Tuesday, May 10, 2005

How Can a $124.8 Million a Year CEO Make Health Care More Affordable?

An op-ed piece in the Providence Journal about huge pay packages for corporate CEOs mentioned the breath-taking $124.8 million total compensation of United Health Group (parent of United Healthcare) CEO William McGuire. This figure can also be found in the Forbes Special Report on CEO compensation. Here one can find that other managed care CEOs got less fabulous, but still formidable compensation, e.g., Howard Phanstiel, PacifiCare, 3.38 million; Edward Hanway, Cigna, $13.3 million; John Rowe, Aetna, $22.2 million; and Larry Glassrock, Wellpoint, $25.0 million.
McGuire's compensation was so large as to take a measurable part of this large company's net income (5%). Or to look at it from a stock-holder's (and hence, an company owner's) viewpoint, had McGuire, who is an employee, been only paid a cool million, and this money had been distributed as a dividend, it would amount to about a $0.20 per share dividend. (The current dividend is $0.03 per share.) (See company data available from Forbes as well.)
To look at it from a United employee's viewpoint, had McGuire, who is an employee, been only paid a cool million, and this money had been distributed to employees, each of the 40,000 employees could have received a bonus larger than $3000.
To look at it from the viewpoint of the health care system, the $124.8 million total compensation of a single United employee could pay the salaries of 833 general internists at current typical salaries. Or the $124.8 million could run one reasonable size community hospital for a year.
United Health Group's mission statement is "the company directs its resources into designing products, providing services and applying technologies that improve access to health and well-being services; simply the health care experience; promote quality; and make health care more affordable." (See this fact sheet.) Rather, it seems to be directing a good chunk of its resources into salaries of top management employees. How a $124.8 million CEO salary can be reconciled with a mission to "make health care more affordable" is completely beyond me.

30 comments:

Don Seamons said...

Look, I completely agree that no one single person is worth an eighth of a billion dollars in a year. But don't play fast and loose with the facts. In terms of salary and bonus, Dr. McGuire earned about $10 million in 2004. The rest was made from cashing in on stock options.

So what? Well, because the bulk of that money came from the selling of stock and not out of operating budgets, the result is far less onerous. $114 million wasn't diverted from patient care to pay a "fat cat."

Your arguments still apply -- how can a $10 million a year CEO make health care more affordable? In my opinion, the issue isn't with Bill McGuire or UnitedHealth Group. They are doing quite a bit to improve patient care and drive costs out of the health care system. The issue isn't even CEO compensation. The issue is with a health care system where what's best for the patient takes a back seat to what's best for the doctor, the hospital, the health plan and the employer who could ALL be characterized as fat cats controlling the purse strings.

Roy M. Poses MD said...

I suppose one could argue that the value of the stock options should have been added to Mr. McGuire's total compensation the year he got them, rather than the year he cashed them in.
But I don't understand how one could argue that the stock options were not part of his total compensation either at the time they were issued, or the time they were cashed in. I am no economist or accountant, but I am sure there are plenty who would argue that stock options clearly entail a cost to the company issuing them. If Mr. McGuire could sell his options for $115 million, then the company could have instead issued $115 million in new stock, kept the proceeds, and used them for some other purpose. By giving Mr. McGuire these options, the company gave up the opportunity to do so.
It is of course true that there are lots of other people and organizations who make money from health care. Some, unlike Mr McGuire, actually take care of patients. But very few, outside of CEOs of large health care organizations, make $1 million a year, much less $10 million. Some cats are clearly "fatter" than others.
And again, it is hard to reconcile the company's stated mission to "make health care more affordable" with the amount it pays its CEO.

RRedfern said...

I suppose that the use of all the smoke and mirrors used to delay or deny the payment of claims made by the patient's is not to increase the bottom line of the company and therefore stock value. People are terrified of having to deal with their faceless claims adjustor.

Why is it that the claims agent can override diagnosis and treatment recommendations by licensed health care professionals?

Dr. McGuire is not the only CEO to receive obscene amounts of money for running an insurance company. Check Tenet Health Care. Parade Magazine 3/3/03. This is not a one year windfall. Check for the compensation amounts over the last decade.

