Wednesday, June 25, 2008

California HMOs - Raking in the Dough


Health costs and insurance premiums are rising at a rate that is completely unaffordable to companies, the government and to patients who buy their own insurance. We've seen these escalating costs for years and everyone who is connected to health care, either as a provider or a buyer knows we are standing at the edge of a cliff with a steep drop off.

So how is it that in 2007, HMOs in California spent $6 billion on administrative costs, which included large CEO salaries? (and that is in addition to billions of dollars in profits) . Talk about waste. That is 6 billion dollars in high premiums. Six billion dollars that did not go toward vaccinations, or mammograms or surgery or nursing care.

UnitedHealth Group, the largest health insurer in the nation, paid it's CEO $124.8 million in 2004. After an outcry, his salary went down to a paltry $12 million in 2006. Anthem Blue Cross (previously Wellpoint) paid its CEO total compensation of $52.4 million in 2006. That's enough to provide about 29,000 California children with health insurance. He also gets the use of the company jet and travel for his wife.

HMO plans are only part of the story. For enrollees who buy coverage in Blue Cross PPO plans, only 51 cents of every premium dollar is spent on health care. Profits account for 27% and that is on top of "administration", which I presume is those juicy salaries and perks.

These HMOs are for-profit, meaning they answer to wall street shareholders who want a return on the dollar. Is that where we want health premiums to go?

The next time a test or doctors visit is denied or you realize your out of pocket deductible is the only amount that is being paid, think about these salaries. Don't think health care reform is going to come easily. With these amounts of dollars, the incentive for change is a long way off.

4 comments:

Anonymous said...

Yikes. That is a lot of health care money going to rich white guys!!!

Healthnut said...

Thank you for sharing this great blog. More people need to be aware about these scums.

If I have to pay for my health insurance, I will go uninsured. For the premiums my employers pay (~$400/month), it's not worth the money. I rather hand over the cash to the doctor who will give me a more thorough physical done than a "Mickey Mouse" one.

For my physical this year, I did not get a CBC or a CMP14 test. Surely this should be part of preventative medicine. What if my WBC, AST, ALT, etc. go sky high?

By not offering a CBC or CMP14 test to its subscribers, I feel that the insurance companies are not saving any money in the long run but are opening themselves up for lawsuits.

Suppose someone's AST, ALT, etc. go sky high. After "x" number of years, this individual checks in at the ER. The ER doc tells him or her that his or her liver is failing and that a liver transplant is necessary. Who is going to foot that bill? Who is going to be blame for this?

Initially, doctors will get blame for misdiagnosing, but the insurance companies diverted patients to a remote location for their "Mickey Mouse" screening. They are the ones deciding on the tests. The doctor did not make the decisions. Shouldn't the insurance companies be held accountable?

K said...

I really, really, really, really, really hate health insurance companies. Like, a lot. In part because of their efforts, I can't afford to see a decent doctor without their services. It's a damn racket and if I could strike them from this earth, I would in a heartbeat.

Cary said...

K is right. I abhor insurance companies and wish the ground would open up and suck them all back down into hell, from whence they came.