DIVESTMENT CAMPAIGN FOR HEALTH CARE investigates holdings by TIAA-CREF and urges divestment from health insurance companies

By Sandra Fox

Healthcare-NOW, the national grassroots organization for single-payer healthcare, together with Physicians for a National Health Program, began a committee in 2010 to look at divestment from for-profit health insurance companies. We called ourselves the Divestment Campaign for Health Care.

As a member of the committee and a participant in TIAA-CREF funds, the nation’s largest pension fund that offers retirement options to academic (including medical centers) and religious organizations, I decided to investigate their holdings in the “socially responsible” stock option called “CREF-Social Choice.” As a stakeholder, I wanted to make sure that health insurance companies were not included in this fund.

Upon reviewing the 2010 Audited Schedules of Investments for the fund, I was very disturbed to discover that CREF-Social Choice included holdings in Aetna, CIGNA, Coventry Health Care, Humana, and WellPoint.

According to their Summary Prospectus the five “social criteria” TIAA-CREF reports using to decide on their socially responsible holdings include:

1) Strong stewards of the environment;
2) devoted to serving local communities where they operate and to human rights and philanthropy;
3) committed to higher labor standards for their own employees and those in the supply chain;
4) dedicated to producing high-quality and safe products; and
5) managed in an exemplary and ethical manner.

I understood from reading the Prospectus that companies are screened and ranked by an outside vendor, namely MSCI Inc, and that TIAA-CREF invests in companies that “meet or exceed the screening criteria…,” though “…concerns in one area do not automatically eliminate a company from potential inclusion in the …Fund.”

I further understood from the Prospectus, that “Even if an investment is not excluded by MSCI’s criteria, Advisors has the option of excluding the investment if it decides the investment is inappropriate, though it is expected that Advisors will normally apply MSCI’s screening results.”

Thus began my inquiry directly with TIAA-CREF headquarters in NYC.

It began in March 2011 with a phone message to Amy Muska O’Brien, Director of Global Social and Community Investing for TIAA-CREF. Ms. O’Brien’s email response recommended I send a letter to Keith Rauschenbach, Managing Director and Head of Affiliated Business Development for TIAA-CREF. A three page letter was sent to Mr. Rauschenbach on March 23, 2011 and copied to Ms. O’Brien, presenting my concerns and requesting 1) TIAA-CREF “review the appropriateness of holdings with health insurance companies, given their record of unethical and hurtful practices, resulting in worsening health, loss of like life, and bankruptcy to countless Americans”; and 2) “…a meeting at your headquarters in New York between executives of TIAA-CREF socially responsible funds and individual investors in these funds, myself included, who share the above concerns… I look forward to your response and to a future dialogue with you on this issue.”

I received a two page response from Mr. Rauschenbach on April 8, 2011, which explained that the indices used for inclusion in the Social Choice fund utilize [no “s”] “a ‘best-of-class’ approach–they include companies with high ESG ratings relative to their sector peers.” While “input from individual investors serves as a valuable addition to our process…, at this time we are not excluding health insurance companies from our Social Choice portfolios…you asked about a possible meeting…While our investment professionals cannot meet with investors individually, we appreciate the feedback…from investors like you…”

In February 2012 a PROPOSAL OF SHAREHOLDER’S RESOLUTION TO TIAA-CREF RE: CREF-SOCIAL CHOICE HOLDINGS IN HEALTH INSURANCE COMPANIES was sent to William Mostyn, then Corporate Secretary and Vice-President of TIAA-CREF, containing both my signature from Pittsburgh, PA and the signature of Johanna W. H. van Wijk-Bos (aka Johanna Bos), ordained clergy in Presbyterian Church (USA) and Professor of Bible at the Louisville Presbyterian Theological Seminary in Kentucky.

Within a few weeks of receipt of the proposal, William Mostyn called me to request a conference call to discuss the proposal. This was arranged for March 5, 2012 and included Mr. Mostyn, Ms. O’Brien, John Wilson (Head of Corporate Governance for TIAA-CREF), Johanna Bos, and me.

On the conference call, TIAA-CREF requested that we withdraw our proposal in return for dialogue with both them and MSCI, Inc., their vendor for rating companies. Mr. Mostyn indicated that if we did not withdraw the proposal, they would file to block the proposal with the SEC, claiming it would interfere with “ordinary business,” a claim that apparently can legitimately be used to block shareholder resolutions.

After an emergency conference call that night with members of the divestment committee, an email letter was sent the next day to TIAA-CREF with our collective response: an agreement to withdraw the proposal for one year contingent on separate meetings in NYC with MSCI and TIAA-CREF; based on our assessment of progress made, we may or may not decide to resubmit our proposal in 2013.