The money in health care is not going to buy care for the patients of this country. Many MDs are trapped, but many are also checking out. It is a corrupt system in my opinion. It is a conflict of interest for publically traded companies to be involved in health care insurance and have all the power that they have.

Anonymous said...

Doctors are no longer allowed to practiced meicine in your best interest. Its the attorneys and the overpaid healthcare companies that run medicine.

Lars said...

McGuire's compensation is beyond obscene; it's rape and pillage of a variety that would make a Viking's eyes water. He alone is compensated approx 5% of the profit of an entire multi-billion dollar company. The majority is profit from stock options but as we all know from recent regulatory moves, options definitely cost the company money. Every day Dr. McGuire walks out of his office, he racks up approx half-million dollars, assuming a 5 day workweek; hope the poor fellow gets weekends off. His compensation is literally off the charts in comparison to his competitors at Aetna and Wellpoint/Anthem. Which brings us to the juicy question of why the board allows such egregious compensation. Well just look at how much the board of directors have been cashing in on their stock options (http://finance.yahoo.com/q/it?s=UNH).If I have my hand in the honey jar, why slam the lid on Dr. McGuire's greedy little fingers. Remember Donna Shalala, yes former HHS secretary under Clinton who helped almost bring your the Hilary HealthCare Plan. She must have become disillusioned with socialized medicine since she is now one of many mult-millionaire directors on Dr. McGuire's cozy board. I 'll scratch your back if.... Amazing what a few million will do to re-orient the socialist mindset in a capitalist direction. Thinks its time the boys doing the Enron investigation took a deep look into the cozy boardroom of Dr. McGuire's little cabal.

AZCOM said...

You argue that "If Mr.(sic) McGuire could sell his options for $115 million, then the company could have instead issued $115 million in new stock, kept the proceeds, and used them for some other purpose."

However, without an effective CEO United Healthcare could have very easily had low to no earnings, or even worse, went the way of Enron....

Anonymous said...

In order for McGuire to make this incredible amount --they have reduced the insurance of their OWN employees! Their own employees have the worst--cheapest--poorest coverage in the INDUSTRY. They allow you to go for your well person exam--but then you have to pay up to $4000 out of pocket before they kick in! Yearly! Plus the amount weekly you pay!!! THeir employees have the equivilant of NO healthcare. Who on an average salary has that much cash to pay for medical bills every year??? What type of cost of living did their employees get last year--0-2%!!!! Didn't even pay the cost of gas!!Their wages for the average employee is the lowest in the industry. Why do your claims get messed up?? Because they cannot recruit/keep good people. In an era where the top fortune 200 companies are going to UNITEDHEALTH and asking them to put together a good healthcare policy for them so they can use it to attract and retain their employees--UNITED HEALTH does the opposite. In a recent corp mtg the executives plainly said--if you don't like it ..go somewhere else..and UNITED HEALTH employees are..in droves..who is left to manage the healthcare system and claims?? What about the ongoing cost of hiring/retraining due that is passed on in soaring healthcare costS?????

alamostar said...

I WAS AN EMPLOYEE OF PACIFICARE, NOW A UNITED EMPLOYEE THANKS TO THE SELLOUT. UNITED IS INDEED ONE OF THE CHEAPEST COMPANIES ON EARTH! WHEN I WORKED AT PACIFICARE, WE WERE ENTITLED TO BE PAID FOR UNUSED VACATION TIME WHEN WE LEFT THE COMPANY. WITH UNITED, IT IS CONSIDERED A "GRANT", NOT EARNED COMPENSATION. NOW WHEN WE LEAVE, WE MUST GIVE UP MONEY THAT COULD HAVE ADDED UP TO A FEW THOUSAND, NOT TO MENTION SOME OF THE OTHER BENEFITS THAT WE ENJOYED AS PACIFICARE EMPLOYEES. READING THIS ARTICLE STRENGTHENS MY RESOLVE TO GET OUT OF THIS MONEY GRUBBING COMPANY THAT COULD CARE LESS ABOUT QUALITY OF LIFE FOR ITS EMPLOYEES.

RN at UnitedHealthCare said...

