How We Pay
Alphonso O’Neill-White, the CEO of Blue Cross Blue Shield of Western New York pulls in $8,300 per day in salary and other benefits.
Now, I’m not one to begrudge someone a nice big fat salary, and hope one day to join him in earning a ridiculous boatload of cash money.
But within the context of the current debate over health insurance reform, there’s something that smells funny about this. Why is it, to some, imperative that we maintain the status quo? Who has convinced regular people that it is their obligation to ensure that Buffalonian health insurance executives make a salary that is about 5300% higher than the median income in the Buffalo Metro?
I realize that Alphonso O’Neill-White has to eat, but don’t tell me that his compensation doesn’t reveal a fundamental structural problem with the way that health care is paid for in this country.
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Alphonso is just a piker compared to the CEO of Aetna, Ronald A Williams. He makes $11,682 per hour (assuming an 8 hour day, which is a stretch, I realize). Must be that higher cost of living in Connecticut.
http://www.healthreformwatch.com/2009/05/20/health-insurance-ceos-total-compensation-in-2008/
you’re exactly right alan, and i would urge other pro-public health care advocates to concentrate on outrages like this in the ongoing debate. clearly, the status quo stinks, which is why a majority of americans favored a fairly radical overhaul of the health care system as recently as early this year. the millions currently uninsured, along with the tens of millions more who are afraid to change jobs or move to a different part of the country for fear of losing what coverage they have ARE EXACTLY what this debate is about. fuck the republicans and fuck the bedwetting southern democrats who should be told that — if they don’t vote for a package that includes a strong public option — their districts will be cut off when the time comes to dish out the pork. threaten to cancel a few lucrative defense contracts in the south and west, for starters.
I’d recommend watching the video at this site and reading the information.
http://sickforprofit.com/
Oh come now, BP, don’t you know Al is just better than you? /libertarian
Ethan, you are a consistent tool. I support reform, do not support the status quo and the last thing I would advocate is more government intervention.
@Alan, the reason Alphonso is making so much money is because favorable (to him) government regulations have destroyed the free-market.
Agree with much of what has been said here, but still think this is an incredibly thorny issue.
If you are able to limit pay, it will eventually trickle down to the lowest employee. Companies will find a way to squeeze a dime out of everyone if compensation is limited. You really think they would cut CEO pay and pay middle managers more money to be more fair and equitable?
Also, who’s to say he (or another CEO) isn’t worth that money? One could make the argument that Alan Mullaly is worth tens of millions of dollars by keeping Ford out of bankruptcy. Think of the shareholder value he creates, the reputation he saved by not going into bankruptcy etc. Though you could calculate Ford’s earnings (or lower losses) and come to some calculation of his added value, its the long term impact he has on the company that he should be rewarded for and that number is very difficult to quantify.
I get that in healthcare is a thorny issue because its a life we are talking about and not a car and it sucks that they make 5300% over the median income. But you limit pay in healthcare and who’s to say financials or construction isn’t next? Do doctors deserve a million bucks? What’s wrong with 750k or 500k? Still seems fairly comfortable to me.
Another shot from the Liberal Playbook. Forget about public and think about PRIVATE.
Insurance companies are PRIVATE entities, and function as any other corporation does. Do I think that many CEO salaries are excessive? Yes I do. But since I’m not a member of the board of directors of any of those companies, I don’t have anything to say about it. It comes down to you get to live with the deal you make when you go to work for any entity. Insurance companies are FOR PROFIT. Do I think some of the rules they use to qualify patients and authorize payment for services need to be changed? Sure. THAT is an issue that needs to be looked at —the status quo dog doesn’t hunt there. How about TORT REFORM—that could lower Malpractice insurance, and lower costs for care. Won’t hear anything about changing THAT staus quo from the Congresscritters whose pockets are full of money from the Trial Lawyers associations.
