Encore! EP384: How Shareholders Impact Carrier Behavior, Exactly and Specifically, With Wendell Potter

I am drowning in all things Q1 right now. So, this week we’re going with an encore. But this is a great show to go back and reflect upon, as it’s about carriers and how shareholders impact the actions of said carriers.

For a full transcript of this episode, click here.

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And, yeah, I think it’s always been pretty clear heretofore that for shareholders, I don’t know, money is the mission. Brian Klepper, PhD, said that the other day in a different context, but yeah. And there’s a certain amount of okay about that. Like, the finance person in charge of ensuring the pension fund doesn’t run out of money for retirees. Right?

Money is the mission, or the family office can continue for another generation. Money is the mission. Like, there’s a very vested interest in what amounts to profiteering. And if the business sells handbags or computer chips, I don’t know, profiteering is probably fine. No one blinks an eye about putting profits before, like, shoppers or profits before other businesses in the supply chain.

But this is healthcare that we’re talking about, and patient lives are the product. And again, there just doesn’t seem to have been very many conversations about a distinction between what might be okay when the product is a handbag that might not be okay when the product is caring for human beings.

This being said, I want to bring up an interesting caveat to this whole discussion and actually one reason I decided to encore the show with Wendell Potter from 2022. I’m gonna read a very well put post in LinkedIn by Richard Staynings, and he wrote this in mid-January 2025. Here’s the post:

“UnitedHealth Group in the cross-hairs—not by patients and regulators but shareholders. … On Wednesday, UHG shareholders requested the company prepare a report on the costs and public health impact related to UnitedHealth’s practices that limit or delay access to healthcare.

“The Interfaith Center on Corporate Responsibility (ICCR), a group representing faith-based shareholders, said it has filed a shareholder petition requesting the company to review how often prior authorization requirements and denials of coverage … lead to patients postponing or forsaking medical treatment as well as serious adverse events for individuals.”

Wendell Potter, by the way, my guest today, commented on that press release. As interesting as the post itself, I found the comments on the post and kind of, you know, curbing enthusiasm with a dose of realism on those comments. George Mathew, MD, MBA, FACP, who also was on the podcast a couple of years ago (EP253), he commented, “Many of the large shareholders [at these carriers] may work at [UHC, and] they may vote against this type of transparency.”

That is very thought provoking to see, actually, if the C-suite at these companies is more or less committed to patients/members than their shareholders. This podcast with Wendell Potter was recorded well prior to any shareholder uprising, however.

Now, I do want to say this next part, and I’m gonna mention, coming up is a show with Vivian Ho, PhD, about the sky-high hospital prices being a big culprit for the high premiums that many American workers are saddled with. And that matters because, here’s the sentence that absolutely must be said: The problems with healthcare in this country and why some people call it the healthcare industrial complex, it’s a problem with the whole healthcare marketplace, not just one stakeholder.

It’s everybody in concert doing some not great stuff, egged on by shareholders and professional capital and boards of directors, not one villain in a black hat tying someone to train tracks, like in some kind of talkie. Right? The problems that we have today are a confluence of a whole lot of folks, working at a whole bunch of different places, taking advantage of a whole lot of perverse incentives.

So, with that, this is a really interesting encore. As I said again, please do listen to it.

Here’s a Milton Friedman quote: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it [that entity] stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Okay, so this is Friedman, Milton Friedman, pretty much the most influential advocate of free market capitalism, stating quite clearly that an entity’s greatest responsibility lies in the satisfaction of its shareholders. His nod to social responsibility or ethics of any kind comes at the end there, where he says that for free market capitalism to function, there must be open and free competition and no fraud.

So, let’s compare this to what’s going on in the payer space in the healthcare industry. First off, there was just a chart in the New York Times the other day where pretty much every major payer except one got a check in a box for being accused of fraud. Interestingly, if you look in the comments section of that article, people posted links where that one outlier was being accused of fraud. So, I’m not sure what’s up with that, but yeah, let’s just conclude that there’s fraud in the payer space.

