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Originally Published: 7/31/2009


By The Issue Wonk


Now that we all know that the health insurance companies are handing out the big bucks to fight health care reform (see Ask the Wonk), I thought I’d do some research on the biggest companies. Here are the giants.1


You’ll notice that for many companies profits in 2008 fell due to increasing unemployment. Concomitantly, many of the CEOs had major reductions in their compensation. Considering they’re already losing money due to the poor economy, it’s no wonder they’re terrified of losing market share to a government-run insurance provider.




Aetna, is based in Hartford, Connecticut. In 2007 it posted $1.831 billion in profits2 and $1.384 billion in 2008.3 (Not income. Profits.) CEO Ronald A. Williams “earned $24,300,112 in total compensation for 2008, with more than half of that ($13,537,365) coming from option awards. He 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.”4 [Note: All the “total compensation” listed herein is made up of compensation packages similar to Williams’.]


Williams told investors in February, 2008, “Our commercial medical benefit ratio of 79.2% for the fourth quarter and 79.5% for the full year reflected solid underwriting discipline and our focused efforts in the area of medical management.”5 In other words, they rejected and/or weeded out people who were old or had pre-existing conditions and refused to provide health care. They paid out less than 80% of the premiums they charged, and are very proud of it.




Cigna is based in Philadelphia, Pennsylvania. In 2007 it posted $1.115 billion in profits.6 The 2008 CEO H. Edward Hanway took a drastic pay-cut of more than $11 million.7 In 2007 he sucked up $22,716,454 in compensation.8


Cigna has been a leader in barebones coverage with caps on benefits. It describes its Starbridge Choices plan as “a limited-benefit medical plan that meets the day-to-day needs of today’s hourly workforce at a price that fits their financial situation.”9 I have seen this policy. It’s a stripped-down policy that covers practically nothing. In fact, the premiums that you pay amount to more than the minimum services that are covered.




Based in Bethesda, Maryland, Coventry posted 2007 profits of $626.1 million.10 Its 2007 CEO, Dale B. Wolf, was compensated to the tune of $14,869,823. In 2008 he took a pay-cut to $9,047,469 and early in 2009 he “retired.”11 (Interestingly, Forbes reported his 2008 total compensation as $20,860,000.)


While you may not think you’re insured with Coventry, look at this. Coventry owns

Health Insurance Pennsylvania, Carelink, Coventry Health Care Georgia, Group Health Plan, HealthAmerica Pennsylvania,12 Altius, HealthAmerica, and Medicare prescription drug coverage king OmniCare,13 as well as other health-related businesses. Coventry is well known for denying coverage.14,15


Health Net


Based in Woodland Hills, California, 2007 profits for Health Net were $193.7 million.16 CEO Jay M. Gellert was paid $4,425,355 in 2008.17 Health Net is the insurance company that made the news by giving large bonuses to employees for canceling policies. (See The Weekly Wonk, Health Insurance, 11/10/07.) According to the Los Angeles Times,18 one analyst made more than $20,000 in bonuses. “Through nearly 300 rescissions [this analyst] ended up saving an estimated $7 million, prompting her supervisor to write: ‘[Her] successful execution of job responsibilities have been vital to the profitability of individual and family policies.’”




Based in Louisville, Kentucky, Humana’s 2007 profits were $833.7 million.19 CEO Michael B. McCallister raked in $6,435,390 in 2007.20 However, in 2008 he earned $5.5 million less.21


Humana is a big player in the privatized portion of Medicare. In 2007 it was accused of “bait and switch tactics” – that is, luring seniors into a Medicare prescription drug plan by offering low premiums one year, then jacking them up the next. In Massachusetts the increase was 130% in 2007.22 Also that year: “In the first major investigation of Medicare marketing, the Oklahoma insurance commissioner has documented widespread misconduct by agents working for Humana.”23 Investigators found evidence that agents had used “bait and switch tactics to secure the initial invitation” into Medicare beneficiaries’ homes. Oklahoma fined Humana $500,000 for “using unlicensed agents” and “misleading marketing practices and misrepresentations.” In other words, they took advantage of old folks who were trying to get better care for less money. They screwed Gramma.


UnitedHealth Group


UnitedHealth Group, based in Minnetonka, Minnesota, posted 2007 profits of $4.654 billion.24 That billion. With a “b.” Its CEO, Stephen J. Hemsley, raked in $13,164,529 in 2007, a drop from his 2006 compensation of $15,549,028.25


If you think you haven’t got UnitedHealth, what about one of its subsidiaries: Oxford, PacifiCare, AmeriChoice, Evercare, Ovations, MAMSI, and others. It also owns Ingenix, a health care data company, as well as The Lewin Group, a research company recently being cited for its surveys showing the American people don’t want health care reform. (See The Weekly Wonk, Healthcare Reform Polls, 7/25/09.)


