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Vail Dail letter: Health care reform as a doctor thinks it should be

Michael J. Schneider
Vail, CO, Colorado
newsroom@vaildaily.com

This is an article I wrote two years ago and sent to every senator in Congress with no reply from any of them:

I think that all medical professionals would agree that our reimbursements from insurers have decreased significantly over the years since “managed care” contracts came into the picture. Along with these decreases in reimbursements to physicians, there has been a dramatic increase in our patients’ health-insurance premiums.

An article in USA Today on Sept. 14, 2005, stated that a survey done by the “nonpartisan” Kaiser Family Foundation found that the average family health-insurance policy had neared $11,000 a year. Helen Darling, of the National Business Group on Health in Washington, D.C., stated that the average was more like $12,000 per year.

Workers paid an average of $2,713 a year, which was $1,094 more a year than they had paid five years before.

There is a public misconception that one of the reasons that medical costs are so high is because the physicians are charging too much for services. As a physician, I realized that something was wrong. If our reimbursements had gone down and the public’s health-insurance premiums had gone up, then where was the money?

This prompted me to Google “CEO compensations managed care.” I found a Web site: http://www.aishealth.com/ManagedCare/

CompanyIntel/ExecComp.html.

I learned that the total annual compensation amount for the 31 top executives of the 15 publicly traded managed care firms for the year 2004 was $78,682,409.

The top earner was William McGuire, M.D., of United Health Group with an annual salary of $2,176,923, a bonus of $5,550,000 and “other annual compensation” of $242,386 for a grand total of $7,969,309. This did not include stock options for this “top earner” in 2003, which amounted to $28,000,000.

Since I wrote this article a few years ago, I am adding some new information about Dr. McGuire, which I just read today on the PostGazette.com: “Savvy move. Today, the 58-year-old Dr. McGuire is chief executive officer of UnitedHealth Group Inc., one of the nation’s largest health care companies. He draws $8 million a year in salary plus bonus, enjoying perks such as personal use of the company jet. He also has amassed one of the largest stock options fortunes of all time.

“Unrealized gains on Dr. McGuire’s options totaled $1.6 billion, according to United Health’s proxy statement released this month. Even celebrated CEOs, such as General Electric Co.’s Jack Welch or International Business Machines Corp.’s Louis Gerstner, never were granted so much during their time at the top.”

Read more: http://www.postgazette

.com/pg/06108/683054-28.stm#ixzz0Ml18aDM7.

The U.S. Census of 2000 reports the average family size as 3.14 persons.

Computation:

The average American family (3.14 persons) pays about $11,000 per year for health insurance.

The total CEO compensation (not including stock options) for the 31 execs of the 15 publicly traded managed care companies is $78,672,409.

This translates to the fact that the entire premiums of 7,152 families or 22,457 people go to pay the 31 executives of the 15 publicly traded managed care companies.

Summary: If we are to lower health care costs, we must look to some of the reasons that they have become out of hand. I have just illustrated one. What does a person do to deserve these outrageous compensations?

Managed care did not exist before the late 1980s. We had indemnity insurance, which was between the physician, the patient and the insurer. Managed care was supposed to lower health care costs. Instead, it increased the costs dramatically.

Solution:

I don’t purport to have the total solution to this health care issue, but it seems to me that a return to the indemnity system would be a start. It will eliminate a spectrum of the insurance process that had added billions to the tab.

How about health savings accounts into which an individual or family could put pretax monies that would be ongoing year after year, eliminating the “use it or lose it” rule? The more the account would grow, the greater the deductible would be and the less the policy would cost.

Government control of your health care is not the answer. Putting some type of health czar in between you and your physician is the worst possible answer.

Michael J. Schneider, D.P.M.

Vail


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