While I can't be mad at someone else who is a CEO not an RN; I can be extremely frustrated at what the top-of-the-ladder MDs at UnitedHealthCare make based on how employees are treated. Each day I am to make a difference in a client's life. I am to make sure they are doing everything for their diagnosis, maintaining health, taking their medications, etc. Yes, it is true. United HealthCare is the first company I have worked for that does NOT take care of it's own. What I do for my patients I cannot do for myself. I cannot afford my medications, so I don't take them, or I skip days to make the RX last. I don't see my Internist to check on my blood pressure. I dont' get my lab work done to be sure the medications I do take aren't damaging my liver. I pay 2x a month for my healthcare insurance. UnitedHealthCare gives me $400 to spend on health care...that equals one chemistry lab panel, and one 15min md visit. Then I must pay several thousand to meet my out of pocket max for the year, before any insurance kicks in. In the old days, Met Life and then Metra Health did well by taking care of it's nurses...showing us healthcare mattered for it's employees, not just the clients. After purchased by UnitedHealthCare things have been downhill for the staff here. I see Kaiser nurses getting paid $30-$40 an hour...so everyone thinks that because I am a nurse I am so rich. I barely make rent, utilities, and upkeep on my old car. How many jets, lexus, and other things does one CEO really need ? Only saving thought I have is that I know where I am going when I die , and it won't be the same place where the CEOs go who put money and worldly goods first. ---oh and we employees do bring up the issues of what we need, changes we desire. Last year we talked about inability to afford our medication to a head MD who told us straight out "If you don't like it you can go somewhere else to work". That was sure supportive and caring ! The nurses and nonmedical staff are the workforce that powers the beast that pays for these CEO and head MDs salaries. It sickens us all.

Anonymous said...

Virginia Medicaid has had to make a special arrangement for their patients who have United Healthcare as their primary insurance. Unfortunately, United Healthcare's Reimbursement is so low few providers in the state are contracted with them. Normally Medicaid is the payor of last resort, but because many Medicaid beneficiaries have been unable to find providers in their area that accept United Healthcare many patients were going without services they needed. VA Medicaid has had to make an exception for these patients and will pay the full allowed amount for services, rather than paying the just copays. I am sure this is exactly what United Healthcare wants.

Anonymous said...

Don't forget his $1.6 billion in options grants.

Anonymous said...

Thanks guys for helping me make up my mind. My husband is going to his job tomorrow and canceling our insurance with those blood sucking bastards.

I'll go to the county hospital before I'll play United's game and support that CEO. I wonder what he had for dinner tonight? I'm sure it wasn't Top Ramen, like I did.

Anonymous said...

It's funny how the government talks about restricting patients rights to sue doctors for frivouls lawsuits because that is whats driving medical cost thru the roof. From reading the comments on this site it is clear to me that what is driving these cost up is the greed of these top company officials. My doctor will no longer accept my family as patients because United Health Care has not increased its payouts to the doctors in FIVE years, yet my insurance premiums have more than TRIPLED in the last five years. My doctors office sent me a letter saying the receive less from UHC than they do from medicaid. Someone Please do something to stop this sort of stuff from happening to hard working family's.

Dave Shuck said...

And the customers keep getting screwed more and more and it gets worse and worse every year. I was just sent an email from my boss this morning that my UHC coverage will be changing next month from $1140 to $1277 per MONTH!

I blogged it here if anyone is interested:
RANT: Remember when insurance was a benefit?

Anonymous said...

It's sad that the CEO of United Healthcare can make so much money yet United Healthcare denied coverage for a drug my daughter needs due to her birth defect. After appealing twice, we were still denied--and we had never been denied previously. At least now we know why he makes as much as he does. I hope the son of a bitch rots in hell.

Anonymous said...

Also consider that United Health Care, Mamsi, MDIPA have very confusing literture. They came out with a 11/06 brochure wherein the designations "PPO" (non-FEHB) and "Dental Discount" (FEHB) appear on the same cover. I can't help but think they want to confuse the hell out of people who are supposed to decide which to use at any given time. Class action time????

denverdoctor said...

At one time, United Healthcare had a reasonably good reputation. When I read about the coming Merger with Pacificare, I knew they were going to become more like Pacificare (cheap) and my fears were realized. I'm sure United ran an ad for a CEO, 1 million in compensation per year and no stock options available, they would get plenty of good applicants.

Anonymous said...

