HEALTH CARE AND MEDICAL DISPARITY ATTACK COMMON SENSE
One of the biggest problems facing America today is health care. Health care costs are outrageous! If you have ever had to spend any time in a hospital and later really looked at the bill in detail, then you are aware of the $7.00 Aspirins. If you asked about it, you probably got the standard response that the costs are high to cover all that other stuff you did not see on your bill, like nurses, orderlies, laundry people, special equipment, etc. etc. That’s why your semi-private room costs more per day than a suite in a four star hotel. What they don’t tell you is the salaries they pay to various administrative people. I’m sure the laundry people are no major burden, but the hospital administrator and his staff are most likely a different.
I live in a county of 150,000 people where the mean income is under $25,000 a year. We have two hospitals, one is a for-profit facility, and the other is supported and supplemented by the county taxpayers through a variety of programs. The county supported hospital, with its 350 beds, just got a new administrator. He will be paid $245,000 a year, a 20% bonus for meeting measurable and established goals, a car allowance of $1039 per month, and if terminated he will still get a year’s salary beyond termination!
That’s $257,468 income a year BEFORE bonus! If you add in that 20% bonus of $48,000 you are at $305,468 a year in a city where the median income is $22,163! Did I forget to mention $1,200 housing allowance the first year and $8,000 moving expense? Those last two figures alone exceed the median income in the county! Possible total compensation for the first year is up now at $327,868! That one person’s salary works out to be slightly over $2.18 a year from every person in the county, whether they use that hospital or not! Additionally, the taxpayers will be paying another $250,000 severance pay in that same first year to the former Administrator that they pushed out because he had gotten politically sideways to some of the doctors. Did I forget to say that hospitals are run to satisfy the egos and pockets of the doctors who use them and not the patients? As unfortunate as that may be, it is the truth! If you don’t believe me, just ask any hospital worker, “Who are considered as Gods in their hospital?” I assure you it’s not the patients. Patients, although they are the ones who pay, are also not considered as customers either. In addition to being “Gods”, the doctors are considered as the customers. There is something really out of kilter with all this! Am I the only person that finds this situation outrageous? I’m also frustrated by the fact, I see no way of changing any of it! To paraphrase something from an old movie, “I’m mad as hell because I have to take it”!
If you have insurance when you go into the hospital, you usually only pay 10-20% of what they say were the charges. So, people with insurance don’t usually pay much attention to the bill because they figure they got away cheap by having only to pay a small percentage. Truth is, we are ALL already paying in one form or another.
One of the reasons the charges are so high, besides having overpaid administrators, is because hospitals claim they have this terrible indigent care burden, where they have to provide services to people with no insurance and no ability to pay. Since they can’t take a loss on those that don’t pay, they offset the expenses by simply inflating the costs charged to everyone who does pay, which includes the insurance companies. Want a little clue here about unfair pricing practices? The major insurance companies negotiate the costs of most procedures with the medical providers they list as “preferred” so that they pay less than the “listed” or “usual” fee for various procedures, Maybe a $1,000 procedure has been negotiated down to $600. So, the policy holder is happy to pay his co-pay 20% of $600, instead of 20% of $1,000. He may even naively believe his insurance company did him a favor by getting the indicated discount. But for the person without insurance, the bill is still $1,000! This $1,000 no insurance fee also has another effect by serving as a scare factor in forcing people to seek medical insurance direct or through employers which is, of course, good for the insurance industry. This difference in listed cost for a procedure also allows the hospital to use the higher figure when telling the IRS and general public, how much they graciously provided in “free” service to the indigent public. In actuality, nothing was provided for free … you paid, I paid, and the insurance companies paid for every bit of that “free” service through higher prices. I still have not figured out why we have for-profit hospitals and then ones supported by taxes, both charging the same rates, yet, one needs tax money and the other is still making a profit. Maybe it’s because the for-profit hospitals are not paying their administrators over $300 thousand a year!
