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Health Insurance Whistleblower: Medicare Advantage Is “Heist” by Private Firms to Defraud the Public

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Many of the nation’s largest health insurance companies have made billions of dollars in profits by overbilling the U.S. government’s Medicare Advantage program. A New York Times investigation has revealed that under the Advantage program, health insurance companies are incentivized to make patients appear more ill than they actually are. Some estimates find it has cost the government between $12 billion and $25 billion in 2020 alone. We speak with former healthcare insurance executive Wendell Potter, now president ​​of the Center for Health and Democracy, who says Medicare Advantage will be recognized in years to come as the “biggest transfer of wealth” from taxpayers to corporate shareholders, and blames the lack of regulation over the program on the “revolving door between private industry and government.”

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now! I’m Amy Goodman, with Juan González.

A major investigation by The New York Times this weekend has found many of the nation’s largest health insurance companies have made billions of dollars in profits by exploiting the government’s Medicare Advantage program. Eight of the 10 largest Medicare Advantage providers have overbilled the government. Six of the 10 have been accused of fraud by the government or company whistleblowers.

This comes as the number of people enrolled in the privatized system continue to grow. Projections show that by next year more than half of all Medicare beneficiaries will be enrolled in a private plan.

Under the system, health insurers get more government funding for sicker patients, which has given the companies an incentive to make patients appear more ill than they actual are. UnitedHealth, Humana, Kaiser and other health insurance companies have been sued for fraud for overdiagnosing patients to bump up profits. The cost to taxpayers is staggering. Overbilling by health insurance costs the government an estimated $12 billion to $25 billion in 2020. The New York Times reports doctors at Kaiser were offered bottles of Champagne and bonuses if they added additional illnesses to the medical records of their patients so the company could make more money.

Joining us now is Wendell Potter, former executive for the health insurance companies CIGNA and Humana. Potter is now the president of the Center for Health and Democracy and the president of Business Leaders for Health Care Transformation. He’s author of the book Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans.

Welcome back to Democracy Now!, Wendell, joining us from Philadelphia. If you can start off by explaining how Medicare Advantage works? Many people might say, oh, they thought that was a government program for people 65 and older.

WENDELL POTTER: It’s important to note that it is neither Medicare, nor is it an advantage. It is — I think, will be recognized in years to come as probably the biggest heist, the biggest fraud, the biggest transfer of wealth from taxpayers, middle-income, low-income Americans, from them to corporate executives and shareholders.

It is a plan that has been in the works — or, has been around for about 20 years. It was born during the George W. Bush administration, when Republicans controlled Congress, and they were determined to start privatizing the Medicare program. And as you noted, now 20 years later, it’s to the point that almost half — and in some cities and districts, well more than half — already are enrolled in this program.

It is a private program. It is operated by private insurance companies. Most of them are for-profit. In fact, this year over 80% of the enrollment in these plans were people enrolling in for-profit plans. They are lured into these plans with deceptive advertising.

The plans feature things that are common in private plans but not in traditional Medicare, such as prior authorization — doctors have to get permission, in many cases, from the insurance company before they can treat their patients — inadequate networks, particularly as people get older and sicker, and very, very high out-of-pocket cost if people, knowingly or inadvertently, go out of network. So, it is a program that absolutely should be called “disadvantage.”

JUAN GONZÁLEZ: And, Wendell Potter, to me, it’s amazing, the healthcare system in this country right now. When you go to a general practitioner, they basically are constantly referring you to specialists, who always then want to do more tests. And it’s the testing process of all of these specialists that drive up these costs. And as you say, on television, almost every single night there are ads trying to lure senior citizens into these Medicare Advantage programs, this privatization of Medicare. Why isn’t the government exercising more regulation or control over this process, especially the one that, as the Times reported, piling on imagined or badly documented illnesses?

WENDELL POTTER: Well, it’s not because Congress has never seen this kind of information before. Many governmental organizations, like the OIG, the GAO, MedPAC, which advises Congress on Medicare issues and payment issues, and the Department of Justice, which has intervened in a number of these whistleblower lawsuits against these companies, that’s been something that’s been going on for a long time. And there also, by the way, have been other important journalists who have taken this on and done this investigation, like Fred Schulte at Kaiser Health News, Trudy Lieberman at the Center for Health Journalism. So, they’ve known this, but they’ve turned a blind eye, in many cases, because of the massive amount of our money that these big corporations are spending to lobby Congress, to throw money into their campaigns for reelection, and to propaganda campaigns and very, very misleading advertising, as you just mentioned.

