J. TODD FOSTER: Our Health Care Problem An Insurance And Greed Problem

I went to the doctor the other day, and he handed me an article he had printed from the online site WebMD. America does not have a health care problem, he told me, but an insurance company problem.
The article, written two years ago by Dr. Ira Kirshenbaum, reveals the 2005 compensation of chief executive officers of 23 health care companies.
I doubled-checked his figures from Forbes.com, and Kirshenbaum made a couple of errors, including one whopper. He wrote that these 23 CEOs made $14.9 billion over five years. The actual number is a shade more than $1.4 billion. He added an extra zero.
How much insurance coverage would $1.4 billion buy though? With insurance at an average cost of $8,000 per family per year, the salaries of these 23 CEOs could fully cover about 36,000 families for five years and nearly 180,000 families for a full year.
Keep in mind that the average doctor earned $149,000 in 2005. Those 23 CEOs earned an average of $24 million in 2005, or a combined $560 million in one year.
Topping the list was Dr. William W. McGuire, CEO of the Minneapolis-based UnitedHealth Group. His pay for that year was $125 million and $342 million over a five-year period.
McGuire resigned in disgrace in 2006 over a stock options back-dating scandal that resulted in a record fine of $468 million by the Securities and Exchange Commission. It also was the first fine of an individual under the “clawback” provision of the Sarbanes-Oxley Act, which was enacted following the Enron scandal. The clawback provision aims “to deprive corporate executives of their stock sale profits and bonuses earned while their companies were misleading investors,” the SEC wrote in a Dec. 6, 2007, press release.
“The Commission’s complaint alleges that during a 12-year period, McGuire repeatedly caused the company to grant undisclosed, in-the-money stock options to himself and other UnitedHealth officers and employees without recording in the company’s books and disclosing to shareholders material amounts of compensation expenses as required by applicable accounting rules.”
Said SEC Chairman Christopher Cox at the time: “Whenever a corporate officer misleads investors about a company’s performance by secretly backdating stock options, the integrity of our markets is undermined.”
Added Linda Chatman Thomsen, director of the SEC’s Enforcement Division, “The $468 million settlement in this case, including the largest penalty [$7 million] assessed against an individual in an options backdating case, reflects the magnitude and scope of Dr. McGuire’s misconduct.”
McGuire reportedly received a $1.1 billion severance deal – said to be the largest golden parachute in corporate American history – after his ouster. He didn’t deserve a dime. Instead of his big payday, he should have been forced to trade in his designer suits for a jailhouse orange jumpsuit and matching flip-flops.
A man became a billionaire for doing a job whose performance was measured by how much profit he could glean by having his minions deny as many medical claims as possible.
Then there’s Cigna CEO H. Edward Hanway, who earned $13.3 million in 2005 and $62.8 million over five years.
Cigna is my insurance company. In 2004, when my second son was born with a jaundice condition that required another day in the hospital, Cigna refused and forced us to take him home. In order for him to qualify for an extra hospital day, he would have needed to be sicker. But if his condition worsened, it could have been life-threatening.
I watched my pediatrician yell in the telephone for more than an hour at a Cigna gatekeeper whose only goal was to save a buck, but who ultimately agreed to have a medical device called a bilirubin blanket transported from Charlottesville, Va., across the mountain to Waynesboro. The transportation costs and the blanket probably wiped out the savings derived by denying the extra hospital day.
My doctor is right. Our national health care crisis is rooted in the boardrooms of insurance carriers and other health care companies whose greed is putting Americans at financial and medical risk every day.

J. Todd Foster is managing editor of the Bristol Herald Courier and can be reached at jfoster@bristolnews.com or (276) 645-2513.