Premiums Would Go Down If Insurance CEOs Took a Pay Cut

Original Link: http://thebagofhealthandpolitics.wordpress.com/2009/10/12/premiums-would-go-down-if-insurance-ceos-took-a-pay-cut/

By thebagofhealthandpolitics

America’s Health Insurance Plan–the lobbying arm for billionaire insurance CEOs–is beginning to spread disinformation about health care reform. They claim that premiums would go up because the Senate Finance Committee bill would make insurance too affordable for them to provide services at their current levels. Of course keeping things the same means keeping CEOs compensated at obscene levels, spending hundreds of millions of dollars on corporate jets, and continuing to maximize profits by minimizing ill Americans access to the doctor.

Insurers spend up to 40 cents of every dollar (pdf) on “administrative costs.” This bland term hides outrageous compensation, like the $1.1 billion severance package former United Health Care Group CEO Bill McGuire got. It also hides outrageous and immoral practices–like WellPoint’s habit of paying five-figure bonuses to employees who figure out how to stop a cancer patient’s treatment.

Insurers do these things to meet Wall Street’s expectations. Wall Street expects profits to continually grow. They expect bigger dividends and higher stock prices with each passing year. They expect companies to avoid spending money on “uneccessary” items.

But Wall Street has also defined lavish executive salaries and obscene bonuses as “neccessary to retain top talent.” Thus Wall Street sees nothing wrong with a society where the highest earners make 400 times more than the average family.

Of course if these “talented” minds actually felt like earning their paycheck, they’d think about the problems the middle class is having in this economy, and they’d quickly conclude that too much money is going to the top, leaving the middle class–the foundation of our economy–without enough money to meet basic needs. That, in turn, causes the middle class to reduce spending, which causes businesses to reduce production and lay off middle class workers, which causes more middle class people to reduce spending. It’s a sad feedback loop that the economy is stuck in. In short, an economy that lacks a strong foundation will inevitably collapse in on itself.

When applied to health insurance, paying for the salaries and bonuses of “talented” individuals like Bill McGuire means trying to shift the cost of medical care onto the middle class. An insurer in Texas dropped a cancer patient because she failed to disclose a previous case of acne on her insurance application. No insurer in Tennessee would cover a young Lupus patient.

Without the money to continue expensive, life-saving treatments, both of these patients put off proper care. The cancer spread to stage IV, and may ultimately claim the life of Robin Beaton. Nikki White ended up in the hospital where the state spent over a million dollars on 15 surgeries that were done in a desperate efforts to save Nikki’s life. In the end, she died at the age of 32 from what her doctor termed “complications secondary to a failed health care system.”

Tennessee Governor Phil Bredesen (D)–who pushed through health care cuts that had a huge negative impact on Nikki White’s treatment–was an insurance executive before entering politics. He amassed a fortune of between $100 million and $250 million before entering politics. He is now opposing health care reform because he thinks it would cost state governments too much money.

The state-based CEOs of Blue Cross–a company which has been found to tie good performance evaluations to the dropping of high-cost policy holders like Robin Beaton–earn as much as 16 million a year, even when their plan’s income decreases and their membership declines.

Deep down, Karen Ignagni knows that her rent-a-study just defends the sorrid status quo. Insurers and their lackeys on K Street are defending a system in which the coddling of high-powered executives is more important than getting proper, life-saving care to the people who need it. They are defending a system in which small business–who would like to provide insurance and peace of mind to their employees–are priced out of the insurance market.

In short, they’re defending a failed system. And they’re doing that because they profit mightily off of the struggles of small businesses, hard-working American families, and Americans who just need to see the doctor in order to become productive, high-earning citizens. I don’t need to tell you this by now, but the “study” AHIP commissioned isn’t credible.