In 2006 UnitedHealth’s then-CEO, William McGuire, was involved in a stock options scandal. He eventually was forced out and returned $618 million and paid a $7 million fine.26 Hemsley stepped in. Hemsley had been the Managing Partner and Chief Financial Officer at Arthur Andersen, the accounting firm that folded after its involvement in the Enron scam became known. (See Wikipedia.) It later turned out that Hemsley, McGuire’s COO, was also involved in the stock options swindle and also “surrendered” $240 million. 26


Currently UnitedHealth is involved in a dispute with New York State Attorney General Andrew Cuomo, who says that the insurance behemoth has been systematically forcing patients to pay more than they should when using doctors and hospitals outside of the networks.27 These are plans that charge enrollees more for the option of going outside the network, so these insureds have paid a premium for this coverage. UnitedHealth will expend a lot of money to keep from paying what they promised you.




Based in Indianapolis, Indiana, WellPoint made $3.345 billion in 2007.28 Angela Braly, its CEO, earned $9,844,212 in 2008, up from $9,094,271 in 2007.29 If you think this shows that women have reached equality in the workplace, think again. Braly’s $9 million is quite a bit less than her predecessor’s, Larry C. Glasscock’s, 2006 compensation of $23,886,169.30


WellPoint is the largest U.S. health insurance company and is the owner of 14 of the Blue Cross/Blue Shield companies across the country -- California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Massachusetts, Missouri, Nevada, New York, Ohio, Virginia, and Wisconsin – as well as Empire HealthChoice Assurance.31


Early in 2008, with the recession beginning and jobs being lost, profits began to dip. So CEO Braly came up with a way to increase profits – bring in new members. However, these wouldn’t be just any members. She said, “As we are rolling out these new products we will continue to price business for appropriate margins. We will not sacrifice profitability for membership.”32 In other words, they were taking only the healthiest people, the ones that wouldn’t cost them so much, and increasing premiums on sicker and older insureds with the hope that they would drop their coverage. Nice.


A Final Thought


I told you in Health Care – The Public Option: “Until 1981 only about 12% of the market was served by for-profit organizations. By 1997 for-profit health care represented about 65% of the market.” Now that you know how much money is in the health care system, you can really see why they’re paying such big bucks to kill anything that would whittle away their profits. But, as I’ve said before, the investors are gambling. Gambling that enough people will pay premiums and be denied care so that they can make profits. It’s obscene. It’s immoral.




1  2008 Fortune 1000 Custom Ranking of Health Insurers. CNN Money. [Note: You have to go to the right of the screen and request the ranking for health insurance. There is no separate link for health insurance.]


2  Aetna. CNN Money.


3  Aetna WikiAnalysis. WikiInvest.


4  Aetna’s Ron Williams – CEO Compensation. FierceHealthcare.


5  Williams, Ronald A., Chair and CEO, Aetna. Aetna, Inc. Q4 2007 Earnings Call Transcript, February 7, 2008, seekingalpha.com


6  Cigna. CNN Money.


7  Cigna’s H. Edward Hanway – CEO Compensation. FierceHealthcare.


8  H. Edward Hanway: CEO Compensation. Equilar.


9  See CignaVoluntary.com.


10 Coventry. CNN Money.


11 Coventry Health Care’s Dale Wolf – CEO Compensation. FierceHealthcare.


12 Coventry Health Care Inc. Personal Care Individual Products.


13 Coventry Health Care Announces Acquisition of OmniCare. Bnet, May 17, 2004.


14 Cancer Patient Protests Coventry Insurance, March 8, 2007, KMBC.com.


15 Fighting a Rare Cancer and an Insurance Carrier, July 1/8, 2007, ABCNews.


16 Health Net. CNN Money.


17 Health Net’s Jay Gellert – CEO Compensation. FierceHealthcare.


18 Girion, Lisa. Health Insurer Tied Bonuses to Dropping Sick Policyholders. Los Angeles Times, November 7, 2007.


19 Humana. CNN Money.


20 Michael B. McCallister CEO Compensation. Equilar.


21 Humana’s Michael McCallister – CEO Compensation. FierceHealthcare.


22 Krasner, Jeffrey. Menino Calls for Humana Inquiry: He Hits Fee Hikes for Medicare Drug Plans. The Boston Globe, January 3, 2007.


23 Pear, Robert. Oklahoma Chides Insurer in Medicare Marketing Case. The New York Times, May 15,2007.


24 UnitedHealth Group. CNN Money.


25 UnitedHealth Group Definitive Proxy Statement, Securities & Exchange Commission.


26 Fisk, Margaret Cronin & Goldstein, Avram. United Health’s Former Chief to Repay $600 Million. Bloomberg, December 6, 2007.


27 Abelson, Reed. Inquiry Set on Health Care Billing. The New York Times, February 14, 2008.


28 WellPoint. CNN Money.


29 WellPoint’s Angela Braly – CEO Compensation. FierceHealthcare.


30 Wellpoint Inc. Executive Salaries, Bonuses, Stock Options, and Other Compensation. CompanyPay.


31 WellPoint Company Description. Medibix.com.


32 Bray, Angela, President and CEO, WellPoint. WellPoint Inc. Q1 2008 Earnings Call Transcript, April 23, 2008, seekingalpha.com.




© The Issue Wonk, 2009




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