Families USA Report Says MCO Execs Get Extensive Benefits

Managed care companies are offering their executives "profligate executive compensations" while they continue to "claim that patient protections" in a patients' bill of rights are too costly, a new report from Families USA says. According to the report, the 25 highest-paid executives from 10 of the top insurers received a combined $201 million in annual compensation, including salary, bonuses, life insurance, retirement plans, care and travel allowances and other compensation. The total excludes unexercised stock options. But the 25 executives with the largest unexercised stock option packages in 2000 had options valued at $1.1 billion, Families USA estimated (Welch, USA Today, 6/21). Ten executives have stock options valuing $68 million apiece, ABC's "World News Tonight" reports (Douglass, "World News Tonight," ABC, 6/20). UnitedHealth Group CEO William McGuire, for instance, received $54 million in compensation in 2000, excluding unexercised stock options valued at $357.9 million, the report says. Families USA President Ron Pollack said, "The compensation is enormous, and the unexercised stock options are beyond enormous. It clearly shows they have a double standard: one standard when it comes to lining their own pockets and another when it comes to protecting the rights and interests of consumers." USA Today reports that the study coincides with the Senate's consideration of the patients' rights bill (S 283) sponsored by Sens. Edward Kennedy (D-Mass.), John McCain (R-Ariz.) and John Edwards (D-N.C.) (USA Today, 6/21). That bill would allow patients to sue HMOs in state court for denial of benefits or quality of care issues and in federal court for non-quality of care issues. In addition, the bill would cap damages awarded in federal court at $5 million, but state courts could award as much money in damages as the state allows. Kennedy said of the report, "All this time [insurers] have been crying crocodile tears when they are paying their executives millions. Their attitude toward the patients is let them eat cake" ("World News Tonight," ABC, 6/20).

But American Association of Health Plans spokesperson Phil Blando called the report a "diversionary tactic," adding, "It's no accident that this is being released in the midst of an effort by the trial lawyers to take over the American health care system" (USA Today, 6/21). Industry spokespeople say that Democrats are "just taking political pot shots," explaining that executives' stock options "come from investors, not patients' premiums." ABC reports that Democrats "will make a lot of political hay out of this report [today] because they know it's the kind of thing that makes voters angry, and voter anger is what they need to pass their version of the patients' bill of rights" ("World News Tonight," ABC, 6/20).