Andy Slavitt’s United States of Care: A Second “Undertaking” (and What We Can Expect From It)

By Lambert Strether of Corrente.

“A company for carrying on an undertaking of great advantage, but nobody to know what it is.” –Prospectus for a joint stock company in the South Sea Bubble (1720)

Yesterday, we looked at how Andy Slavitt’s United States of Care (henceforth @UsofCare) was launched, whether we should be wary of it (undisclosed donors; board of perps establishment figures), and whether it opposes #MedicareForAll (yes, when you peel away the bafflegab). We took an especially close look at Slavitt tapdancing his way through taking a position on #MedicareForAll, quoting him at tedious, though not excessive length. (Not excessive, because a cuttlefish-like volumeretriciousness of speech seems to be one of Slavitt’s essential characteristics as an interlocutor[1]. If you skipped over the Slavitt parts yesterday — they were formatted like this — I urge you to go back and read them before continuing; they are breathtaking in their effrontery.) Today, and at much less length, I’ll propose that the three requirements I outlined for the Bezos, Buffett and Dimon undertaking will also apply to any solution emanating from @USofCare[2]. To review, these three requirements are:

1. Accounting control fraud
2. Financial predation
3. Abused workforce

And to those three I will add a fourth:

4. Conflict of interest

Of course, I’m not saying that Slavitt and his 50 “Directors and Founders” sat down and agreed a list of criminal acts; that’s not how these things are done, and in any case, absent evidence from a whistleblower or a fly on the wall, it’s hard to see how anyone could prove that. What I can do is show the track records of the players; since the system is working very well for them, they are unlikely to change their behavior under any scheme proposed by @USofCare. I will also assert that the level of corruption under neoliberalism[3] is such that any solution proposed within that conceptual framework — rather, by elite players operating within that framework — will exhibit these features. We’ll look at each feature in turn. (For expository reasons, I will put “Conflicts of Interest” before “Abused Workforce.”) But before we do that, here’s a potted history of Slavitt’s career. I’ve underlined the firms to watch:

Before building and selling his healthcare company ‘Health Allies’ to UnitedHealth in 2003, Slavitt was an investment banker for Goldman Sachs and also worked as a consultant with McKinsey and Company, a private healthcare lobbying firm. Slavitt quickly rose through the ranks at UnitedHealth, eventually becoming head of Optum Insight (née Ingenix) – the company’s technology arm. By the time the opportunity in new government infrastructure came up, UnitedHealth had the technology, expertise and leaders to scale up.

That “new government infrastructure” was, of course, the ACA. The Hill takes up the story:

Prior to his appointments to CMS and current nomination… Slavitt was CEO of Optum/QSSI, a subsidiary of UnitedHealth Group, one of the nation’s largest health insurers. Optum/QSSI had been building the data services hub for the online marketplace Healthcare.gov under an $85 million contract before it was chosen to serve as the systems integrator in late October 2013, just weeks after the website famously imploded.

And finally from the Minneapolis Tribune:

He also served in one of the top health care posts under former President Barack Obama. He’s probably best known as the wonk brought in to fix healthcare.gov after the website’s disastrous launch.

You got that right: The ObamaCare website imploded after being built by QSSI, run by Slavitt. Slavitt then slithered over to HHS/CMS and has now acquired the reputation, at least in his home state, Minnesota, for fixing the broken system his own company built[4]. That’s a world-class Flexian in action! (I’m mindful of alert reader MedicalQuack’s comment that “I’ve written about this snake in detail for years.” I think a timeline of Slavitt’s career would be very useful point of entry to the big picture on health care, and perhaps at some point we’ll create one.)

1. Accounting Control Fraud

Here is a classic scheme from United HealthCare. Slavitt was a senior executive with United Healthcare from 2003 to 2013, during which time the fraud occurred:

United Healthcare Services Inc., which runs the nation’s largest private Medicare Advantage insurance plan, concealed hundreds of complaints of enrollment fraud and other misconduct from federal officials as part of a scheme to collect bonus payments it didn’t deserve, a newly unsealed whistleblower lawsuit alleges.

The suit, filed by United Healthcare sales agents in Wisconsin, accuses the giant insurer of keeping a “dual set of books” to hide serious complaints about its services and of being “intentionally ineffective” at investigating misconduct by its sales staff. A federal judge unsealed the lawsuit, first filed in October 2016, on Tuesday.

The company knew of accusations that at least one sales agent forged signatures on enrollment forms and had been the subject of dozens of other misconduct complaints, according to the suit. In another case, a sales agent allegedly engaged in a “brazen kickback scheme” in which she promised iPads to people who agreed to sign up and stay with the health plan for six months, according to the suit.

Sounds like United HealthCare and Wells Fargo have a lot in common, unsurprisingly.

2. Financial Predation

Here is a classic database scheme from Ingenix, where Slavitt was CEO. It was so bad that even Andrew Cuomo noticed, back when he was New York state’s Attorney General. SourceWatch:

On February 13, 2008, New York State Attorney General Andrew Cuomo announced the state was expanding an investigation that focused on Ingenix. After an initial six-month investigation, the AG filed lawsuit against Ingenix. At a briefing held on February 13, Cuomo stated, “This involves fraud in the hundreds of millions of dollars, affecting thousands and thousands of families … Too many people have been hurt. It has to stop. We believe there was an industry wide scheme perpetrated by some of the nation’s largest health insurance companies to defraud consumers.”