On to Friedman’s requirement for open and free competition. As we all know, there are a few very powerful, very big, consolidated entities who control the vast majority of the market with both regulatory capture as well as the capital to continue to buy more and more adjacent businesses, as well as any threatening upstarts and just close them down.

I wanna shift gears now to discuss the rules of the game, and this is really the topic of today’s podcast. Friedman said in that quote above that there are rules of the game that entities abide by. Therefore, these rules of the game are inarguably consequential. And today we’re talking about how these rules of the game echo when it comes to payers—companies that are publicly traded on Wall Street with shareholders.

So, that’s your spoiler for where this episode is headed. But before we go there, let me just say one or two things to the many listeners who I would consider certainly part of our Relentless Tribe who also work for payers. If you work for a payer, you have a few options. One of them is to do as much social good as you can.

The other is to see the problems with clear eyes. I mean, we’re in a place in this country where the majority (67%) of adults who reported medical bill or debt problems was insured when that care was provided. That’s from Kaiser Family Foundation. There’s 100 million Americans with medical debt. These numbers are staggering.

What’s the why with all of this? It’s our dysfunctional healthcare benefits market. Listen to the show with Kevin Schulman, MD (EP366) for more on this at the systemic level. But today we’re talking about one entity in this dysfunction, which are payers. I invited Wendell Potter on the show to ask him to explain how for-profit payers contribute to our dysfunction.

Again, being blunt here, the reality is, private payers have not been able to bring costs of care down. What they have done instead is settle more and more out of pockets with patients or with taxpayers or with employers.

Speaking of more and more out-of-pocket costs, although this is not the focus of the show, I am not giving consolidated health systems a pass here, obviously. But in this episode, we’re focusing on why payers behave as they do contributing to the dysfunctional healthcare benefit system in this country.

I could not have been more thrilled to have an opportunity to speak with Wendell Potter. His name most likely precedes him. But in brief, for much of his early career, Wendell Potter was a health insurance executive. After 20 years, he left his job after a crisis of conscience. Wendell testified before then-Senator Rockefeller’s Commerce Committee at a hearing about how healthcare companies actually operate. From there, he went on to write books and ultimately to start the Center for Health & Democracy.

Also mentioned in this episode are Brian Klepper, PhD; Richard Staynings; Interfaith Center on Corporate Responsibility (ICCR); George Mathew, MD, MBA, FACP; Vivian Ho, PhD; Kevin Schulman, MD; and Chris Skisak, PhD.

 You can learn more by following Wendell on LinkedIn and signing up for his newsletter at wendellpotter.substack.com.

Wendell Potter is a leading advocate for healthcare system reform in both the political arena and the marketplace. Working dual roles, Wendell is president of the Center for Health & Democracy. He regularly engages across the political spectrum to discuss health insurance issues with members of Congress, state legislatures, and their staffs. He is also the editor in chief of HEALTH CARE un-covered, which investigates and reports on healthcare corporations and insurance conglomerates in particular.

A New York Times best-selling author, Wendell returned to his first career of journalism after serving for two decades as head of communications for two of the country’s largest insurers, Cigna and Humana. He became an industry whistleblower when Congress was debating what became the Affordable Care Act. Wendell testified before several Senate and House committees, pulling the curtains back on prevalent industry business practices that resulted in higher healthcare costs and a growing number of uninsured and underinsured Americans.

His first book, Deadly Spin, won numerous awards and is still used in journalism and health policy classes at universities across the country. He has contributed to the New York Times, the Washington Post, USA Today, and many other publications and has appeared frequently on CNN, NPR, MSNBC, Fox Business, and other media outlets.

08:31 What is the medical loss metric?

11:33 “The reality is, insurers have been jacking up premiums … for a long time.”

12:48 “It’s a short-term game.”

15:39 “You’re seeing that these companies are not doing a very good job … of controlling costs because they don’t have the incentive.”

20:19 EP366 with Kevin Schulman, MD.

22:45 How do payers ensure that they’re controlling utilization?

25:53 “It’s death by a thousand cuts.”

31:51 “Just like independent practice physicians are endangered, so are community pharmacists.”

33:17 Who runs our healthcare system? 

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