GREED....that's how.
I can tell you, as an office manager who must get authorizations for medical procedures...UHC is the ABSOLUTE WORST of all. It's clear to me why their corporate profit was so high. They have awful provider services and consequently that affects patient care. Their CEO compensation is a reflection to me of how much $$ is horded by that company, at the expense of those members who have UHC for a health plan.

Beyond that....McGuire is greedy - on top of his high salary, his insider knowledge about the company stock gave him an advantage.
Now having to pay back $600M or so - is that all he his liable for?
What about the expense of the investigation, the prosecution, etc.
Plus - back-dating usually is by definition ILLEGAL. You can be sure UHC would not pay a claim that had false dates.

What difference will it make to McGuire...will he go to jail for these deceptions? His reputation might be tainted, but it seems that our country is full of CEOs who probably pat each other on the back for a job well done...when all they do is line their pockets -with so much money one wonders...why do they need all that?
Mozilo is another one.

Anonymous said...

I am a physician. United Healthcare has not raised its rates to our office in over 12 years. They pay less than medicaid. They send monthly forms requesting me to switch a patients medications when the patient is only getting the medication every three months by mail order. They deny medications as "experimental" if the FDA 'approved' dosage is exceeded, even with 5-10 years of published articles and even in textbooks quoting these dosages as standards of practice. I am a conservative physician so these decisions are made on expense or quantity of pills.
On the other hand I have requested several times to fill a prescription in a way cheaper for the insurance company and was denied. Example 30 capsules of 10mg plus 30 capsules of 20mg to give total of 30mg daily dose where 30 mg capsule does not exist. Insurance company authorized 90 capsules of the 10mg capsules.

#30 of 10mg was $100
#30 of 20mg was $100
total price $200
but patient had 2 copays for $50
insurance price $150

#90 of 10mg was $300
but patient copay was $25
insurance price $275

I have had 10 patients in the past month that I could have saved the same $125. This totals $1250 for the month. $15,000 for the year. There are 5 other physicians in my office , this would be $90,000 for just our office.

It all adds up. I was told that there was no way in the computer to waive the second copay for the patient.
Wouldn't be but probably an hour of a computer programmers time to create a new rule in the system. Okay I'll give them 20 hours of time. Not nearly the cost of the meds.

Thaddeus Stevens said...

I concur with the comments about overdoing the emphasis on the big numbers; the stock options are costing the company though. The books have to be adjusted and the accounting department would be busy if all the CEO's stock options were sold in one day. Has any top paid CEO ever sold all of their stock options before leaving the job? I'd rather doubt it because to do so would be kindred to killing the goose filled with unlaid golden eggs.

Health care plans are being hard hit for wasting millions these days by people of a progressive leaning, but those top paid executives are not the norm. In Detroit, the CEO of Blue Cross Blue Shield of Michigan (BCCBSM) falls in the last 50 of the top 100 paid CEO's in Michigan. BCBSM has over a million members; as has been noted above, the issue in health care is not really on excess profits and overpaid executives. The real issue is about the quality of care that the average member receives for the premiums paid.

My summary statement about health care is here: http://www.politicsusaweb.com/WhyOnePayerWon'tWork2.html
1. Health care in this country is similar to and akin to the cottage industry in England in the 18th and 19th century as portrayed in 'Silas Marner' by George Eliot. The medical providers toil behind their own walls, blindly oblivious to the hapless patients traveling up and down the roads outside the walls of the practice or facility or laboratory or manufacturing concern.
2.The average consumer is not prepared to travel from 'cottage' to 'cottage' to shop for care but is forced to do so out of dire necessity. Unprepared and ill equipped he accepts on blind faith what each practitioner tells him and may even request more care than is necessary just to make sure he gets his just dues.
3. Employer groups fail to educate their employees on the benefits and force the employee to call the health care plan in desperation for information on the benefits they have. Enrollment procedures churn chaotically each year as people switch from one plan to another or join the foray for the first time. This mad churning causes interminable delays and mass confusion about benefits, costs, and responsibilities. Because of this many members will fail to utilize their benefits and thus the third major source of health care costs arises, underutilization of care.
In that order then, the source of costs increasing (maybe, in a conservative manner that I feel is well documented at the web site)by $150 billion per year:
1. Quality of care at the point of service: basically it's abysmal. WE have no way of moving low quality care givers off the system and no way or rewarding those who consistently deliver the best care.
2. Over utilization of care; because providers and their patients are fearful they may seek more care than is necessary or providers may seek higher wages for more procedures; providers are also fearful of litigation and may over provide; patients are fearful of not receiving the correct care.

