Paul Krugman’s New Year’s article pointed out the need for a system of health care in our country. It’s good reading.
Similarly, I came across a syndicated financial column by Malcolm Berko. It points out the outrageous billing practices encountered in the current non-system of health care. His point is that there is no incentive for either the providers or the insurers to be more efficient. Prices and insurance rates go up in lock-step. The concept of value in health care doesn’t exist.
Berko notes:
“I’d like to know why you don’t “gritch” about a $30,444 hospital bill plus $3,882 in medical supplies for an appendectomy patient who had a five-day stay. And how fair is a $7,809 emergency room charge to X-ray and cast a fractured fibula? But I’d really like to know why Aetna and Blue Cross paid those outlandish charges without a peep (but nickel and dime every doctor) using our premium dollars.”
“Last year the Big Eight (ed note: health insurers) reported net profits of $19 billion plus free cash flow of $22 billion. Holy moly! That’s $41 billion – easily enough to pay the health care costs for all of those 41 million uninsured. The top five officers at each of the Big Eight health insurance companies received $237 million in compensation last year. That’s a shameful use of our premium dollars. Those Big Eight health insurers employ more than 300,000 people, each of whom is paid a salary with benefits averaging $40,000. Well, that number computes to $12 billion and not a penny of that is used for health care. Certainly a shameful use of our premium dollars.”
Consider also that these insurers have overheads estimated at over 20% compared with the published 2% of Medicare–critics say that this is understated and that the real overhead of Medicare is 5%, still not bad in comparison with the private providers.
Add that to the obvious culture of waste in the private insurers. In a cost plus system there is no particular incentive to hold the line on costs.
It is a fact that the salaries and option packages that health insurance executives enjoy are generated from your health insurance premiums. It’s also sadly obvious that health care is a business first and that the customers/patients have become cash cows that provide a revenue stream. How else to explain the runaway costs at every level of service provided. The major beneficiaries are the the corporations, their executives and stock holders. What’s wrong with that picture?
Highest compensation package, exclusive of unexercised stock options
NAMEÂ Â Â Â Â Â Â Â Â Â Â Â Â TITLEÂ Â Â Â Â Â Â Â COMPANYÂ Â Â Â Â Â Â Â Â Â COMPENSATION
William W. McGuire CEO   UnitedHealth Group    $54,129,501
Wilson H. Taylor Rtd, chair        Cigna              $24,741,578
Ronald Williams Exec VP        WellPoint             $13,205,631
W, Donaldson Chair      Aetna/U.S. Healthcare   $12,650,393
Leonard Schaeffer Chair/CEO WellPoint              $11,127,465
H. Edward Hanway Chair/CEO   Cigna               $9,478,634
D. Mark Weinberg Exec VP     WellPoint            $8,957,410
Richard Huber Ex-chairCEO Aetna/US Hlthcare      $6,988,987
William Pastore President         Cigna               $6,779,028
T. Jones Pres Retir/invest         Cigna                 $6,055,314
Source: http://www.managedcaremag.com/archives/0109/0109.compmon.html
Executives with the largest value of unexercised stock options
NAMEÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â TITLEÂ Â Â Â Â Â COMPANYÂ Â Â Â Â Â Â Â Â Â COMPENSATION
William W. McGuire  CEO     UnitedHealth Group   $357,865,646
Stephen J. Hemsley Pres/CEO UnitedHealth Group $144,928,886
Norman C. Payson Chair/ CEO Oxford                 $115,375,414
Wilson H. TaylorRetired chair    Cigna                   $66,141,372
Leonard Schaeffer Chair/CEO  WellPoint              $64,610,759
H. Edward Hanway Chair/CEO  Cigna                $43,385,939
James G. Stewart Exec VP/CEO Cigna                 $41,049,922
Jeannine M. RivetExec VP/CEO, UnitedHealth       $39,450,395
R. Channing Wheeler  CEO    Uniprise United Hlth $32,506,870
John W. Rowe President & CEO Aetna                 $25,026,549
SOURCE: HEALTH PAY FOR HEALTH PLAN EXECUTIVES, JUNE 2001, FAMILIES USA, WASHINGTON
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