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.
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