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Who’s Right about Kaiser — Michael Moore or SEIU?

Thanks to the Watergate scandal, Michael Moore’s documentary SiCKO was able to report some history of the Kaiser Permanente health maintenance organization (HMO).  It’s history that Kaiser would prefer you do not know.

Moore included tape of President Nixon and chief aide John Erlichman discussing what would become the HMO Act of 1973.  Based on conversations with executives at Kaiser Permanente, the largest health plan in California, Erlichman assured Nixon that the incentives at Kaiser run toward less medical care.  The less care provided to members paying a flat premium, the more money Kaiser makes.  Nixon expressed his approval.

To no one’s surprise, Kaiser Permanente issued a rebuttal, although it is surprising how clumsy a case Kaiser makes.  Attempting to discredit Erlichman, Kaiser cites two documents from the National Archives that supposedly refute Moore’s evidence.  One document turns out to be irrelevant, but the other one, a Feb. 6, 1971 letter from chairman Edgar Kaiser to Erlichman, is a gem.

Mr. Kaiser explained that Kaiser physicians, organized as the Permanente Group, receive both a salary and a share in any surplus left over from the contractual payments by the Kaiser Health Plan to the Permanente Group.  The incentive is to minimize the number of physicians in ratio to Kaiser members.  Chairman Kaiser’s letter goes on to complain about several features of the draft HMO Act.  In particular, he insisted, “Organized health care programs, including associated physicians, must have a significant incentive to elect the HMO framework.  The rate-based, rather than cost-based, method of payment . . . could provide such an incentive.”

In other words, said Kaiser, you must allow our plan to retain a difference between premium income and the cost of delivering care.

The drive to minimize care caused Kaiser much embarrassment in 2002 when the Los Angeles Times reported that Kaiser “awarded financial bonuses to call center clerks who spent the least amount of time on the phone with each patient and limited the number of doctors’ appointments” (“Kaiser Clerks Paid More for Helping Less,” Los Angeles Times, 17 May 2002)

Despite providing evidence that confirms SiCKO‘s reporting (although buried in a Web link), Kaiser praises itself for being “a non-profit health plan.”  In fact, Kaiser aims to generate the same surplus that everyone recognizes as profit in ordinary corporations.  A “non-profit” is different only because it is tax-exempt and does not pay dividends to shareholders.

Certainly, Kaiser executives are not of a non-profit mind.  Kaiser chief executive officer George Halvorson takes around $2 million a year, and dozens of Kaiser top officials get $500,000, $700,000 and $900,000 a year.

In its so-called rebuttal to Michael Moore, Kaiser ends up taking pride in having “served as a model for the HMO Act of 1973” — the very legislation that legalized the big HMOs skewered by SiCKO.

Enter SEIU

United Healthcare Workers-West (UHW-W), a large subunion within the Service International Employees Union (SEIU), represents many Kaiser workers.  One might expect UHW-W to recognize in SiCKO a wonderful opportunity to expose and denounce Kaiser Permanente’s systematic incentives to minimize the care provided to members.  The barely hidden profit drive makes work at Kaiser intense, frustrating, and stressful for many Kaiser employees.

Instead, UHW-W attacked Michael Moore for “smearing the reputation of one of our nation’s most progressive, reform-minded, pro-worker health-care organizations: America’s premier not-for-profit, pre-paid, integrated health-care delivery system, Kaiser Permanente.”

UHW-W does acknowledge that Kaiser packed a dazed, disoriented Carol Ann Reyes, 63, into a taxi and had her dropped in the skid row area of Los Angeles.  After all, viewers of SiCKO cannot forget the observation camera that recorded Reyes walking aimlessly in the street, still in a hospital gown and diaper, trying to figure out where she was and what she should do next.

However, UHW-W simply ignores Nixon’s delight in discovering Kaiser’s essential profit motive, except to drag up a statement by Edgar Kaiser . . . from 1938.

UHW-W insists there is “a fundamental distinction between a not-for-profit, pre-paid, integrated health-care delivery system and a stereotypical, for-profit insurance company.”  As far as the members who represent a “medical loss” to both kinds of health plans can see, the main difference is that one displays “Inc.” at the end of its name while the other does not.

Finally, UHW-W expresses pleasure at its 10-year labor-management partnership with Kaiser Permanente.  Remember the bonuses for phone center employees who kept members from making doctor appointments?  UHW-W officials served as straw bosses, working with Kaiser bosses urging clerks to get with the program.  Now the Kaiser-SEIU partnership extends to distorting history.

Phony Health Reform vs. Equal Care for All

At a time when health reform is on the national agenda, thanks in good part to Michael Moore’s SiCKO, Kaiser Permanente put forward its own proposal (George C. Halvorson, Francis J. Crosson, and Steve Zatkin, “A Proposal To Cover The Uninsured In California,” Health Affairs 26.1, 12 December 2006).  Kaiser wants to require that everyone must purchase a health plan as a matter of law.  Although the government should offer a bottom-of-the-barrel medical plan, most of the health business should go to private insurers and HMOs.

Instead of rejecting this corporate despotism, UHW-W tells health reform activists, “While Kaiser’s vision for getting to universal coverage may not be exactly the same as ours, we should acknowledge that their ultimate goal is very much the same.”  UHW-W officials ignore the fact that capital and labor have directly opposed visions of health care.  Kaiser promotes the business game plan.

The working-class current in health reform is embodied in the concept of Equal Care for All, implemented as a universal public health plan.  It breaks the tie between your health care and your individual wealth.  When you walk into a doctor’s office or arrive at a hospital, it should not matter whether you are rich or poor.

Currently, the movement for Equal Care for All has a concrete focus on John Conyers’ HR 676 legislation in Congress.  More than 300 trade union bodies have endorsed HR 676.  To be sure, UHW-W is one of them; those who advocate labor-management partnership easily sit on both sides of a fence.  It is worth noting that one of the two main trade unions in the drive for HR 676 is the California Nurses Association/National Nurses Organizing Committee.  (The Steelworkers are the other one.)  CNA/NNOC represents most Kaiser Permanente registered nurses in California, and it firmly rejects partnership collusion with the employer.

The front-running Democratic presidential candidates (Clinton, Obama, Edwards) all make noises about health reform, but each of their proposals is much closer to Kaiser Permanente’s plan than to Equal Care for All.  These candidates bow down before the private health insurers and HMOs rather than telling them: the people have decided, it is time for you to go into the sunset.  SEIU and UHW-W will spend millions of dollars promoting misleading generalities about health reform while they wait to see which Democratic candidate and which phony health reform they must support.

No wonder SEIU could not accept the truth about Kaiser in Michael Moore’s SiCKO.


Charles Andrews is a Kaiser plan member who has heard from dedicated caregivers there what things are really like.



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