Anonymous said...

We are a healthcare provider that has now cancelled our in-network status due to our integrity and principal. UHC is ripping off their customers by denying claims and lowing payments to Doctors to the point no office will be able to keep their doors open. I spoke with a clinical doctor of UHC to get treatment approved for a patient and he said he understands they are a PPO they do not have to approve treatment, even though the insurance booklet outlines they do get treatment with their plan! We discussed how PPO is now being manageelike an HMO. So they are lying to the Employers who purchase UHC/Pacificare for the employees in making them think it is a PPO and they are collecting PPO premiums but paying out as HMO benefits, when they even do approve a payout for the poor patient. It is shameful but I have Faith the God is watching all this and hearing the prayers of all the sick that need help through proper coverage. And he hears the prayers of the Doctors and Nurses who work so hard but are not able to make ends meet due to the low payments. One Emergency room walk-in near by had to shut down because of this terrible mess.
ATTENTION all Doctors- Get out of UHC and then they can't keep their doors open. We can do this in numbers. Print out all the info we have on the internet and share it with your patiets so they can cancel UHC and they can tell their employers about it! Thanks a lot McGuire! Maybe you should learn something from Oprah and the Big Give, not the Big Take!

Anonymous said...

Get rid of the health care insurance providers. Go to a single payer system where everyone in the US is covered, the costs are distributed over the entire US population. Everyone can go to their own doctors and have the bill paid through medicare. The government is the peoples government and the only reason it doesn't work is because there are people in government who don't want it to work. they want to make the government look innefective so they can privatize everything. Just ask Grover Norquist.

Thaddeus Stevens said...

The key factors in rising health care costs are related entirely to: quality:

1.-low quality of care,

2. uneven quality of care and

3. the unrecognized nature of the quality of care problem facing our country;

all of these elements in the problem contribute and must be addressed before we can move forward in improving health care. The major point of my writing today is to point out and educate the reader on the known issues that have not surfaced so far in the wide ranging discussion that is occurring in conjunction with public policy debates centered on the 2008 Presidential campaign.

From
Preventing Medication Errors: Quality Chasm Series (2007)

The key messages of "To Err Is Human", were that there are serious problems with the quality of health care delivery; that these problems stem primarily from poor health care delivery systems, not incompetent individuals; and that solving these problems will require fundamental changes in the way care is delivered. A subsequent IOM report, Crossing the Quality Chasm: A New Health System for the 21st Century (IOM, 2001), took up the challenge of suggesting how the health care delivery system should be redesigned. It identified six aims for quality improvement: health care should be safe, effective, patient-centered, timely, efficient, and equitable (IOM, 2001).
The Quality Chasm report and the later IOM report, Patient Safety: Achieving a New Standard for Care (IOM, 2004), also emphasized the need for an information infrastructure to support the delivery of quality health care. The latter report called specifically for a national health information infrastructure to provide real-time access to complete patient information and decision-support tools for clinicians and their patients, to capture patient safety information as a by-product of care, and to make it possible to use this information to design even safer delivery systems (IOM, 2004).


Despite these investments, however, progress continues to be slow, lessons learned are fragmented, and little effort is being devoted to evaluating the impact of these improvement initiatives so future efforts can be guided more by evidence than by anecdote (Jencks et al., 2000; Leatherman and McCarthy, 2002, 2004, 2005). In short, the quality chasm in health care remains wide. On average, adults in the United States fail to receive almost half of the clinical services from which they would likely benefit (McGlynn et al., 2003). And while per capita health care spending in the United States greatly exceeds that in other industrialized countries, cross-National comparisons of health care quality reveal that other countries achieve better performance on many measures (Hussey et al., 2004; Reinhardt et al., 2004). Similarly, spending levels vary widely among U.S. regions, yet there is no evidence that more expensive regions have either better quality or improved health outcomes (Baicker and Chandra, 2004; Fisher et al., 2003a,b). Racial, ethnic, and class disparities are pervasive; moreover, the numbers of uninsured are rising, currently making up more than 15 percent of the population (IOM, 2002, 2004). For the sizable investments being made in health care services, Americans should be getting much greater value from the care they receive.
There are many obstacles to rapid progress in improving the quality of health care, but none exceeds the fact that the nation still lacks a coherent, goal-oriented, consistent, and efficient system for assessing and reporting on the performance of the health care system. Thus if quality improvement initiatives are to achieve their full potential, a concerted national effort to consolidate health care performance measurement and reporting activities will be essential.