Even the private clinics and physician-owned facilities are enjoying record incomes with no end in site. Speaking of end, let’s consider as an example, the procedure of a colonoscopy. (Pun intended) A colonoscopy is a relatively simple preventative type procedure recommended by physicians every 2-4 years for those over fifty in order to reduce the risk and expense of colon cancer by early detection. Usual cost run between $2,000 and $3,000 per procedure. A local gastroenteroligist physician may even do this procedure in his personally owned facility. Let’s be VERY conservative and say that he performs only five procedures a day, five days a week and let’s use the lower cost figure. This would still work out to $10,000 a day, $50,000 a week, or OVER $2-million annually if he takes off two months for vacation!
So many people who are under some company’s health insurance program will not think much about this because they think it does not come out of their pocket. As I have already said, it DOES! We ALL pay in the form of higher insurance costs. Even if paid 100% by your company, it still equates to less money for salaries and raises. Only when paid by an individual do we actually see it come from our pocket and realize the actual costs.
What is it going to take to get the American public mad enough to stop this Great American Health Care Rip-off? Did anyone notice recently that the annual salary of the CEO of a major drug company was at $40 Million! That did not include stock options and other benefits. The drug companies try and tell us that the reason drugs cost so much is due to the cost of research and development. They leave out the millions they spend in advertising to try and get you and your doctor to try their “take a pill” solution for every malady that plagues modern Homo sapiens. In a recent Reader’s Digest magazine of only 200 pages, thirty of the pages were for prescription drugs! It short, drug companies made up 15% of the entire magazine and almost half of ALL the advertising! Feeling a little out of sorts get Prozac; can’t get it up, get Viagra; got heartburn then ask your doctor about the “new” purple pill, Nexium; Arthritis got you down, get Vioxx or Celebrex; allergies flaring get your doctor to prescribe Allegra, and the list goes on, and on, and on. All of these medications are prescription drugs that the drug companies are spending millions to get YOU to influence your doctor in to prescribing. Add one CEO’s salary and a few hundred more million in advertising and it’s easy to see why the drug companies are charging so much for most all medications. Of course they’ll tell you that their profits are not outrageous. Would that be because big salaries and advertising are deducted as business expenses before declaring company profits? Also deducted is their big lobby expense for politicians and political contributions.
The HMOs complain that any increase in their costs of treating patients will require them to raise premiums, making them too costly, and causing more of us to have to go without insurance. Maybe if they cut some executive salaries they could make us a better offer?
Look at a few HMO statistics from 1996, which I’m sure are even higher today. These are HMO Executive Salaries Reprinted from FAMILIES USA.
The 25 Highest Paid HMO Executives of 1996. These were annual compensation figures, exclusive of unexercised stock options. This was also for 1996. I hate to think how these salaries may have grown during the last decade. As we saw with World Com, salaries are usually the smallest part of the overall executive compensation package. It’s the stock options we see them sell that can be in the hundreds of millions of dollars in a single year that are even more outrageous! It’s housing and auto allowances, severance packages, use of corporate jets, yachts, “entertainment” allowances, and so on. Also keep in mind that these executives, and many other upper level corporate management underlings, are receiving these earnings while their company’s are trying to find every way they can to disallow payment or reimbursement for many of the procedures and treatments you may require and thought were covered by the outrageous premiums you have been paying for years.
