American’s are avoiding hospitals knowing they’ll be on the hook for high deductibles: Former Cigna VP

Former Cigna VP Wendell Potter joins Yahoo Finance’s On The Move panel to weigh in on the inconsistencies in America’s healthcare system.

Video Transcript

JULIE HYMAN: Well, it's receded a little bit to the background amidst the coronavirus pandemic, but policymakers are still looking at the structure of health care. And certainly, that will be a subject of discussion going into the election as well.

Our next guest definitely thinks that should be front and center. Wendell Potter is joining us now. He's the former Vice President at Cigna, and is now the Center for Health and Democracy President. Our Anjalee Khemlani is also joining us. Wendell is joining us from Philadelphia, by the way.

Wendell, so your organization is focused on fixing health care, basically, to sum it up. And you have said that in your prior life, so to speak, you made some mistakes in how you represented what the health care system in this country should look like. What should it look like, and what particularly lessons from coronavirus have we learned that lend themselves to what you're talking about?

WENDELL POTTER: Well, first we need a system, certainly, in which everyone is covered. We need to move much more rapidly than we have been able to to get everyone in this country covered in an insurance plan of some nature. And we also need to do more than we've been able to do to reduce the cost of health care.

And that includes how much people have to pay out their own pockets, because one of the reasons I left my job, I was expected to be a champion for moving everyone into high-deductible plans. The industry has had great success in doing that, to the point that many, many millions of Americans have deductibles that just simply cannot meet before their coverage kicks in. And that's been a problem during this pandemic, as people know that they are potentially going to be on the hook for a lot of money-- in many cases now, money they don't have because so many people have lost their jobs.

And that is another thing that we need to address and that has been laid bare by this pandemic, is that we've got to move away from the employer-based system. Over the years, a lot of employers have stopped offering coverage, because they just simply can't afford to do it, small businesses in particular. But we've seen millions of people lose their jobs, and along with those jobs their health insurance.

So we've got so many problems that continue to exist with the system that we have now that is largely controlled by the companies like the ones that I used to work for, Cigna for 15 years and Humana before that.

ANJALEE KHEMLANI: Wendell, we know that right now a lot of coverage is focused on what the rates, premium rates are going to look like for the upcoming year, considering the fact that insurers have really been a windfall from the savings from the outbreak, as well as looking at what they're going to be doing with these profits. So your thoughts on that, on what can be done and what premium rates are likely going to look like in 2021?

WENDELL POTTER: Well, even though you're right, many of these insurers-- in fact, the sixth-largest for-profit insurance companies have released second-quarter earnings over the past few weeks. And they have indeed really blown Wall Street's financial expectations out of the water.

United Health Care had the most profitable quarter in its history. And some have seen a doubling of their profits from the quarter a year ago. So they've-- and it's been largely because for two reasons. One, as I mentioned earlier-- they're able to avoid paying a lot of claims because of moving so many people into high-deductible plans, but also because of all the elective procedures that have been canceled.

There is the expectation that some of those will be rescheduled. So I expect that we will see that, despite this windfall, insurance companies will still increase their premiums next year, saying that they anticipate medical trend, as they say, to pick up, and that they will have a return to more normal times.

ADAM SHAPIRO: Is it possible-- I think Elizabeth Warren is calling for a law to make the insurance companies no longer profit-based businesses. And was that the model up until the early 1970s? What would happen if we went to that model?

WENDELL POTTER: I think we'd be better off, for sure, yes. Many of us can remember a time when most health insurance companies-- certainly, in my youth most companies were nonprofit. That began to change 20 or 30 years ago when big life insurance companies-- Cigna and Aetna, for example, were not initially very big in health insurance. And now it's their dominant product.

When I joined Cigna, it was a big multi-line insurance company. But the predominant model was non-profit health insurance companies. And I think that it could change, possibly by legislation or by investors, seeing that this is no longer the best place to put their money.

And I think that we will possibly see that. I've seen some reports over the past two weeks that are indicating that even some investors are thinking, or analysts are thinking, that maybe the glory days are behind us for the health insurance business. I think we could indeed see a return to nonprofits being kind of the dominant model again.

JULIE HYMAN: Wendell, thank you so much. Wendell Potter is former VP at Cigna and now President of the Center for Health and Democracy.