1. Quality of medical care in this country is low. This is because the delivery system for health care is broken-many people cannot reach a health care provider-because there are none within many miles of their home. If health care is available it is uneven in quality with excellent providers next door to under trained and overworked providers. Facilities and systems of facilities are locked into a failed system within their own walls because there is no one with the coercive power to make groups of medical providers sit down and do a systems analysis of why their facilities are broken. Often times understaffed facilities throw their patients back out onto the system and then the patient is obligated to seek care at another facility. We need a way of identifying those providers who are equipped to handle a particular medical condition and stop the train to an “all around acute care facility.” No one facility is best equipped to handle every patient who comes their way.
2. Many Americans tend to over-utilize care and burden the system with unnecessary costs and delays. This is often the result of the employer based insurance program which almost forces medical providers to give priority to those who can readily pay. Most employer groups are unwilling to openly discuss this issue.
3. Other Americans may under utilize the health care system because of a lack of understanding of what is available or because of an inability to pay; a result is not knowing what exactly their responsibility is, or ignoring their own health condition. They are then too often thrown on to the health care system at a critical junction and the Emergency system becomes over burdened as a result. We could subsidize low income folks with payments to an existing plan (like the Federal Employees group or a state employees group) and enroll them there to keep every one covered. This would ease costs for health care plans too because the medical underwriting would be in the favor of the plan with a lager membership.
4. Health care plans to often look to maintaining their own networks and don’t often add a cumulative value to health care but simply man the walls to keep members locked inside. This parochial approach to maintaining network barriers keeps patients locked into a smaller pool of providers who are regionally based. It is not necessarily the case that health care quality is evenly spread around the country or evenly dispersed throughout a state or region. This out of network phobia is the ghost in the machine behind the problem outlined in item 1 above. Health care plans fund low quality care because they are chained to their own pool of care givers, those providers get paid whether or not those facilities and professionals are really the best that might be available. This fear of looking out of the network perpetrates the unwillingness to look at a systems analysis that would remove some providers from the system. The patients overall medical condition is often ignored as a result in an effort to keep members locked inside a particular plan. Health care plans need to look outside their own walls and allow members to travel where they wish if the quality of care is better out of the network. Most health care plans go through the motions of identifying quality but usually their cozy relationship with their own providers does not allow them to do this in an effective manner to remove providers who are harming patients with poor or out of date practices. Some health care plans are, in many respects, actually run for and by the providers. Health care plans need to compete on providing their members with the best providers, to do this we need quantifiable statistics on quality-something doctors and facilities have usually resisted drawing up, again by manning the walls with kettles of boiling water and more tar and pitch to protect the network. In the area of Cardiac medicine, a system of spreading knowledge by copying the methods of the best practitioners has kept that area far ahead of the learning curve in providing high quality of care to many patients.
5. A single payer system would only make monolithic the out-of-network-phobia outlined above. Here, there would be no other resort to another plan and again, as now, low quality providers, who mistreat and misdiagnose (often unwittingly) would be rewarded for doing a bad job. This would happen because there is no way of pinpointing who the low quality providers are.
These are then the key to reform:
Identify who the better providers are and reward them by paying them well, identify the lower quality providers and retrain them or move them off the system. Establish, through the Institute of Medicine and related provider groups,a nation wide system that would generate scientifically verifiable quality reports on providers that shows a history of the care they give patients, evaluates the risks involved and shows the outcomes related to those risks and the kind of care given. This would move beyond the ‘Good Housekeeping’ type of quality reports we have today through groups like Council for Affordable Quality Health Care-CAQH.Health care plans have a unique role in establishing this national data base because of the extensive body of data they have residing in their claims system.
The Toxic Environment we Live in causes so many more people to become ill than was true 50 years age. The combination of,
1. Fallout from nuclear bomb testing, use of depleted uranium weapons and leakages from nuclear power plants results in our planet being a toxic place to live
2. Combine this with industrial pollution, exhausts from internal combustion engines and poorly processed waste and we are facing situations that cause more people to become sick; here is the root cause of the problem with health care.