1996 Annual Compensation
Stephen Wiggins, CEO, Oxford Health Plans, Inc. $29,061,599
Wilson Taylor, Chairman and CEO, CIGNA Corporation $11,568,410
David Snow, Executive Vice President, Oxford Health Plans, Inc. $10,403,451
Robert Smoler, Executive Vice President, Oxford Health Plans, Inc. $10,085,972
William Sullivan, President, Oxford Health Plans, Inc. $ 7,823,076
Joseph Sebastianelli, President, Aetna, Inc. $ 7,394,506
Michael Cardillo, Executive Vice President, Aetna, Inc. $ 7,069,969
Leonard Schaeffer, Chairman and CEO, WellPoint Health Networks, Inc. $ 7,010,698
George Jochum, President and CEO, Mid-Atlantic Medical Services, Inc. $ 6,526,065
Ronald Compton, Chairman and CEO, Aetna, Inc. $ 5,813,287
Wayne Smith, Former President, Humana, Inc. $ 5,166,575
James Stewart, Executive Vice President, CIGNA Corporation $ 4,832,799
Richard Huber, Vice Chairman, Aetna, Inc. $ 4,801,841
Roger Taylor, Executive Vice President, PacifiCare Health Systems, Inc. $ 4,103,864
Daniel Crowley, CEO and President, Foundation Health Corporation $ 3,849,023
Gerald Isom, President, Property and Casualty, CIGNA Corporation $ 3,778,293
Alan Hoops, President and CEO, PacifiCare Health Systems, Inc. $ 3,221,602
Daniel Kearney, Executive Vice President, Aetna, Inc. $ 3,189,272
D. Mark Weinberg, Exec. Vice President, WellPoint Health Networks, Inc. $ 3,009,944
Donald Levinson, Executive Vice President, CIGNA Corporation $ 2,985,017
Ronald Williams, Exec. Vice President, WellPoint Health Networks, Inc. $ 2,827,381
Allen Wise, Executive Vice President, United HealthCare Corporation $ 2,697,751
Jeffrey Elder, Senior Vice President, Foundation Health Corporation $ 2,235,783
H. Edward Hanway, President CIGNA HealthCare, CIGNA Corporation $ 2,217,711
Kirk Benson, President and COO, Foundation Health Corporation $ 2,104,414
Please take note that several of those listed above work for the same company because it apparently takes several executives in this salary range to pat each other on the back at board meetings and keep costs down.
Annual totals, by Company, of Executives only in above list:
Oxford Health Plans, Inc. $57,374,098
CIGNA Corporation $25,382,230
WellPoint Health Networks, Inc. $12,848,023
Foundation Health Corporation $8,189,220
Mid-Atlantic Medical Services $6,526,065
PacifiCare Health Systems, Inc. $7,325,466
Humana, Inc. $5,166,575
United HealthCare Corporation $2,697,751
Cumulative Total $153,778,303
Please be reminded that these are MILLIONS, paid ANNUALLY! As far as I’m concerned, THIS is why an aspirin in a hospital cost $7.00, why office visits costs exceed $50 and why so many Americans can’t afford health care insurance.
If you find yourself facing a medical emergency, such as a heart attack, do you have the opportunity to check around your area for the best price to get a bypass? Have you ever noticed that basically there is no “shopping” for anything you really need in the medical arena? Sure you can shop around for the best plastic surgeon to do your face lift or breast augmentation or shop for a small discount on certain drugs, but when it comes to a bypass, cancer treatment or other major life threatening medical requirements, you pay what the medical profession has determined the price to be and there is no other option. So, if they say it’s $90,000, then that’s what it will cost you. There is really something wrong when the charges for a vital life saving necessity are regulated only by the people providing the service. Isn’t it a fact they can command whatever price they want? When it’s your life or the life of a loved at stake, you really have no choice, and they know it!
Common sense should now tell you why your elected legislators can’t seem to find any incentive to improve Social Security, health care benefits, or regulate costs for life saving procedures in this country. The obscene amount of money being made in health care converts directly to a strong lobby and contributing force within the legislative branch of our government. These politicians do not want to do anything that might shut off or endanger these contributions to their re-election. Certain sectors of the health care industry (i.e.: doctors, drug companies, medical equipment providers, other medical suppliers, HMO’s, etc.) are making enormous, even outrageous profits, while the public pays for it. The government seems to be able to find justification to supervise services and regulate costs within other industries, such as transportation, utilities, communications, and job safety, to just name a few; all in the name of protecting the “public”. Yet these bureaucrats can’t find a way to regulate heath care costs or limit the profits being gouged from the sick. In short, they can regulate costs for the interstate transportation of goods, but can’t regulate the costs of prescription drugs? It’s just another one of those government things that fails to make common sense, unless you want to face the real fact that MONEY dictates and the medical lobby is applying plenty of that in the right pockets and places. We seem to have forgotten that MONEY also corrupts.
The even more scary thing is that if this kind of disparity between medical earnings and patient costs is happening right here in my little county, what do you think is happening in your back yard when no one is looking?...or across the country, as indicated by the HMO executive salaries? If this does not make you mad, then you are in the medical insurance or health care racket yourself and I certainly don’t mean one of the many underpaid nurses, technicians, or “common” health care workers.