The Health Insurance Scam
Published September 26, 2009 07:25 pm -
Mankato Free Press
Premiums take care of insurance executives
Tom Maertens, Mankato
In 2005, William McGuire, as CEO of UnitedHealth Group, received compensation of $124.8 million, according to Forbes. The Wharton School estimated his 2006 options package — most illegally backdated — at $1.6 billion.
For $1.6 billion, he must have revolutionized health care, right?
But United Health doesn’t treat illness, doesn’t perform surgery, doesn’t provide health care of any kind. Neither does any other health insurance company.
What insurance companies do is take your money and promise to pay if you get sick. They then use your premiums — which have doubled in the last seven years — for their own purposes, showering money and benefits on executives and on tame board members who rubberstamp management’s decisions, buying off congressional watchdogs with campaign contributions, and underwriting a public scare campaign about health reform. Such loading fees skim off as much as 40-45 percent of your premiums, according to a University of Minnesota study.
The remainder goes to pay medical claims — as few claims as possible. The California Nurses Association found that United’s Health’s PacifiCare subsidiary rejected 39.6 percent of all claims. They paid employees, and even awarded bonuses, for rejecting claims and terminating patients with chronic illnesses.
Meanwhile, insurance executives award themselves golden parachutes, lifetime use of company jets, chauffeured limousines, company apartments, club memberships, sports tickets, financial planning, and other perks
Competition from a government option would clearly doom such extravagances. Medicare’s overhead is 4 percent and its administrator makes $250,000. Insurance industry practices, in contrast, extract $450 billion from the system every year, according to an op-ed by George McGovern in The Washington Post — enough to fund Medicare for everyone.
Faced with this corrupt, dysfunctional system, why does the Republican Party continue to oppose reform, choosing in effect to protect insurance company executives instead of providing healthcare for all?
Mankato Free Press
Premiums take care of insurance executives
Tom Maertens, Mankato
In 2005, William McGuire, as CEO of UnitedHealth Group, received compensation of $124.8 million, according to Forbes. The Wharton School estimated his 2006 options package — most illegally backdated — at $1.6 billion.
For $1.6 billion, he must have revolutionized health care, right?
But United Health doesn’t treat illness, doesn’t perform surgery, doesn’t provide health care of any kind. Neither does any other health insurance company.
What insurance companies do is take your money and promise to pay if you get sick. They then use your premiums — which have doubled in the last seven years — for their own purposes, showering money and benefits on executives and on tame board members who rubberstamp management’s decisions, buying off congressional watchdogs with campaign contributions, and underwriting a public scare campaign about health reform. Such loading fees skim off as much as 40-45 percent of your premiums, according to a University of Minnesota study.
The remainder goes to pay medical claims — as few claims as possible. The California Nurses Association found that United’s Health’s PacifiCare subsidiary rejected 39.6 percent of all claims. They paid employees, and even awarded bonuses, for rejecting claims and terminating patients with chronic illnesses.
Meanwhile, insurance executives award themselves golden parachutes, lifetime use of company jets, chauffeured limousines, company apartments, club memberships, sports tickets, financial planning, and other perks
Competition from a government option would clearly doom such extravagances. Medicare’s overhead is 4 percent and its administrator makes $250,000. Insurance industry practices, in contrast, extract $450 billion from the system every year, according to an op-ed by George McGovern in The Washington Post — enough to fund Medicare for everyone.
Faced with this corrupt, dysfunctional system, why does the Republican Party continue to oppose reform, choosing in effect to protect insurance company executives instead of providing healthcare for all?
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2 Comments:
Tom,
Great OpEd especially since the latest defense argument (as made by George Will and others) is that insurance companies have not been the best Wall Street performers.
But two other aspects that should be mentioned along with the compensation of these managers :
First, many CEOs compensation includes large amounts of preferentially taxed capital gains and dividend income annually … which is taxed at a lower tax rate than wages. They pay zero taxes for Social Security and Medicare paid on their capital income … plus since Social Security Tax is capped at $106,800 in wages, they make only token payments on their wages. Meanwhile, the vast majority of Americans have very little or no capital gains income and earn less than $100,000 in wages annually, paying both payroll taxes on that full amount. (Sidebar question : How can it possibly be "persecuting" the rich to ask them to pay some greater amount of the Social Security and Medicare tax burden that most ordinary Americans share?)
Second point, is that company executives typically have “Cadillac health plans”. A typical program generally costs the company $40,543 in premiums annually for each participant’s family.
That is four times what a typical company provides. Premiums for employer-sponsored health insurance rose to $13,375 annually for family coverage this year—with employees on average paying $3,515 and employers paying $9,860, according to the benchmark 2009 Employer Health Benefits Survey released 9/15/09 by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET).
MinnPost is reporting that Senator Franken has authored the Fairness in Health Insurance Act of 2009. It will be offered in the Finance Committee as an amendment by Senator Rockefeller.
The legislation would require that 90 percent of every premium dollar spent on health insurance go to actual health services. The remaining 10 percent could be used on administrative costs, advertising and profits.
Franken said “As we move forward in health insurance reform, it’s essential that insurance companies know that their top priority must be serving patients, not taking care of shareholders or CEOs.”
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