yeah, i just read the other day, in "the washington post," that max baucus's staff met with a group of lobbyists. two of them had been baucus's former chiefs of staff. >> right. >> moyers: i mean, they left the government. they go to work for the industry. now, they're back with an insider status. they get an access, right? >> oh, they do, they do. and these lobbyists' ability to

raise money for these folks also is very important as well. lobbyists, many of the big lobbyists contributed a lot of money themselves. one of the lobbyists for one of the big health insurance company is heather podesta, the podesta group, and she's married to tony podesta, who's a brother of john podesta. >> moyers: who used to be the white house chief of staff. >> right. right. and they're democrats. and my executives wanted to meet with... and when i say "my," the people i used to work for... >> moyers: at cigna. >> yeah, wanted to meet with hillary clinton, when she was still in the senate and still a candidate for president. well, that's hard to do. that's hard to pull off, but she did. that just shows you that you can, through the relationships that are formed and that the insurance industry pays for by hiring these lobbyists, you can get your foot in the door. you can get your messages across to these people in ways that the average american couldn't possibly. >> moyers: so it's money that can buy access to have their arguments heard, right? >> that's right. >> moyers: when ordinary citizens cannot be heard. >> absolutely right. it's the way the american system

has evolved, the political system. but it does offend me that the vested special interests, who are so profitable and so powerful, are able to influence public policy in the way that they have, and the way that they've done over the years. and the insurance industry has been one of the most successful in beating back any kinds of legislation that would hinder or affect the profitability of the companies. >> moyers: why is public insurance, a public option, so fiercely opposed by the industry? >> the industry doesn't want to have any competitor. in fact, over the course of the last few years, has been shrinking the number of competitors through a lot of acquisitions and mergers. so first of all, they don't want any more competition, period. they certainly don't want it from a government plan that might be operating more efficiently than they are, that they operate. the medicare program that we have here is a government-run program that has administrative expenses that are like 3% or so.

>> moyers: compared to the industry's... >> they spend about 20 cents of every premium dollar on overhead, which is administrative expense or profit. so they don't want to compete against a more efficient competitor. >> moyers: you told congress that the industry has hijacked our health care system and turned it into a giant a.t.m. for wall street. you said, "i saw how they confuse their customers and dump the sick, all so they can satisfy their wall street investors." how do they satisfy their wall street investors? >> well, there's a measure of profitability that investors look to, and it's called a medical loss ratio. and it's unique to the health insurance industry. and by medical loss ratio, i mean that it's a measure that tells investors or anyone else how much of a premium dollar is used by the insurance company to actually pay medical claims. and that has been shrinking, over the years, since the industry's been dominated by or

become dominated by for-profit insurance companies. back in the early '90s, or back during the time that the clinton plan was being debated, 95 cents out of every dollar was sent... you know, on average, was used by the insurance companies to pay claims. last year, it was down to just slightly above 80%. so, investors want that to keep shrinking. and if they see that an insurance company has not done what they think meets their expectations with the medical loss ratio, they'll punish them. investors will start leaving in droves. i've seen a company stock price fall 20% in a single day when it did not meet wall street's expectations with this medical loss ratio. for example, if one company's medical loss ratio was 77.9%, for example, in one quarter, and the next quarter, it was 78.2%, it seems like a small movement. but investors will think that's ridiculous and it's horrible.

>> moyers: that they're spending more money for medical claims. >> yeah. >> moyers: and less money on profits? >> exactly. and they think that this company has not done a good job of managing medical expenses. it has not denied enough claims. it has not kicked enough people off the rolls. and that's what... that is what happens, what these companies do, to make sure that they satisfy wall street's expectations with the medical loss ratio. >> moyers: and they do what to make sure that they keep diminishing the medical loss ratio? >> rescission is one thing. denying claims is another. being, you know, really careful as they review claims, particularly for things like liver transplants, to make sure, from their point of view, that it really is medically necessary and not experimental. that's one thing. and that was that issue in the nataline sarkisyan case. but another way is to purge employer accounts that... if a small business has an employee,

for example, who suddenly has to have a lot of treatment or is in an accident, and medical bills are piling up, and this employee is filing claims with the insurance company, that'll be noticed by the insurance company. and when that business is up for renewal, and it typically is once a year for renewal, the underwriters will look at that. and they'll say, "we need to jack up the rates here, because the experience was"-- when i say "experience," the claim experience, the number of claims filed was more than we anticipated. "so we need to jack up the price. jack up the premiums." often they'll do this, knowing that the employer will have no alternative but to leave. and that happens all the time. >> moyers: so, the more of my premium that goes to my health claims, pays for my medical coverage, the less money the company makes. >> that's right. exactly right. >> moyers: so they want to reverse that. they don't want my premium to go for my health care, right? >> exactly right. they...

