Pocket Protector

K.B. Forbes is defending uninsured patients. Never mind why.

Solutions to the ills of corporate health care may be found in unlikely places. From out of a quiet corner of a Los Angeles Hilton lobby on a recent eve-ning comes the eager voice of one dyed-in-the-wool conservative. And he’s mad as hell–at America’s “greedy” hospitals that routinely, he says, “price-gouge” low-income people without health insurance. It’s “an evil wrongdoing,” says the practicing Catholic, peering bug-eyed through thick, black-rimmed glasses.

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K.B. Forbes has become one of America’s most powerful advocates for the uninsured, chiefly by attacking hospitals’ practice of billing uninsured patients up to four times as much as they bill HMOs and Medicare for exactly the same services. Hospital chains frequently pump up their “sticker prices” to mitigate their losses when forced to negotiate downward by big-time insurers. Without a powerful HMO behind them, the uninsured are saddled with the full “list price.” In 2002, according to the National Journal, some hospitals were charging them an average of more than 200 percent above cost; Medicare, in contrast, pays an average of 1 percent below cost. With an inimitable mix of attack-style PR and detective work, the 38-year-old Forbes almost single-handedly pressured a major hospital chain to end the inflated pricing and has called on government to review the nonprofit status of some of the most egregious hospital offenders. A congressional investigation is now threatening to do just that.

But hand in hand with his victories for the uninsured, Forbes has advanced the interests of a wealthy conservative insurance executive, J. Patrick Rooney, for whom he once worked and to whom he maintains close ties. Rooney is a relatively small-time health insurer compared with the likes of Aetna and Blue Cross but is an influential figure on the right for championing private health savings accounts. Already, hospital discounts resulting from Forbes’ campaign have netted Rooney’s Indianapolis-based company, Medical Savings Insurance, a multimillion-dollar windfall.

Forbes, a self-styled “child of the Reagan revolution,” grew up in a mixed household in a Los Angeles suburb. His father was an Irish union member and his mother a Chilean social worker. Both were card-carrying Democrats, but Forbes quickly blazed a trail in conservative politics, and by his late 20s he was serving as chief spokesman for Pat Buchanan and later Steve Forbes (no relation) in two successive presidential campaigns. These days, though, Forbes likes to hark back to one of his first jobs, as an ESL teacher in Latino Los Angeles. The day after the 2000 presidential elections, he said his farewells to Capitol halls and jetted across the country to return to something more “grassroots.”

Which turned out to be Consejo de Latinos Unidos. Forbes, who speaks fluent Spanish, founded this advocacy group out of East Los Angeles in 2001–a nonprofit dedicated to fighting for hospital discounts for the uninsured, a disproportionate share of whom are Latino. Navigating 8,000 miles of Los Angeles freeway alone in a 1995 green Ford Taurus, “El Gordito” or “Chubby,” as Forbes is affectionately known, began documenting cases like that of Pascual Rivera. In 2001, Rivera, an uninsured auto mechanic and the father of three children, was charged nearly $30,000 for a three-day hospital stay after coming down with a severe flu–10 times the amount the hospital would have billed an HMO. When Rivera offered to pay $10,000 and have the rest refinanced, the hospital threatened to put a lien on his home. Soon, Forbes was taking the most egregious cases to the press. “It was phenomenal,” Forbes booms. “Everyone was doing it–for-profit, nonprofit, public, and private.”

In 2003, Tenet Healthcare Corporation, the nation’s second-largest hospital chain, finally yielded to Forbes’ pressure and agreed to implement discounts for the uninsured. Now Forbes is targeting the only chain bigger than Tenet–Hospital Corporation of America, or HCA. Consejo’s damning radio and television ads have aired in 15 states; in press releases, Forbes has called on Catholic hospital executives to “end the price-gouging and visit the confessional booth.”

