Insurance Outrage: Hike Prices, Pay CEO $100,000,000

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Like most other consumer reporters, I’ve been doing stories about health care reform in an effort to help others understand it. My overall position: I don’t know whether the recently enacted reforms will help or hurt over the long term, but I can absolutely assure you that some kind of reform is needed.

Most recent evidence? My personal health insurance bill went up 40% this year. And this week I learned that the CEO of the company that issued my policy, United HealthCare, personally received more than $100,000,000 in compensation last year alone.

That’s enough to pay a $500 monthly insurance premium for a full year for nearly 17,000 families. That’s the entire average annual household income of 2,000 American households.

According to this article in the Washington Post, United Healthcare CEO Stephen J. Hemsley exercised 4.9 million stock options in February 2009 at a personal gain of $98.6 million. While the transaction took place last year, it wasn’t reported until the evening of April 15, 2010.

The options exercised by Mr. Hemsley last year were issued 10 years before. According to the Post, the company reported that he just exercised the options and didn’t sell his new stock. So he hasn’t actually pocketed that 100 million just yet. What Steve did pocket last year, however, was $8.9 million in other compensation, up from $3.2 million in 2008.

I’m a capitalist and supporter of free markets, so how can I complain about how much a CEO gets paid? I can’t. Not ordinarily, at least. But these aren’t ordinary circumstances. Ordinarily, I can express my outrage by voting with my feet and choosing a different insurer. But my state-controlled insurance choices are extremely limited, so that’s not really an option, especially since I’d probably find the same prices and compensation policies at other companies. Ordinarily, I can simply bypass a product that gets too expensive, but since this one is integral in keeping me alive, that’s not really an option. Ordinarily, a company wouldn’t be so brazen, callous, or frankly, dumb, as to raise it’s prices by 40% in one year (to me, at least), call the increase necessary due to “rising health care costs,” then hand more than $100,000,000 to a single employee.

But these aren’t ordinary times. They’re times of reform, and in my opinion it’s reform that’s long overdue. What’s your opinion?

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Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • CBC

    I hate that reform has become such a partisan issue. Anyone objectively should see the health care industry is broken. Hospital charges are out of control. Insurers cut benefits and raise prices. Come on!
    $100 mil? Really?

  • Tired of it all

    Options…salary…”other compensation…United Health has been stealing for years, while the stock has tanked…outright looting…

  • Robert

    Any corporation that pays its CEO an enormous amount of money is stealing from its shareholders. After all, the company doesn't belong to its CEO, does it? He is hired to do what's best for the company and its shareholders, not to rob the shareholders.

    • http://www.bcarr.com Brendon Carr

      Let me take the contra position here: In Feb. 1999 those shares were six bucks each. Ten years later they were over twenty apiece. Feb. 2009 the total market cap was something like US$40B. Let’s say there were no dilutive events from Feb. 1999 to Feb. 2009 — the same number of shares were in existence.

      That would make the increase in shareholder wealth something like $27B, of which 0.37% was paid to the CEO, kind of like a commission. Did he steal from the shareholders? Or did he administer a tripling of their wealth?

      Anyway, the thirty-seven one-hundredths figure is misleading. I can’t imagine that United Healthcare did not issue more shares over that decade, so the absolute increase in wealth is going to be much larger — making the CEOs incentive share of the booty that much smaller by comparison.

  • denisemeehan

    I can't get UHC to pay for 2 medications they used to. They were removed from our “Formulary” in January. I have been fighting for them ever since.
    Seeing this just makes it clear to me. I insured by UHC for 25 years through my husband's work place, am not important. In fact, I am expendable.

    It really is depressing to keep reading things like this. I was told I couldn't even appeal.
    UHC/Empire Plan/NYState Civil Service Commission, be ashamed. Very ashamed.

  • Anonymous

    I agree with a lot of comments here but have a little different perspective. I own an Insurance Agency specializing in health insurance of all things, at http://www.focusinsgroup.com So I know the ins and outs of health insurance carriers. But I also know intimately how universal health care works and you wouldn’t like it, unless your already poor. I spent 17 years in Berlin, Germany where they now pay 15.9% of their gross wages just for health insurance, and the German people on average are in much better shape than we Americans. Universal health care would bankrupt us for sure. We have it so good here and most people don’t realize it. But our current system can certainly be improved upon. No doubt about it. If people are having problems with their carrier, call your agent and let them earn their commissions. LOL You shouldn’t have to deal with it. If you have questions you can always copntact me through my website above.

  • Anonymous

    I work for United Health Care – and OUR (employee) insurance premiums DOUBLED for 2011. It’s rediculous! They are even OUTSOURCE jobs to India and laying off AMERICAN workers in the company – why – probably because they work CHEAPER and old Steve needs to pay for his “goodies”. Most of the people in my area are FED UP with the way our company operates – many have left to other companies. But in this economy it’s not easy just changing jobs – for every job listed there are thousands applying for them. What most folks DON’T realize is the Insurance companies WROTE the darn “Obamacare”. I know – I have see the internal memos on what UHG says they wrote into it. It corruption from the top down. The ONLY way we will get REAL health care reform or REAL financial reform is when we get people in office that REALLY care about the American people – not their payoffs from corporations and big banks! Folks – wake up! Get angry! Do like they are doing in Europe – taking to the streets and having mass protests.

  • Anonymous

    Hemsley should be given a need for USING health care! Throw this piece of garbage in the slammer, and let Bubba make Hemsley his girlfriend.