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Monday, February 10, 2014

Mother Of AOL ‘Distressed Baby’ Speaks Up

Deanna Fei's daughter is now one year old. (Courtesy of Deanna Fei)

Deanna Fei’s daughter is now one year old. (Courtesy of Deanna Fei)

AOL CEO Tim Armstrong is reversing himself. In a letter to employees this weekend, he apologized for blaming a change in the company’s retirement plan on the high costs of two employees’ “distressed babies.” He also said he was changing the retirement plan back to the way it was.

The mother of one of the “distressed babies” is speaking out. Deanna Fei, whose husband works for AOL, wrote in Slate, “Armstrong exposed the most searing experience of our lives for an absurd justification for corporate cost-cutting.”

Here & Now’s Robin Young speaks to Fei, as well as to journalist Olga Khazan of The Atlantic, who writes, “it’s hard to imagine how company structured like AOL could ever pay $2 million for two pregnancies gone wrong.”

Interview Highlights

Deanna Fei on AOL CEO Tim Armstrong’s comments

“I don’t doubt that her care was extremely expensive. What I do take issue with is this singling out of any individual for using their health plan in the situation like the one we faced, which was a catastrophe… It was not a high-risk pregnancy. There was not a single risk factor I had, there was not a single warning. And you know, I think that was his attempt to explain that he was actually talking about the fact that he does care about his employees’ welfare, but for me hearing that added insult to injury because it wasn’t true, but also because there’s the suggestion as if we kind of took on something risky and the company was generous enough and charitable enough to cover us when it went wrong.”

“It would be unthinkable to call out an employee who got breast cancer, you know, parents of a kid with chronic asthma. We just would never single these people out as someone doing anything except exercising their rights as employees. And I also want to point out, it’s a valid and probably necessary conversation on a national policy level to talk about healthcare expenditures. I don’t know the answers, but I know in this context, we’re talking about a publicly-traded company that had just posted its best quarterly earnings in years, that could afford to pay its CEO $12 million last year, a company where all of the employees have health insurance and there’s no reason to make it a zero sum game.”

Olga Khazan on Armstrong’s $1 million cost estimate for each “distressed baby”

“That’s a little bit puzzling because most premature babies cost about $50,000 more than most newborns do, and employers pick up about half of that cost… So even with two of those it would be far less than $1 million. We don’t know how much the other newborn, what kind of situation they were in, but it still seems like a bit of a stretch.”




It's HERE AND NOW. AOL CEO Tim Armstrong is backtracking. This weekend, he sent a letter to employees apologizing after he blamed a change in the company's retirement plan on the high cost of two employees' distressed babies. He also said he was changing the 401(k) retirement plan back to the way it was; meaning no employees will lose company matching funds, as they would under the proposed plan.

Now in a few minutes, we're going to explain the proposed change because other companies are taking it up, but first to Armstrong's claim that the birth of two babies made the cuts in the pension plan necessary because they cost a million dollars apiece. One of their mothers is speaking out.

Deanna Fei writes in Slate: (Reading) Tim Armstrong exposed the most searing experience of our lives for an absurd justification for corporate cost-cutting.

Deanna Fei joins us from the NPR studios in New York. Welcome.

DEANNA FEI: Thank you.

YOUNG: And when AOL heard that we were going to speaking with you, a spokesperson called us and said that Tim Armstrong had directly apologized to you. As much as you want to share, what did he say, and what did you tell him?

FEI: I'm not going to get into the exact, you know, words that he said because he spoke to me very sincerely, as a fellow parent. He's a father of three kids. He expressed his regret over what he said. You know, I forgive him. I mean, I can understand how, you know, we all say things, sometimes, that we wish we could take back.

YOUNG: Well, as some people know, Tim Armstrong does on more than - he has on other occasions as well. But tell us now, you gave birth to a baby in 2012 who weighed under 2 pounds. She was described by the shaken doctor as gelatinous, bloody, bruised all over.

FEI: That's right.

YOUNG: I mean, she had to stay for quite some time. You, as parents, did not know how much to attach to her, whether to name her. You didn't know what the outcome was going to be. I mean, pretty excruciating, yeah.

