Welcome Back, Potter
On ACA, It’s the Supreme Court vs. the Insurance Industry
Wendell Potter gained famed as an insurance industry whistleblower. For the moment, he’s back on their side—in defense of Obamacare.
He was called a whistleblower when he spoke out about the deceptive practices of the health care insurance industry, but now Wendell Potter, former chief spokesman for Cigna and Humana, is switching sides again. He says the industry he left in disgust six years ago has got it right this time in defending the Affordable Care Act in King v. Burwell, the case before the Supreme Court that challenges the legality of federal subsidies to people in states that have not created their own health exchanges.
Potter’s not about to go back on the industry’s payroll – not that they would want him after he exposed how for years they undermined any serious efforts at reform – but he thinks the validity of the insurers’ arguments could save Obamacare from an early death. Health insurance providers have reformed their business model based on the ACA’s provisions that no one can be turned away because of a pre-existing condition, and that the young and healthy must buy insurance.
As Potter made the rounds last Wednesday among radio talk show hosts organized by Families USA, a pro-health care group, he reflected the arguments in a 30-page amicus brief filed by America’s Health Insurance Plans (AHIP), the trade association for health insurers. He noted the coffee stain on his copy of the brief, and his notes throughout the document. “They understand what’s at stake, and what the consequences are for the health care system,” he told me.
We were across the street from the Supreme Court where the justices were at that moment hearing oral arguments in the case. Protestors crowded the sidewalk with signs that declared, “Don’t Take away my Health Care” or “I didn’t elect the IRS.” Full disclosure: I too was being interviewed about the potentially game-changing challenge to Obamacare, and Potter was kind enough to share the amicus brief with me, dog-earing the pages with the most critical passages.
He explained that if the “premium tax credits” are struck down in the 34 states without state exchanges, that would put in place a process known as “adverse selection,” meaning that without subsidies to offset the cost only the oldest and sickest would be motivated to buy health insurance: “And if that happens, you have to raise rates, and that means more young and healthy people leave … and that creates a system where very few people can afford coverage.”
That would lead to what’s known in the trade as the “death spiral,” a phenomenon that Justice Anthony Kennedy, a key vote if the ACA is to survive, invoked during oral arguments. Kennedy told the plaintiffs’ attorney, Michael Carvin, that if his argument is accepted, “the states are being told either create your own exchange, or we’ll send your insurance market into a death spiral. We’ll have people pay mandated taxes which will not get any credit on -- on the subsidies. The cost of insurance will be sky-high, but this is not coercion. It seems to me that under your argument, perhaps you will prevail in the plain words of the statute, there’s a serious constitutional problem if we adopt your argument.”
Kennedy is known to favor states’ rights but King v. Burwell is not a constitutional case, it’s a question of interpretation of four words, “established by the state,” and whether that phrase excludes consumers of health care policies in states with federally established exchanges. Kennedy is no fan of Obamacare – he voted against its constitutionality in round one in 2012 – but he appeared more unwilling to condone the societal chaos that the Court would trigger by rejecting subsidies for some seven to nine million Americans.
The insurance industry brief states that if the ACA were struck down, the situation would be “worse than it was before Congress acted…It would leave consumers in those states with a more unstable market and far higher costs than if the ACA had not been enacted.” The justices seemed to agree there could be catastrophic consequences, but when Justice Antonin Scalia said Congress wouldn’t just “sit there while all of these disastrous consequences ensue,” there was laughter in the courtroom.
“You can’t just go back to the way things were,” says Potter. The AHIP brief notes that 68 percent of those nationwide receiving Obamacare are in the 34 states vulnerable to losing subsidies. It’s worth noting that the health insurance industry, after long resisting government reform, has adapted quite nicely to Obamacare and its flood of new customers, which is reflected in their stock prices.
“Who knows if this is the last legal challenge,” Potter says. “The law is pretty well entrenched. Even if Republicans wins the White House, I doubt they could repeal and replace… They haven’t got an alternative, and they know this includes some of their best thinking.” The individual mandate and state exchanges or marketplaces were conservative ideas. Potter says he didn’t see this particular challenge coming (few did), and Republicans have made political gains by demonizing the ACA. Still, he thinks the more enlightened members of the GOP, or at least those who understand the health care industry, recognize that there is no viable way to replace it.
Potter committed what many saw as career suicide when he testified before a Senate committee in June 2009 about the tactics he and his colleagues in corporate communications used to influence public perceptions in what was often a deceptive way. “It was my first time out as a consumer advocate,” he recalled. “I had spent years discrediting the Canadian and European systems as socialism, and promoting the idea that our system is superior.”
Michael Moore’s 2007 documentary, Sicko, on the reasons why so many Americans lacked insurance, got Potter thinking. His job was to criticize the film, and instead he found himself agreeing with its premise, that insurance companies go to absurd lengths to disqualify people from coverage based on some real or trumped-up pre-existing condition. As a top executive enjoying a very comfortable lifestyle, Potter took a big risk speaking out and changing sides, but he’s got lots of company now in the industry he left.