>> moyers: where does it go? >> well, a big chunk of it goes into shareholders' pockets. it's returned to them as part of the investment to them. it goes into the exorbitant salaries that a lot of the executives make. it goes into paying sales, marketing, and underwriting expenses. so a lot of it goes to pay those kinds of administrative functions, overhead. >> moyers: when a member of congress asked the three executives who appeared before the committee if they would end the practice of canceling policies for sick enrollees, they refused. why did they refuse? >> well, they were talking to wall street at that moment. they were saying that because... i guess they might have to spend some additional dollars to be more vigilant, to make sure that they were not rescinding a policy inappropriately. it makes no sense. the only reason they would have said that is to cover themselves, and to send a signal to wall street that, you know, we're going to continue business as usual here. >> moyers: you know, i've been around a long time, and i have to say, i just don't get this. i just don't understand how the

corporations can oppose a plan that gives the unhealthy people a chance to be covered. and they don't want to do it themselves. >> well, keep in mind, what they want to do is enhance their profits, enhance shareholder value. that's number one. and the way that the business that they're in is health care, certainly. but their primary motivation is to reward their shareholders. most of the shareholders are large institutional investors and hedge funds. hedge fund managers are the ones who look at the stock, and investors for large organizations. it's not mom and pop investor. >> moyers: you wrote a column with the headline, "obama's false friends of health reform." you use as a prime example a man named ron williams, who is at the top of the list of insurance executives in terms of their

compensation. we actually saw ron williams at president obama's town hall meeting. >> i would commend the president for the commitment he's made to really try to get and keep everyone covered. and i think, as a health insurance company, we are committed to that. >> moyers: who is ron williams, and why do you use him as the example of what wall street expects and wants from the insurance companies? >> he has, apparently, had a seat at the table of health care discussion. he was recruited by aetna from wellpoint. aetna had gone on a buying binge. there's been an enormous amount of consolidation in the health insurance industry over the last several years. aetna bought a lot of competitors. it reached 21 million members. and... but what it realized and what investors began to see is that a lot of the businesses that it had bought were not all that profitable. so they were in... aetna was in a pickle. and they saw their stock price starting to plummet. so they brought... among the things they did was bring ron williams in. and williams, among the first

thing he did was order a revamp of the i.t. system, so that... >> moyers: the information technology system. >> exactly, so that the company could determine more about which accounts were not profitable or marginally profitable. so, with that new system, he was able, and the other executives, to identify the accounts that they wanted to get rid of. and over the course of a very few years, they shed eight million members. >> moyers: eight million policy holders? >> eight million people-- men, women, and children, yes. some of them were shed by intention. some, i'm sure, probably walked because the... or left for whatever other reason, but they intentionally had this program to purge these accounts. eight million fewer people were enrolled in aetna's plans. many of them undoubtedly joined the ranks of the uninsured, because their employers had been purged. >> moyers: so what happened to aetna's stock? >> went up, and it has... >> moyers: and so did ron's... >> and... >> moyers: ...compensation, right? >> ron's compensation and his

stock on wall street. >> and so i think, in the context of thinking about a government plan, what we say is, let's identify the problem we're trying to solve. let's work collaboratively with physicians, hospitals, and other health care professionals, and make certain that we solve the problem, as opposed to introduce a new competitor who has the rulemaking ability that government would have. >> moyers: you know, there's an irony, because you hear the companies and their trade groups talking about how we don't want a public option that would put a bureaucrat between a patient and his doctor. but you've just described a situation in which a c.e.o. is actually between a doctor and the patient. >> it's true. and that same thing happened in the nataline sarkisyan case. you had a corporate bureaucrat making a decision on coverage. so, they are trying to make you worry and fear a government bureaucrat being between you and your doctor.