Living by cell phone and sometimes crusading through three different cities in the course of a week, Forbes has taken his campaign to rhetorical heights where many liberal consumer advocates fear to tread. Instead of simply campaigning against hospital overbilling, he alleges racial discrimination. (A full 42 percent of non-elderly adult Hispanics are uninsured, compared to 24.5 percent of blacks and 15 percent of whites.) One Consejo television ad aired widely in Florida compares hospital pricing to the “colored only” waiting rooms of the Jim Crow era. And when Alabama’s attorney general came out in support of a nonprofit hospital Consejo had targeted, Forbes responded by calling the official a “stooge for price-gouging thugs.” Since June, the trial lawyers have joined in, filing claims of overbilling against more than 65 hospital chains nationwide. Hospitals are so worried about being the campaign’s next target, Forbes claims, some are contacting him to start negotiations rather than wait for Consejo to attack. “They don’t want to defend the indefensible,” he says.

In part, Forbes’ Tenet success was based on timing. In 2002, he helped put together a series of 10 lawsuits filed by uninsured Latinos against Tenet hospitals in Southern California; two months later, federal officials began investigating the hospital chain for Medicare fraud and illegal kickbacks to doctors. Meanwhile, Tenet lost $1.6 billion in acquisition deals in four cities, and in January 2003, the besieged company finally came around. Tenet agreed to implement discounts for the uninsured, and to stop aggressive collection practices–such as liens on patients’ homes and court cases against the unemployed. “They were seized upon with situations in the stock market and the feds,” Forbes now says. “Who pushed us to a deal? It was the federal government of the United States that raided them.”

But looming over Forbes’ passionate advocacy is the long shadow of J. Patrick Rooney, his former employer. Forbes’ work has produced direct, and dramatic, benefits for Rooney’s company, Medical Savings Insurance. When Tenet agreed to discount care to the uninsured, the chain applied discounts to MSI, which, unlike the much larger players in the industry, couldn’t negotiate deep discounts on its own. Tenet ultimately forgave some portion of the bills MSI had refused to pay in protest over inflated prices. According to a June 2004 article in Businessweek, that portion amounted to $2 million. In addition, Tenet agreed to accept significantly reduced payments from Rooney in all future claims.

For Rooney and a handful of his colleagues at conservative policy centers, however, there is more at stake than just his company’s private fortunes. Rooney has been at the forefront of a conservative push to promote health savings accounts, with which individuals can set aside tax-free money to pay their own medical bills. Typically, the health accounts are linked to high-deductible insurance policies that provide only “catastrophic” coverage. The idea is that as consumers pay more bills out-of-pocket–and save whatever they don’t spend–they will be more leery of unneeded medical expenses and therefore generate more competition among doctors’ groups and hospitals. Consumers will demand that pricing be more transparent, and good old market forces will be restored to the health care business.

Rooney, who has led two insurance companies that specialize in selling both the health savings accounts and the catastrophic insurance policies, has lobbied hard for this “consumer-driven solution” to health care. (He sold his family’s company, Golden Rule, for $500 million in 2003.) That has meant getting Congress behind the notion of offering tax-free savings opportunities to attract medical consumers into a freer market. Over the past 14 years, his family members and employees have contributed several million to Republican coffers. And in 2003, Congress crowned those efforts with success in the form of a Medicare prescription drug bill that included a $6.4 billion tax break for health savings accounts.

Rooney was a key supporter of Consejo’s launch, pledging $100,000 to help get the organization off the ground. Forbes, who worked for Medical Savings Insurance between 1997 and 1999, denies any other financial ties, but is unapologetic about receiving “intellectual help and political access” from Rooney’s company, where he is also a policyholder. “I’m good friends with Pat Rooney–it’s true. But the bottom line is we do all of our work for the uninsured. Period.”

Despite such protests, some health care executives have clearly come to view Forbes and Rooney as a team. “We’ve known the connection was there,” says Jeff Prescott, spokesman for HCA. Rooney’s agenda, he points out, is to win the same pricing treatment as the big guys. Prescott adds, “Rooney is trying to get his insurance company legitimized.”

Today Forbes gleefully likens his work with Consejo to his work on the “insurgent” Buchanan presidential campaign. “It was like this little speedboat that drove the big aircraft carrier mad,” he notes. He seems tickled at Consejo’s success, as if pleasantly surprised at having pulled off a somewhat improbable gambit. Referring to some of the hospital chains he has taken on in the past several years, he muses, “I could see them sitting there thinking, ‘Who is this son of a bitch?’” Forbes is happy to leave that question unanswered: “People cannot pigeonhole Consejo, or K.B. Forbes.”