Popular disgust over the fat premiums that financialexecutives bestow upon themselves is burgeoning, and rightly so. Those WallStreet piggy banks are filling up with billions upon billions ofgovernment-subsidized dollars.
But anyone infuriated by the grossly inflatedcompensation of the masters of finance should check out the incredible earningsof the top executives in the health insurance business. They're among the mosthighly paid suits in the countrynot owing to any skill in providing healthcare, which they don't do, but because they have succeeded in denying care,quashing competition, driving up costs and winning federal subsidies for their companies.
Last year, WellPoint, the country's largest healthinsurer, paid chief executive Angela Braly just under $10 million in salary,options and bonuses, along with the use of a private jet for herself and herfamily. That included a raise of about $750,000 over her 2007 salary.
UnitedHealth Group, the second largest, paid CEOStephen J. Hemsley only $3.2 million last year, but in 2007 he took home $13.2million. His biggest bonanza got away when he was forced by the Securities andExchange Commission to surrender $190 million in falsely backdated stockoptions, but that was nothing compared with the nearly $1 billion in optionsthat his predecessor was required to disgorge. The SEC declined to prosecuteanyone for those frauds.
Meanwhile, the CEO of Aetna, Ronald Williams, earned$24 million in 2008, and the CEO of CIGNA, Edward Hanway, brought home a totalof $120 million over the past five years, plus nearly $29 million in stockoptions.
Where's the Competition?
Why are these insurance executives paid such obsceneamounts? They might explain that they have improved the processing of claimsand managing of riskhappy euphemisms for the notorious corporate practices ofdenying care wherever possibleor they might insist that their huge salariesreflect their challenging roles in a highly competitive marketplace.
But these companies actually exercise nearmonopolistic control of local insurance markets, which allows them to drive upcosts and reduce access. That is the assessment of the American MedicalAssociation (AMA), which has sponsored a series of large-scale studies ofinsurance markets across the country to determine whether excessive marketpower affects doctors and hospitals. The very notion of a competitive marketand consumer choice is a sick joke in most American cities and towns, where asingle health insurer predominates.
Those AMA findings amplified earlier studies datingback to 1995, which even then showed a clear trend toward concentration thathas only grown worse. Over the past five years, the largest insurers havefollowed an imperial strategy of growth through merger and acquisition.
The buying binge has led to bloat, with the twobiggest companies, WellPoint and UnitedHealth, now covering more than 67million individuals, or 36% of the total American insurance market. That ismore than double the market share controlled by the two largest insurers, Aetna and United, in 2000.
If the insurance executives get their way, thisdamaging consolidation will continue unchecked. When Angela Braly isn'tcomplaining about potential competition from a public option provided bygovernment, she tells shareholders that acquisition of smaller firms willcontinue to serve as "one of the key drivers of WellPoint's futuregrowth."
The other significant "driver" ofprofitable growth for the insurance monopolies is the federally subsidizedMedicare Advantage program, which overpays them by billions of dollars annuallyto compete with the traditional, government-run Medicare system. Originallybilled as a way to reduce the cost of Medicare, that program has accomplishedlittle except to improve the bottom line for the private insurersandunderwrite the excessive compensation of the Bralys and Hemsleys of theindustry.
They blatantly curtail competition, lobby forfederal subsidies, boost premiums, ration care and cut access, while insistingthat a public option would cause all those terrible consequences. Obviously,they believe that the rest of us are chumps. And they may well be right.
© 2009 Creators.com.
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