what you have now is a corporate bureaucrat between you and your doctor. >> moyers: whose motive is profit-- understandably, naturally, is profit. >> right. >> moyers: but companies, any company is in business to make a profit, right? >> oh, absolutely. >> moyers: so how can you object? how can we object when an insurance company wants to increase its profits? that's a serious question. i mean, it sounds like a set-up, but it's a serious question. >> it's a very serious question. and i think that people who are strong advocates of our health care system remaining as it is, very much a free market health care system, fail to realize that we're really talking about human beings here. and it doesn't work as well as they would like it to. yeah, there's nothing wrong... and i'm a capitalist, as well. i think it's a wonderful thing that companies can make a profit. but when you do it in such a way that you are creating a situation in which these companies are adding to the number of people who are uninsured and creating a problem of the underinsured, then that's

when we have a problem with it, or at least i do. >> moyers: this is the key question for me. can health reform that includes a public plan actually rid our system of the financial incentive on the part of the insurance industry to provide less for more? >> it will help. it would help. would it rid it? no, i don't think it would, because of the for-profit structure that is now dominant in this country. but the public plan would do a lot to keep them honest, because it would have to offer a standard benefit plan. it would have to operate more efficiently, as does the medicare program. it would be structured, i'm certain, on a level playing field, so that it wouldn't be unfair advantage to the private insurance companies. but because it could be administered more efficiently, then the private insurers, they would have to operate more efficiently.

and that 20 cents in that medical loss ratio we talked about earlier might get narrower. and they don't want that. >> moyers: as this debate unfolds in the next month, into the fall, what should we be watching for? tell us, as an insider, what to look for that is more than meets the eye? >> well, what happens is they will continue this charm offensive, until there's actual legislative language. and what that means, of course, is that, right now, you're not really seeing the bills before the house and the senate that will actually be voted on. when we see the actual legislation, when there's something before congress, and it will happen, presumably, within the next few weeks, you'll start seeing a lot more criticism of it. and the special interests will be attacking this or that. the a.m.a. will be upset about something. the pharmaceutical industry will be upset about something. the insurance industry will not like this or that. it's... you know, a lot of money is made in this country off sick people.

and then, you'll start seeing a lot more of the behind-the- scenes attacks on this legislation in an attempt to kill it. the status quo is what would work best for these industries. >> moyers: in other words, if the industry is able to kill reform, or the democrats and the republicans can't agree on a proposal, that's what the industry really wants. >> exactly. and it happened in '93 and '94. and just about every time there has been significant legislation before congress, the industry has been able to kill it. yeah, the status quo works for them. they don't like to have any regulation forced on them or laws forced on them. they don't want to have any competition from the federal government, or any additional regulation from the federal government. they say they will accept it. but the behavior is that they will not... you know, they'll not do anything after... say this plan fails, say nothing happens. they're saying now what they did in '93, '94. "we think preexisting conditions

is a bad thing," for example. let's watch and see if they really take the initiative to do anything constructive. i bet you won't see it. they didn't then. >> moyers: well, on the basis of the past performance, and on the basis of your own experience in the industry, can we believe them when they say they will do these things voluntarily? >> i don't think you can. i think that they will implement things that make them more efficient and that enhance shareholder value. and if what they do contributes to that, maybe so. but now, they do say they are in favor of an individual mandate. they want us all to be insured. >> moyers: for the government to require every one of us to have some policy. >> exactly. and that sounds great. it is an important thing that everyone be enrolled in some kind of a benefit plan. they don't want a public plan. they want all the uninsured to have to be enrolled in a private insurance plan. they want... they see those 50 million people as potentially 50 million new customers.