Open enrollment will begin in just a few weeks for Medicare-eligible beneficiaries, and you will see just a barrage, a constant barrage, of ads from these companies, that are — they do not tell the truth. They leave out important details, like some that I mentioned earlier. So that’s how they pull it off. And regulatory capture — the Center for Medicare and Medicaid Services has been really asleep at the wheel. Congress actually has given CMS more authority to crack down on this fraudulent program, but they’ve just turned a blind eye. That is a classic example of regulatory capture.

AMY GOODMAN: What is regulatory capture, Wendell?

WENDELL POTTER: What that means is that the companies, the corporations that administrative offices, like CMS, the Center for Medicare Services, and Health and Human Services — they have such influence over these agencies that they don’t act on behalf of Americans. They act on behalf of corporations to protect their profits.

One of the administrators of CMS, some years ago, went straight from that job into the insurance industry as head of America’s Health Insurance Plans, which is called AHIP. They also have staffed — former members of Congress have staffed front groups for the industry. There’s one called the Better Medicare Alliance. A former Pennsylvania congresswoman, a Democrat, was the first to head that up.

So that’s how it happens. There’s this revolving door between private industry and government, and massive — again, massive amounts of money that fund all this lobbying and propaganda.

JUAN GONZÁLEZ: Wendell Potter, you had your own mother disenrolled from the Medicare Advantage plan over a decade ago. Why did that happen?

WENDELL POTTER: Yeah.

JUAN GONZÁLEZ: And what was the impact on her health as a result?

WENDELL POTTER: This is something that every senior should know. These companies go after people when they’re younger and healthier, with kind of a siren call that you can enroll in these plans for no money, you can actually get money put back into your Social Security account, as we hear from people like Joe Namath and William Shatner and Jimmie “J.J.” Walker. But the truth is, as you get older and sicker, then you become aware of just the disadvantages of this program.

My mother broke her hip. She needed to have rehab and skilled nursing services for a while. When we looked at what was available to her in the provider network, it was incredibly inadequate. So, I worked with my mom to get her out of a Medicare Advantage plan. It was one that was operated by UnitedHealthcare. And they market in conjunction with AARP, which is an outrage, in my view. But there’s a problem there, because when you do that and you’re older and you wait, you know, years after becoming eligible for Medicare, it’s harder and more expensive to get a Medicare Supplement policy to help cover your out-of-pockets. So we did that knowing that. We had to pay a lot of money, but at least she was able to get the care that she needed at a quality facility, where she got the rehab and skilled nursing care that she needed, which she would not have gotten had she stayed in that Medicare Advantage program. I’m confident my mom lived additional years because of what we were able to do.

AMY GOODMAN: Wendell Potter, finally, what should Congress do to prevent this kind of fraud? And we’re moving into the midterm elections. There is almost no discussion of Medicare for All in the corporate media. I don’t know if it’s because every five or six minutes they break for a commercial for some drug company, for some new illness that has been defined. But what has to happen right now?

WENDELL POTTER: Well, there are some important bills that have been introduced, and some I trust will be introduced before too long. Congresswoman Katie Porter from California has introduced an important bill that would force the government and force these plans to be more forthcoming, more transparent, to provide information and data that they’re just withholding from the government. It should not even be called Medicare Advantage. Like I said earlier, it’s not Medicare, nor is it an advantage. So I think there should be legislation that should bar these companies from even using the name “Medicare.”

There are some good members of Congress who understand this: Congresswoman Porter, Congressman Mark Pocan, Pramila Jayapal, Jan Schakowsky. They’re all aware of this. And they, unfortunately, are in the minority even among Democrats. But I think that New York Times story and some of the other things that advocates are beginning to do will wake them up and force them to get on the stick and do something. Congresswoman Jayapal has been the lead sponsor, as you may know, of a Medicare for All bill. She gets it. Others get it, too. But this is going to be an important step along the way. There is going to be a big, frankly, effort by industry to say we should have Medicare Advantage for all, which would be the greatest travesty, I think, that this country could ever experience.

AMY GOODMAN: Wendell Potter, we want to thank you for being with us. We’ll link to that New York Times exposé. Wendell Potter is a former executive for health insurance companies CIGNA and Humana, now serving as president of the Center for Health and Democracy and the president of Business Leaders for Health Care Transformation.

Next up, a massive leak of over 4 million confidential documents from the Mexican government have revealed Mexico’s military sold hand grenades and tactical equipment to drug cartels and heavily surveilled the Zapatistas. Stay with us.

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