CEO's health, wealth insured | Arkansas Blog

Tuesday, April 18, 2006

CEO's health, wealth insured

Posted By on Tue, Apr 18, 2006 at 10:34 AM

All you need to know about our dysfunctional health care system is contained in today's Wall Street Journal article headlined, "As patients, doctors feel pinch, insurer's CEO makes a billion."

It's available to subscribers only, so allow us to excerpt the highlights. After discussing how the CEO of UnitedHealth, William McGuire, is accumulating wealth unrealized by chief executives like Jack Welch, the article continues:

Dr. McGuire's story shows how an elite group of companies is getting rich from the nation's fraying health-care system. Many of them aren't discovering drugs or treating patients. They're middlemen who process the paperwork, fill the pill bottles and otherwise connect the pieces of a $2 trillion industry.

The middlemen credit themselves with keeping the health system humming and restraining costs. They're bringing in robust profits -- and their executives are among the country's most richly paid -- as doctors, patients, hospitals and even drug makers are feeling a financial squeeze. Some 46 million Americans lack health insurance. ...

The arrival of the $1 billion CEO would be a head-turner in any industry. But it's especially controversial in health care, where "people tend to view each dollar of executive pay as money that isn't spent on them," says Jonathan Weiner, a health-policy expert at Johns Hopkins University. Dr. McGuire and his supporters say the U.S. would be in even worse shape if it weren't for insurers such as UnitedHealth weeding out unnecessary treatments, bargaining with doctors and encouraging patients to seek out the highest-quality care.

Ever since missing a stock-market windfall in the late 1980s, Dr. McGuire has pursued stock-options wealth tirelessly, as an iron-willed leader surrounded by an admiring board. He declined to discuss his pay, but current and former directors talked at length about their desire to do whatever is necessary to keep Dr. McGuire happy.

This is the heralded "administrative efficiency" of private health insurance, which as an industry spends a higher percentage of its revenue on administration than Medicare. Now you know why.

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