Spinning Nataline Sarkisyans Death While Snooping Her Funeral: Highlights From Wendell Potters Harsh HMO Memoir (Part 2)
By: system
Jan 13, 2015

There’s only one more day before the first round of ObamaCare laws kick in. So it’s appropriate to finish clipping Wendell Potter’s new book Deadly Spin, which is the first health reform memoir. I finally read the entire tome and was surprised to see myself make a somewhat awkward appearance in the later chapters. More on that below. Here are the newsiest bits, scraped from the pages and summarized for you. (And if you missed the earlier two blogs on “Deadly Spin” check out the intro here and an abridgment of the first half of the book here.)

*As part of his polemic against his former industry, Potter bemoans how concentrated the insurance market has become. He cites a stat that says 400 mergers have taken place among HMOs since 1996. That leaves 24 states where the combined market share of the top two HMOs is 70% or more. The lack of competition means that HMOs don’t compete against each other directly by underpricing each other and passing on the savings to members. Instead they simply try to make sure that they issue just about same rate increases to providers as the other HMO in town. Market concentration causes an “endless upward spiral in health care costs.” In Massachusetts for example, Blue Cross had a deal with the hospital system Partners whereby it would always be charged the same rate as other payers, effectively stamping out competition that might have driven down costs.

*Potter describes how HMOs disproportionately dedicate their cash to share buy-backs. Potter speculates that it’s because the CEOs are so heavily incentivized with stock. Cigna, for example, bought back $10 billion from 2000 to 2008. That’s money that doesn’t go to better rates for members or for investments in improving customer service and other operations. Meanwhile the share of premiums that have gone to pay for medical care has fallen since 1993 from 95% to 81%.

*Last year the big five (UnitedHealth, Wellpoint, Aetna, Cigna, Humana) reported $12.2 billion in profits, up 56% from the previous year, and by covering 2.7 million fewer members.

*Getting past the dryer, financial topics, Potter talks about the tragic story of Nataline Sarkisyan. She was the Los Angeles teen for whom Cigna denied coverage of a possibly life-saving liver transplant as she was dying of cancer. The Sarkisyan denial became a PR disaster for Cigna and the industry, a campaign issue during the Democratic primary, and for Potter a personal tipping point.

*The Sarkisyan tale began on December 14, 2007 when a Los Angeles TV reporter called Cigna to say a young woman was being denied a transplant. Potter investigated the situation. In the meantime he sent out a general statement to the press that the company couldn’t comment on any specific member for privacy reasons. But generally speaking, members can appeal denials. The investigation determined that the girl had been denied payment for the transplant because she was considered too sick. Her doctors disagreed, giving her a 65% chance of surviving for five more years. The family’s first appeal to Cigna had already been denied. Potter convened an emergency meeting with then-CEO Edward Hanway, current CEO David Cordani who was then running the health insurance division, and medical director Jeffrey Kang.

*The story snowballed because a media-savvy union, the California Nurses Association, organized protests and sought coverage. Protester picketed the company’s LA office. Cigna decided to take the unusual step of paying out of its own pocket for the transplant, even though Sarkisyan was covered by a Mercedes Benz company plan that Cigna managed but didn’t fund. But the same day that the reversal was relayed to the family, the girl died in the hospital. Presidential candidate John Edwards got involved and Sarkisyan’s mother joined him on the campaign trail. A lawsuit was threatened by celebrity lawyer Mark Geragos. Geragos called for Cigna executives to be criminally prosecuted. It all spun out of control very quickly. “The one bit of good news for CIGNA was that the company was not mentioned by name in most of the headlines,” Potter writes.

*After Sarkisyan’s death Cigna began a PR. campaign to try to deflect the negative attention. Potter had misgivings about this. He had a daughter about the same age as Nataline. And he had stopped drinking a year or so earlier, which depressed his ability to repress emotional responses to his job.

*Cigna’s law firm hired a spy to attend Nataline Sarkisyan’s funeral at the Armenian cathedral and report back on what was said about the company. It turned out nothing was said about Cigna.

*Cigna worked with the national HMO lobby AHIP on the fall-out. They hoped to encourage coverage that would emphasize that the girl would not have been offered transplant in other countries. An American Enterprise Institute scholar (and physician) Scott Gottlieb wrote an attack on John Edwards in the Wall Street Journal, though Potter never explains the direct link between Cigna and Gottlieb.

*This is where I make a brief appearance. Potter writes: “I scored several coups when favorable or at least balanced articles appeared in Forbes and the Wall Street Journal…I couldn’t have been happier to see the headline on the January 8 Forbes story: ‘Does Cigna Deserve All the Blame?‘” Potter says I didn’t press the company hard enough about what kinds of financial incentives it had to deny the transplant, and makes it sound like I got snowed. Readers can decide for themselves.

*Potter also takes credit for a story that ran in the news pages of the Wall Street Journal that included the line: “John Edwards has been bashing big health insurers in recent days with the story of a girl who died waiting for a liver transplant. But the details of the case suggest the Democratic presidential candidate may be over-simplifying the tale.”

*After the Sarkisyan episode, “I was dismayed with what I read and disgusted by myself,” Potter writes. His boss criticized his attitude at work. He began to entertain the notion of leaving the company. He reached out to a former Cigna executive who was now working at a nonprofit health clinic. ”In previous years I would have been consuming enough alcohol to stay sufficiently anesthetized,” he writes.

*Two years later Potter met up with the Sarkisyan family on an NBC Dateline special, and says it was a tense meeting. He also describes how the family’s lawsuit against the company went nowhere, since you can’t really sue your health plan in this country if you get it through your employer.

*In one of the final chapters Potter profiles Karen Ignagni, the chief lobbyist for the HMO industry. He accuses her of having abandoned her progressive background as a union leader once she became a corporate spokesperson. He calls AHIP “duplicitous” for pretending to support health reform right up until the first crucial Senate committee vote. That’s when it released a report that predicted the legislation would raise premiums for those who already have insurance. He also says that the lobby helped foment the tea party movement.

*The end of the book describes Potter’s decision to become a whistle-blower. He hooked up with a former Bloomberg reporter who used to cover Cigna named Avram Goldstein. Goldstein was by then working at Health Care For America Now, a pro-reform coalition. Goldstein got Potter an audience with the right people in Washington, which led to his Congressional testimony in June of last year: “With the  possible exception of my wedding day, June 24, 2009, was the scariest day of my life.”

*Potter’s insider account got traction and he spent almost a year campaigning nonstop for health reform. A senior White House advisor to the President called Potter after Ignagni’s group had released its infamous report. “I was told that Ignagni herself had assured the White House just days before that AHIP had absolutely no plans to launch an immediate attack on the Baucus bill,” he writes. “Now they understood why I had started speaking out against the industry.”

Note to readers: in writing these entries I reached out to America’s Health Insurance Plans and Cigna for their take on what Potter wrote, but got no response. If that changes I will do a follow-up.