3. Focusing on high salaries in the health care industry does nothing to address these issues I have mentioned. Yes, the insurance plans need to be reformed. They need to start competing on the quality of care they provide and the listing of providers who are better than their potential competitors.

4.Establishing a single payer system does nothing to address any of the points I have made; it would only bypass them and lock everybody into a monolithic system that would not address individual needs if it did not see that it had to.

Health Beauty said...

Hey guys!
i just started blogging not that long ago and running across this blog it seemed a bit too interesting to only read the first paragraph. I kinda got confused in the middle of it but the end just made it all go together like a puzzle. Please, who ever wrote this, keep me updated!

drdory said...

Can no one read? Health care costs go up solely because the insurance companies increase their rates. Neither doctors nor hospitals have seen an increase in their reimbursements. The increased profits do not go into patient care. Also, reimbursement rates are solely controlled by insurance companies. Because of the McCarran-Ferguson act of 1945, insurance companies are effectively exempt from anti-trust laws, so doctors and hospitals cannot fairly negotiate on price. Doctors who refuse to sign on with an insurance company can might seem the DOJ coming down on them for collusion, since they don't get the same anti-trust exemption.

(I'm an Orthopedic surgeon in Alabama)

Roy M. Poses MD said...

DrDory - I certainly agree that the way health care insurance companies/ managed care organizations are run has a major, and pernicious influence on health care.

However, I think the blame can be spread much more widely. It is not only how these companies are run, but how many large health care organizations are run. These also include hospitals and hospital systems; biotechnology, drug and device companies; government agencies; medical schools; medical associations; disease advocacy groups; etc, etc.

I would argue with your contention that no doctors have seen increases in their reimbursements. There is evidence that the RUC has increased Medicare's reimbursements for lots of procedures, and that the insurance companies have followed suit. See this post, (and those that link to it):
http://hcrenewal.blogspot.com/2007/03/on-disparities-between-reimbursement-of.html
also see the posts brought up by this:
http://hcrenewal.blogspot.com/search/label/RUC

drdory said...

Sorry for the above typo. That's what happens when I post without reading glasses. Last sentence should be:
Doctors who refuse to sign on with an insurance company might see the DOJ coming down on them for collusion, since they don't get the same anti-trust exemption.

Anonymous said...

"Radically severing the link between health insurance and employment" would be a huge step forward.

Granted yes, individual health insurance has become prohibitively expensive. I recall my mother's in-network premium began increasing 15% per annum at the beginning of the decade and ultimately she had to drop it when the premium rose above $800 per month several years ago. The company didn't really even appear to care that they lost her as a customer.

There are numerous indicators that health care inflation actually decreased during this period, while health insurance inflation rose into double digits. Also during this period, one company for example, United HealthCare, earned $10 billion profit in one year and gave the largest golden parachute in corporate history to its CEO - $1.1 Billion dollars.

Individual health insurance became such a non-viable option for the vast majority, partly due to employer based group plans. The insurer spreads the risk across a company's plan and accepts all employees. Unlike individuals, they do not underwrite each person, and they handle less paperwork.

This is what creates inequality in health insurance and ties us to employers. The individual market is not viable as long as the employer market is allowed to exist unless a major competitive option were to be inserted.

An insurer should be spreading the risk across the largest pool possible, their entire customer base. They do not have to underwrite individuals. Such an abolishment would certainly instill competition and reduce rates.

Caverta Online said...

Well, because the bulk of that money came from the selling of stock and not out of operating budgets, the result is far less onerous.

Roy M. Poses MD said...

Paying the compensation as stock or as stock options may defer the costs to the company, but does not eliminate them.

By the way, this post is now 5 years old. A lot has happened since. Dr McGuire actually got far more than this, and in less straightforward circumstances. He was eventually forced to resign after it turned out some of the stock options he received were back-dated.

See:
http://hcrenewal.blogspot.com/search/label/UnitedHealth