FEI: That's right. I mean, you know, on her first day, we were told that she had a pretty good chance of dying before we could ever bring her home. When we saw her, you know, she couldn't breathe, she couldn't nurse, she couldn't cry because of the ventilator. And, you know, it was the most traumatic experience that my family has ever been through - and that I hope we ever have.

YOUNG: Well, and the ending is a happy one. She sounds incredible, a year later.

FEI: Yes, and you know, that was also something that from the beginning the doctors pointed out; you know, she's a fighter. And given what she's going through, she's doing amazing. So even though the months in the NICU were really long - we had many days of getting updates from the hospital; things about her lung collapsing, a bleed in her brain - we had to just keep faith because you could see that she was fighting so hard for every minute of her life.

YOUNG: So her life was saved and as you write, the implication now from Tim Armstrong is that you and your family obscenely gobbled up too much of the health care pie. That was your take from what he said. You know, he was putting numbers like a million dollars on each of these "distressed," quote-unquote, babies. Do you have a sense of how much it cost?

FEI: I have seen bills that range from, you know, 11 dollars and a few cents to the high six figures. So I don't doubt that her care was extremely expensive. You know, what I do take issue with is this singling out of any individual for using their health plan in a situation like the one we faced, which was a catastrophe.

YOUNG: He also called it a high-risk pregnancy. In a letter to employees this weekend, he said this is the kind of - high-risk pregnancies are the kinds of things we help families with. But it wasn't a high-risk pregnancy. It was just a...

FEI: It was not a high-risk pregnancy. There was not a single risk factor I had; there was not a single warning. And you know, I think that was his attempt to explain that he was actually talking about the fact that he does care about his employees' welfare.

But for me, hearing that added insult to injury because it wasn't true but also because there's the suggestion as if, you know, we kind of took on something risky, and the company was generous enough and charitable enough to cover us when it went wrong. I mean, I am grateful for the benefits that we received, but, you know, unless you're going to say that...

YOUNG: This was just a regular pregnancy.

FEI: Exactly. I mean, you know, the whole business of bringing babies into the world can be fraught with peril.

YOUNG: To play devil's advocate - someone might say, well, I have been wondering why do I have to pay for a pregnancy at all? I don't have children. And you have a response to that. Again, you've already said this is what insurance is for, but a lot of families have something that needs to be paid for.

FEI: Right. I mean, it would be unthinkable to call out, you know, an employee who got breast cancer; you know, parents of a kid with chronic asthma. We just would never single these people out as somehow doing anything other than exercising their rights as employees.

And you know, I also want to point out - I mean, it's a valid and probably necessary conversation on a national policy level, to talk about health care expenditures. I don't know the answers. But I know that in this context, we're talking about a publicly traded company that had just posted its best quarterly earnings in years that, you know, could afford to pay its CEO $12 million last year; a company where all the employees have health insurance. And there's no reason to make it a zero-sum game.

YOUNG: That's Deanna Fei, mother of one of the babies that AOL CEO Tim Armstrong said was the reason that the company had to cut pension plans. Deanna, thanks for speaking with us.

FEI: Thank you so much.

YOUNG: And by the way, Deanna told us that her baby is taking her first steps, seems fine, and it's all because of this medical intervention. Olga Khazan covers health for The Atlantic, and has dug into some of the issues here. Olga, we just want to touch base with you, and start with the cost. You, of course, don't know exactly what Deanna's costs were, but your thoughts on the million-dollar number that AOL's CEO cites.

OLGA KHAZAN: Right, that's a little bit puzzling because most premature babies actually cost about $50,000 more than other newborns do, and employers pick up about half of that cost. So getting - even with two of those, it would be far less than 1 million. And, you know, we don't know how much, you know, the other newborn, what kind of, you know, situation they were in. But it still seems like a little bit of a stretch.

YOUNG: In fact, you say that both distressed babies, as it was put, together might have cost the company about $100,000, not a million apiece?

KHAZAN: That's correct. I mean, there are some added kind of costs to employers in case, you know, the parents were out for an extended period of time or if they, you know, had to take extra leave. But that would all be kind of negligible; somewhere in the, you know, thousands - $2,000, thereabouts.

YOUNG: And of course, a lot of this is out of money that employees pay in their premiums when they pay for their insurance. But let's get to the retirement plan change that AOL sought. Now, they have a matching 401(k) plan. AOL would match employees' contributions in every paycheck, as most companies do who have the matching plan, and they match it up to a certain amount.