In describing the alleged fraud committed by Ingenix, Mr. Cuomo described a typical scenario, where an out-of-network doctor might charge $200 for an office visit but is told that the going rate is $77. The insurer would then normally pay only 80% of that figure, leaving the patient responsible for the difference of about $138. At the heart of the state’s lawsuit was how that $77 rate got set in the first place: the number was derived from a database of claims data created and maintained by Ingenix, and sold to other insurers.

In responding to the Attorney General’s allegations, UnitedHealth said it believed it was delivering “dependable database tools.” Moreover, the company claimed that “the reference data is rigorously developed, geographically specific, comprehensive and organized using a transparent methodology that is very common in the health care industry.” However, Linda Lacewell, who headed AG Cuomo’s healthcare industry taskforce, accused UnitedHealth of lying to consumers. She described the Ingenix database as “garbage in, garbage out.” Another source reported Ms. Lacewell’s description of Ingenix and UnitedHealth’s use of data as “deception, manipulation of data and outright fraud.”[4]

So Slavitt is just the kind of guy we want involved in, er, “fixing” the ObamaCare marketplace, eh?

3. Conflict of Interest

Robert Eskow writes in Alternet:

Progressives Beware: The United States of Care Is Not What It Seems

Slavitt has reportedly created an investment fund (more here) that hopes to make money from “low-income, high need populations” – that is, people who depend on the government for their health care. That’s a pretty fundamental conflict of interest.

Zephyr Teachout, with the Founders, defines corruption as “self-serving use of public power for private ends.” If you regard @USofHealthCare as, at least putatively, as an example of public services, then using that same effort for your own profit is corruption.[5] It’s also not hard to see how somebody with a good RoloDex of government health care administrators could get work thrown to firms which the investment fund has backed.

4. Abused Workforce

Here, I speculate, but let’s look Slavitt’s (deeply conflicted) investment strategy. He highlights two companies:

Medicaid patients are [ConsejoSano’s] main area of interest, particularly those who have difficulty navigating the American health system. It provides a text message services in Spanish, Arabic, Cantonese, Mandarin and other languages that include alerts about upcoming appointments and tasks they need to do that are culturally appropriate. He also made note of Circulation Health, a non emergency transportation company to get patients to medical appointments medications to customers.

(Note that in each case the investment is not made in health care, but in firms that ensure, er, “access” to care, via text messaging and transport respectively.) And he explains the firms that are models for his picks:)

Slavitt pointed out that the common theme these companies have is that they provide much-needed services behind their technologies.

“There is room for cool innovation.

Uh oh…

What is Air BnB doing? What do all these companies do? They logistically give people more opportunities — these are companies that are about improving people’s lives. Is Uber a tech company? Is Air BnB a tech company? In a matter of speaking, yes, they are but it is really about identifying services to make people’s lives better.”

So AirBnB and Uber are Slavitt’s models? Good to know, especially since the essential “innovation” of both companies was in regulatory arbitrage (or, in the vulgate, “breaking the law,” AirBnB by letting property owners run unregulated hotels, Uber in, like, everything, top to bottom). Both Uber and AirBnB abuse workers, Uber through its horrid “gig economy” practices, AirBnB by undercutting the legitimate hotel business and hence that industry’s workers, who are often poor, often of color, often immigrants, and often unionized. (Strange to see a liberal Democrat like Slavitt supporting all this [hollow laughter]). Will abuse of workers happen at the firms Slavitt will invest in? Impossible to say for sure, but “Circulation Health” has “just like Uber” written all over it, and ConsejoSano sounds like a glorified call center.[6] And not that I’m paranoid, but I bet liberal Democrats would love to see #MedicalForAll advocates like National Nurses United taken out. Perhaps it’s time to “disrupt” the nursing profession!

Conclusion

We’ll have to see what policy proposals @USofCare comes out with as Slavitt’s undertakers “change the conversation.” Slavitt’s track record is not, to say the least, re-assuring. I’m sure we’ll be hearing more — much, much more — from him, especially as each one of his “cool innovations” inserts its profit-sucking mandibles into the bloated and prostrate body politic we laughingly call our “health care” “system.”

NOTES

[1] I first encountered Slavitt on the Twitter, as a hash tag activist on #SaveTheACA (but never, ever mention #MedicareForAll). Twitter’s character limit really worked in Slavitt’s favor.

[2] I use the strong form “requirements” to make the point that, for corrupt elites, characteristics like accounting control fraud are features, not bugs.

[3] Clive writes: “Increasingly, if you want to get and hang on to a middle class job, that job will involve dishonesty or exploitation of others in some way. Industries such as finance have seized and held onto larger and larger proportions of the economy.” We have, after all, an entire “industry” (if you want to call selling insurance an industry) with thousands of people in cubes working for firms that profit by denying people health care.

[4] Most of the credit should not go to administrators like Slavitt — “wonk,” forsooth; Reuters calls him a “hero” — but to the engineers and systems architects, many associated with the Obama campaign, who went on to inititiate the United States Digital Service. This story was written up by Steven Brill for Time in 2014. The story is now paywalled — available here in PDF form — and doesn’t seem to exist anywhere else, a fine example of history being erased, even history less than a decade old.

[5] Although a Flexian, presented with Teachout’s definition, would probably just stare blankly.

[6] To be fair, Slavitt’s new firm could just be a cynical attempt to cut a slice of all the stupid money sloshing around Silicon Valley. Not that there’s anything wrong with that.