so they're in favor of that. they see this as a way to essentially lock them into the system, and ensure their profitability in the future. the strategy is, as it was in 1993 and '94, to conduct this charm offensive on the surface, but behind the scenes, to use front groups and third-party advocates and ideological allies. and those on capitol hill who are aligned with them, philosophically, to do the dirty work, to demean and scare people about a government-run plan, try to make people not even remember that medicare, their medicare program, is a government-run plan that has operated a lot more efficiently. and also, the people who are enrolled in our medicare plan like it better. the satisfaction ratings are higher in our medicare program, a government-run program, than in private insurance. but they don't want you to remember that or to know that, and they want to scare you into thinking that, through the anecdotes they tell you, that any government-run system, particularly those in canada and

u.k. and france, that the people are very unhappy. and that these people will have to wait in long lines to get care, or wait a long time to get care. i'd like to take them down to wise county. i'd like the president to come down to wise county and see some real lines of americans standing in line to get their care. >> moyers: wendell potter, thank you very much for being with me on the journal >> thank you for inviting me. >> moyers: quality, affordable health care's on the critical list in america. and so is the newspaper business. so, maybe it's not surprising that one of the most powerful papers in the country attempted an unholy alliance, trying to turn a profit from its newsroom's coverage of the fight for health care reform. you may have missed the story

because it broke on the eve of the july 4th weekend. the publisher of "the washington post," katharine weymouth- one of the most powerful people in the nation's capital- invited top officials from the white house, the cabinet and congress to her home for an intimate, off-the-record dinner to discuss health care reform with some of her reporters and editors covering the story. but she then invited c.e.o.s and lobbyists from the health care industry to come, too, providing they fork over $25,000 a head, or a quarter of a million if they want to sponsor a whole series of these cozy little get- togethers. and what is the inducement she offers them? nothing less than-- and i'm quoting the invitation verbatim: "an exclusive opportunity to participate in the health care reform debate among the select few who will actually get it done." the invitation reminds the c.e.o.s and lobbyists that they will be buying access to "those powerful few in business and

policy-making who are forwarding, legislating, and reporting on the issues." remember, the invitation promises this private, intimate, and off-the-record dinner is an extension "of 'the washington post' brand of journalistic inquiry into the issues, a unique opportunity for stakeholders to hear and be heard." let that sink in. in this case, the "stakeholders" in health care reform in this case do not include the rabble, the folks across the country who actually need quality health care but can't afford it. if any of them showed up at the kitchen door on the night of this little soiree, a bouncer would drop kick them beyond the beltway. in other words, before you can cross the threshold in washington to reach "the select few who will actually get it done," you must first cross the palm of some outstretched hand. the dinner was canceled after the invite was leaked to the web site politico.com, by a health care lobbyist, of all people.

but it was enough to give us a glimpse into how things really work in washington, a clear insight into why there is such a great disconnect between democracy and government today, between washington and the rest of the country. according to one poll after another, a majority of americans not only want a public option in health care, they also think that growing inequality is bad for the country, that corporations have too much power over policy, that money in politics is the root of all evil, and that working families and poor communities need and deserve public support when the market fails to generate shared prosperity. but when the insiders in washington finish tearing worthy intentions apart and devouring flesh from bone, none of these reforms happen. "oh," they say, "it's all about compromise, all in the nature of the give-and-take of representative democracy."

that, people, is bull, the basic nutrient of washington's high and mighty. it's not about compromise. it's not about what the public wants. it's about money, the golden ticket to "the select few who actually get it done." and nothing will change-- nothing-- until the money- lenders are tossed out of the temple, and we tear down the sign they've placed on government, the one that reads: "for sale." i'm bill moyers. >> there's more at our web site. log onto pbs.org and click on "bill moyers journal." you can watch wendell potter's complete congressional testimony, review the different proposals for health care reform, and follow the money the health industry is lavishing on friendly politicians. that's at pbs.org. captioning sponsored by public affairs television captioned by media access group at wgbh

>> paul: i'm paul kangas with a "nightly business report" news brief. general motors is on a roll after only 40 days, it's out of bankruptcy. the company now says it's focusing on customers, cars, and culture. wall street struggled to a narrowly mixed close. the dow closed off 36 points, the nasdaq managed to gain three and a half points while the s&p 500 fell three points. drug store chain walgreen opens in alaska this weekend giving it a presence in every state in the union. the first store is in governor sarah palin's home town of wasilla. the next one's in anchorage. monday, strategist joe battipaglia gives us his forecast for stocks now that economic green shoots appear to be drying up. for more financial news, tune in to "nightly business report" weeknights on this public television station.