They wanted to change that to give a lump sum at the end of the year. In other words, the employees would make their contributions during the year; AOL would match it at the end of the year. But they would not give any if employees left before December; employees who leave would get nothing. This is an effort to reduce employee turnover. Is this common?

KHAZAN: Well, I think it's becoming more common, especially among big tech companies if they're having any kind of financial turbulence. You know, it can be a good deal for the company because any employee who leaves before the end of the year doesn't take their, you know, matching retirement funds with them. So it's something that they - you know, IBM and others have shifted to.

YOUNG: So this is a story - of course, it directly affects this one mom and another mom. But employees beware that your company as well may be thinking of changing your 401(k) plan. We'll link you to Olga Khazan's article in "The Atlantic" and Deanna Fei's story as well, at hereandnow.org. Olga, thanks so much for checking in with us.

KHAZAN: Thanks so much for having me.

YOUNG: You're listening to HERE AND NOW.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

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  • dialyn

    Frankly I think the original comments of the CEO shows how out of touch the very well paid and wealthy are. They figure they can afford everything they want and other people are disposable. Perhaps the problem isn’t that the baby somehow isn’t considered worth so much money but that our health care costs are ridiculously out of control, and maybe the whole fleet of money for brains CEOs should be exchanged for a few that don’t cost as much but actually care about their employees at least half as much as their massive bank accounts.

  • loyal listener

    Health insurance should be separated from employment. It makes so much sense, but unfortunately Obamacare makes the ties between employment and health insurance even stronger.

    • Mina

      I absolutely agree with this. Health insurance should be more like car and home insurance. I think the way it is today tied to the employer we are setting ourselves up for the silent discrmination in the hiring process dealing with perceived health issues or even on the credit reports used in the hiring process and the mention of medical collections and such.
      And we need to be sure the benefits ACA is brought with it such as can’t be denied coverage, no lifetime caps, and coverage can’t be dropped if you are diagnosed with a catastrophic illness.

  • Joe Barry

    I have no idea why AOL exists anymore. AOL made it big by overloading people’s mailboxes with trial disks. Now they exist by providing email and news bloated with banner ads, and selling their users’ information to third-party sites. This latest fiasco is just another reason the company needs to be dissolved.

  • Christine

    First off, I think that the CEO’s comments were odious, and these very proposed changes in the 401(k) plan are going on in many large corporations. These firms no longer provide any sort of pension, only a matching with the employees’ contributions. These changes make it even more difficult to fund one’s retirement, as the contributions lose a year’s worth of growth. Actually, the company gets the float, and the employees get the “challenge” of a do-it-yourself retirement.

    Secondly, it is my understanding from talking to a personal injury attorney that large corporations actually self-fund their employees’ medical care and do not really buy health insurance for them at all. Instead, they hire those companies to manage the payments and of course, to manage the employees in their attempt receive coverage. Perhaps this is worth investigating further by the NPR reporting staff. If this is the case, it could help explain the AOL CEO’s saying that it had cost the company that much for medical care for these two infants.

    • Momof26weeker

      Please investigate self insured companies. It is a very big problem. In years that million dollar babies are not an issue, self insured companies CEOs pocket huge bonuses and it’s like gambling. Doctors in West Virginia were stopped from selling prepaid medical care to their patients because the insurance commission claimed they were selling insurance. Why are big corporation allowed to play by different rules. It can lead to people with disabilities and health conditions to be labeled undesirable to the bottom line. BTW micropreemies are very different than late preterm babies and their care can add up to multi million dollar hospital bills.

  • Mike

    I’ve always wondered about these gigantic hospital bills. Where do these costs come from? If the doctors and nurses weren’t tending to patients, would they not be paid? Do the consumables (bandages, drugs, etc) cost such enormous amounts ($1 for an aspirin pill)?

    Or do these costs go on whether or not patients are there? Are the bills simply the annual budget of the hospital divided up among all the patients for the year (a silly example: if a hospital had only 1 patient, he’d be billed a $billion )?

    • Rick Evans

      If you’re uninsured: en.wikipedia.org/wiki/Chargemaster

      Insurance companies never pay anything near this since their payments are pre-negotiated.

