Greed thrives in our health care system
By Dave Zweifel
April 25, 2006
Here’s another one to remember when someone tells you that our "private" health care system works:
The Wall Street Journal ran a front-page story last week with the headline that said it all: "As Patients, Doctors Feel Pinch, Insurer’s CEO Makes a Billion."
The story, datelined Minnetonka, Minn., was about William McGuire, a doctor who stopped practicing in 1986 to take a management job with UnitedHealth Group Inc., one of the largest HMOs in the country.
He’s now the chief executive officer of the corporation, makes $8 million a year in salary plus bonus, has personal use of the company’s private jet and has amassed what the Journal describes as "one of the largest stock options fortunes of all time."
According to the newspaper, those options total $1.6 billion.
"Even celebrated CEOs such as General Electric Co.’s Jack Welch or International Business Machines Corp.’s Louis Gerstner never were granted so much during their time at the top," the WSJ story said.
But the gist of the story is that while McGuire and other UnitedHealth execs are raking in millions, their company is putting the squeeze on everyone else.
"Dr. McGuire’s story shows how an elite group of companies is getting rich from the nation’s fraying health care system," the bible of the business world reported. "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 newspaper’s research shows that UnitedHealth has particularly benefited in recent years as health care inflation eased somewhat.
Insurers still raised premiums at double-digit rates. At UnitedHealth, for example, its stock price tripled from January of 2003 to January of this year and its net income rose to $3.3 billion. Hence, the nice
board-of-director-approved windfall for McGuire. (Interestingly, former UW-Madison Chancellor Donna Shalala is a member of UnitedHealth’s board.)
"In Minnesota, such riches have infuriated some people," the story continued. "Joel Albers, a Minneapolis pharmacist, regularly impersonates Dr. McGuire at state fairs, donning a tuxedo, holding up an enlarged picture of Dr. McGuire on a stick and handing out leaflets denouncing corporate greed."
Of course, this is just one more anecdote that serves to describe our broken health care system, which leaves more than 40 million Americans without coverage and an embarrassment of riches for those who know how to milk that system.
On one hand we have Medicare, which provides universal single-payer coverage to all Americans over age 65 at about a 2 percent administrative cost. On the other hand we have a hodge-podge of plans with layer after
administrative layer that gobbles up close to 20 percent in overhead costs (Dr. McGuire’s just a piece of that) and leaves millions out in the cold.
How hard can it be to choose in which direction we need to go?