A three hour meeting with MSCI at their office in the heart of the financial district was held on March 30, 2012 and included from our committee: Rev. Dr. Johanna Bos from Louisville; Kay Tillow, Coordinator, All Unions Committee for Single Payer Health Care–HR 676 and Chair, Kentuckians for Single Payer Health Care, Board and Steering Committee member of Healthcare-NOW, also from Louisville; Katie Robbins, Board member and former National Organizer for Healthcare-NOW, Graduate Student in Public Health at Columbia University, from NYC; Dr. Mary O’Brien, internist and primary care physician at Columbia Health Services in NYC and a Board Member of PNHP, national and NY Metro chapter; and myself, co-chair, Western PA Coalition for Single-Payer Healthcare and Board and Steering Committee member of Healthcare-NOW, from Pittsburgh. Attendees from MSCI included Eric Fernald, Head of ESG Methodologies; Linda Eling Lee, head of ESG Ratings; and Julia Gigara, Health Care Team.

A presentation from our committee was made, containing documentation of repeated abuses by the health insurance industry, and our argument for divestment. MSCI indicated that controversy is taken into account in the formulation of a company’s rating, but that TIAA-CREF had elected to use the “best in class” approach with their Social Choice portfolio. Other options for screening are available to clients of MSCI, including those in which objectionable industries are not rated for inclusion. (TIAA-CREF had claimed to us in our conference call that while CREF-Social Choice does not invest in alcohol, gambling, or tobacco companies, it is because their rankings are not high enough for inclusion in the fund.)

A three hour meeting with TIAA-CREF was held at their headquarters in mid-town Manhattan on April 27, 2012. Each of the seven participants from our committee have holdings in CREF-Social Choice or Social Choice Equity Funds (the latter are mutual funds, which also invest in health insurance companies). Our team included: Mark Dudzic, National Coordinator, Labor Campaign for Single Payer Healthcare, from Columbia, Maryland; Josephine Disparti, MPH, EdD, RN, retired registered nurse, fromer faculty member at City University of NY, and member Healthcare-NOW and PNHP, from NYC; Barbara Kritt, Sociologist/Researcher/Campaign Operative a BKritt Consultin, from Ann Arbor, MI, and NYC; Oliver Fein, M.D., Professor of Clinical Medicine and Public Health, Associate Dean (Affiliations), at Weill Cornell Medical College, Past President and Board Member of PNHP, Chair NY Metro chapter, PNHP, from NYC; Rev. Dr. Johanna Bos from Louisville; Mary O’Brien, M.D. from NYC; and myself. The team from TIAA-CREF included Marjorie Pierre-Merritt, Esq. VP and Assistant Corporate Secretary | Advocacy and Oversight TIAA-CREF; Amy Muska O’Brien; John Wilson and Rehka Unnithan, Associate, Global Social and Community Investing. Of curious interest was the very sudden departure of William Mostyn as Corporate Secretary and VP from TIAA-CREF, who had initiated the dialogue by phone.

Once again, as we did with MSCI, we presented our case for divestment, with folders given to each attendee full of supporting evidence regarding the abuses of the industry. TIAA-CREF balked at our request for a decision by them regarding divestment in advance of their 7/17/12 shareholder’s meeting, but we held strong that a decision be made by 7/3.

Their oral response came June 28, 2012 via a conference call coordinated by Marjorie Pierre-Merritt with John Wilson, Johanna Bos and myself. Ms. Pierre-Merritt stated “We appreciate the dialogue we’ve had with you… we’re constantly looking at ” the MSCI methodology, have reviewed it, and are “very comfortable with the process of screening” that they presently use. Mr. Wilson added “MSCI appreciated the dialogue.” Both TIAA-CREF representatives indicated the company will continue to employ the “best in class” approach and rely on MSCI’s ratings. TIAA-CREF would not divest from health insurance companies but encouraged us to continue to provide information to MSCI relevant to our concern.

We informed TIAA-CREF that we were not happy with their response and would resubmit our shareholders proposal in 2013.

Meanwhile, on July 17, 2012, we once again were at the headquarters of TIAA-CREF, this time for their annual shareholders meeting, where standing room only crowds questioned the President and CEO of the company on their holdings in companies deemed socially-irresponsible by the participants. Three of us from our group were able to make our case for divestment from health insurance companies during the question and answer period, while others from the committee protested outside.

Today, January 26, 2013, I am sending the proposal off to TIAA-CREF once again, bearing the signatures of both Johanna Bos and me. We await the next chapter and urge letters of support from holders of CREF-Social Choice to TIAA-CREF on behalf of divestment from health insurance companies.


  1. I am a RNC psych/mental health nurse of 33 years, retired, presently working
    as a volunteer on Single Payer Medicare for ALL with no cuts to it or Social Security. I am anguished by seeing people die for lack of the money that was theirs, guaranteed to for life, while we have a system in place that would support all the people. while insurance and pharmaceutical companies become rich on OUR MONEY.

  2. Ellen Rosen says:

    I think all health care providers, especially those that make a profit, should be banned from utilization in the U.S. Unless we have a not for profit single-payer system, health care should become more expensive

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