      Remember this the next time you hear MIT Professor Jonathan Gruber scapegoat uninsured patients for driving up the cost of healthcare for all the beleaguered insured.

      Allan Sloan offered some insight on this back in a 2009 Marketplace interview.


      But we can continue to expect to hear medical industry water carriers like Gruber tell us that forcing everyone to throw more money at a bloated system will force it to lose weight.

    • jonathanpulliam

      Tort liability reform should have preceded passage of ACA. Because it did not, excessive liability exposure for doctors/hospitals has to support a cottage industry of ambulance chasing lawyers, resulting in many, many un-needed procedures done routinely as a “cover-your-ass” to keep from getting sued.

  • Ellen

    I have to take exception with Ms. Khazan’s comments about premature babies costing about $50K more than full-term babies. With a cost of $2-3K and up per day for NICU (room and board only – no medical services) and an average stay of 21 days, I find her figure unreasonably low. I understand that there are times when “healthy” babies are NICU’d for a day for observation because of thick mec or trouble getting started breathing on their own whose stays don’t cost anywhere near the $50K mark, but very premature babies who require respiratory support, surgeries, tests, medications, therapies and more certainly will have bills that surpass $50K long before their discharge.

    • MTS

      $200k apiece for twins born at a far later gestation and with far fewer complications than this baby, almost 18 years ago. I think 50k maybe covered the first few days of assessment and stabilization and heavy intervention. A little research would have shown immediately that the sort of ‘distress’ she is thinking of is in a whole different category than what NICU parents understand.

  • SteveInSC

    A point that seems never to be brought up. These parents likely never had a choice in any of the hospital care or its cost. The only possible choice was at the very beginning at which point perhaps they were asked if they wished to have the caregivers attempt to save their child. Once they said yes, and who would say no?, a process was underway in which no one would ever speak of cost —– not until it was over and and the functionaries in the hospital system, who were very definitely keeping tract of every item and minute for which a charge could be coded, had the computer system add it all up and send out invoices. So how could the parents be blamed in any way?

    • Mike

      You bring up a good point– nobody asks hard questions like: how much will this [test, procedure, drug] cost? how likely will it help me? is this just a “Hail Mary pass”, is this just to protect yourself from lawsuit?

      After all, insurance will pay for it. And more treatment is better than less, right?

  • Nom de Plume

    Olga Khazan is astonishingly uninformed about medical costs for very premature newborns. She clearly did NOT listen to the interview with Ms Fei about the circumstances of her baby’s birth (that she was supposedly commenting on), but apparently only heard Tim Armstrong’s lame description of a mother with a “distressed baby.” In fact, what Ms Fei clearly and articulately described was a true medical emergency that could not have been predicted or prevented; it was only due to the heroic measures of her medical team and the incredible technology of a state-of-the-art NICU that Ms Fei’s baby survived and is apparently flourishing. Anyone knowledgeable about such lengthy and intense care should not be surprised at a $1 million-plus price tag. That’s part of the medical cost issue that we all face (and a topic for a separate and lengthy discussion among economists, insurers, medical care providers, and politicians)! But of course this bill was not paid directly by AOL – it was paid by their medical insurer. This, Mr Armstrong and Ms Khazan, is what insurance is for! And this is also why Mr Armstrong is apparently in the running for worst CEO ever.

    For Ms Khazan to assert that premature births like this only “cost about $50,000 more than most newborns do” is only a reflection of her incompetence and ignorance, and should immediately disqualify her for future commentary on WBUR, NPR, or any other public forum. In addition, Ms Khazan should visit a few high-end hospitals, see what’s involved in a contemporary NICU, and talk to some hospital administrators and insurers about costs and reimbursement. And perhaps give us a report about why the “Obamacare” legislation was pervertedly rewritten before implemented to benefit only insurance companies.

  • Stacy21629

    This Olga lady doesn’t know what she’s talking about. The mother states in her article that her daughter weighed 1 pound 9 ounces at birth. So the baby was probably 25-27 weeks gestation. ABSOLUTELY care for a baby that young and all the possible complications can cost $1 million. Perhaps if she was a 34 week preemie I could see her number $50K but not at the size of this woman’s child. It’s obvious she didn’t pay close enough attention before this segment to the people in question. Poor journalistic technique. Shame.

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