Watchdog Blog

Morton Mintz: To Trim Health Care Costs, Why Not Start with Executive Pay?

Posted at 8:09 pm, August 21st, 2009
Morton Mintz Mug

“[W]e have to control the rate of increase in health care costs,” the chief executive officer of Aetna Inc., told Judy Woodruff the other evening on the NewsHour with Jim Lehrer.

Woodruff didn’t mention a glaringly obvious way for Ronald A. Williams and his counterparts in the health-insurance industry to slow the rise in those costs: slashing their exorbitant compensation.

“Anyone who wants to know why health insurance is so expensive need look no further than the insurance company proxy statements,” Frank Schneider, of Chicago, wrote in the current issue of The Progressive Populist.

“According to the latest statement, United Healthcare paid its CEO, Stephen Hemsley, $3,241,042 in 2008,” Schneider said in a letter to the editor. “But don’t shed a tear; he was paid $13,164,529 in 2007.

“Aetna’s Ronald Williams did much better. In 2008, he was paid $24,300,112 (in 2007, $23,045,834). Cigna’s Edward Hanway received $12,236,740 in 2008 (2007: $25,846,460). Wellpoint’s Angela Braly got $9,844,212 in 2008 (2007: $9,094,271).

“The top five executives of the half dozen of the largest health insurance companies took home $169,837,696 in 2008. And that was a bad year for executives, with the collapsing stock market.

“That money would pay for a lot of doctor visits, if we only had a public health care system.”

There are four Frank Schneiders in Chicago, according to The Progressive Populist gave me the email address of the Frank Schneider who sent the letter, but he did not respond to my query.

Regardless, the writer’s figures on Ron Williams’ compensation check out. “Williams earned $24,300,112 in total compensation for 2008, with more than half of that ($13,537,365) coming from option awards,” according to a Web site featuring “daily news for health care executives.” Williams “also received an additional $6,456,630 in stock awards to go along with his base salary of $1,091,764. Personal use of a corporate aircraft and vehicle, as well as financial planning and 401(k) company matches added up to $101,487 for Williams.”

But compensation packages like Williams’—totaling $47,345,946 in the last two years—face scrutiny. The chairman of the House Energy and Commerce Committee, Henry Waxman (D-Ca.) and member Bart Stupak (D-Mich.) have asked Aetna and 51 other leading insurers to reveal the compensation of their executives as well as their revenues and profits.

“We want to know if the rise in premiums corresponds to an increase in care or if it has simply padded these companies’ bottom lines while many families struggle to obtain the health care they need,” Stupak said in a statement.

Comments are closed.

The website is no longer being updated. Watchdog stories have a new home in Nieman Reports.