Cutting the fraud out of current government healthcare programs would save NYS hundreds of thousands of dollars a week. Oh yes, the status quo needs to be changed. But you don’t do it by allowing the Government to tell private companies how much they can pay their employees. And you don’t do it by inciting CLASS ENVY/WARFARE between policy holders and Insurance Companies. And you certainly don’t do it by pulling a Hugo Chavez and nationalize the entire system. I doubt very strongly that ANYONE wants the mess that health insurance has become to stay the way it is today—-but remember that GOVERNMENT REGULATION was the key ingredient into causing this mess to begin with. MORE REGULATION will not help. Take a Train Ride or Mail a letter. Government should be in the governing business, not the Banking Business, Auto Business, and Health Insurance Business.
Shorter Hank: Although the pay is excessive, health insurance is for-profit, and if they make a profit they’re entitled to excessive pay.
You don’t think for-profit insurers get duped by fraud? And who said anything about telling private companies how much to pay people? You’ve missed my point entirely.
Whew. Thank God for that, HR 3200 doesn’t nationalize the entire system. Or, really, any part of it. It’d still be essentially the very same system you have now, except with a public option for those who want it, and some consumer protection improvements. I always wonder why conservatives defend the corporations over the consumers. It’s one I don’t quite get.
Providing people health care is part of the governing business. “Provide for the common defense and general welfare.” It’s right there, in black and white.
the problem is that there are currently 50 different sets of regulation governing the sale of health insurance, rather than one central set of rules that would let insurers from every state compete on an even playing field. some states, for example, forbid insurance companies from doing business of any kind unless they offer auto insurance to residents. why a health insurance company should also have to offer auto insurance is beyond me, though the laws were designed to keep companies from cherry picking the types of insurance with high profit margins. only a few companies are large enough to do business nationally, and they can charge whatever they want with the smaller, regional companies simply follow suit. by implementing a national health care policy, we would succeed in breaking the almost feudal grip imposed by 50 different sets of regulations and thus create less government involvement in health care rather than more.
I know class envy or warfare is always the easy solution for Liberals, especially when the debate is slipping away from them, but is this what health care reform hinges on? Does HR3200, or any other legislation on the table, contain specific provisions for determining or limiting health care executive pay? I haven’t heard of any, but I know that does not mean they do not exist. I know this has not been part of the national debate and has not been a major provision highlighted by the president or his supporters. If it is not part of the bill or aything currently on the table, then why are you bringing it up?
I think most people agree the status quo has to change. The difference is in how we go about that. Attacking the rich, especially if there are no provisions concerning this, adds about as much to the debate as screaming at a town hall meeting.
No one’s attacking the rich.
I’m personally wondering why it’s a swell idea to leave matters of life and death to the profit motive. I know there is a profit fetishism amongst some, but it would seem to me to be out of place when dealing with one’s health. IOW, if “rationing health care” is so bad, why is it ok if a for-profit health insurer does it?
hr 3269 calls for non-binding votes for public companies on shareholders compensation. more exec pay stuff to come in the fall
in recent times, no one on the right even mentioned changing the health care status quo prior to it being brought up by the clintons during the 92 elections. nixon had some good ideas about it, of course, more “radical” than those being put forth currently by obama. but i think that when hank and russell at least pay lip service to change, it’s an indication of how far the left has come on this issue.
Is BCBSWNY/HealthNow still not for profit, or is BCBSWNY a not for profit arm of HealthNow a for profit corp?
Alphonso isn’t worth that kind of money to be honest with you. He hasn’t really done anything to improve or secure BCBSWNY’s position. It was all done by Tom Hartnett a few years back who the board then illegally fired, in a coup probably engineered by Alphonso. Tom Hartnett was the one who created the for profit parent company HealthNow, enabling them to skirt some not for profit regulations and also enabling them to compete outside of WNY, under HeathNow, since they couldn’t use the BCBS title in areas where other health insurers were using that name. (Excellus is Rochester’s BC/BS for example.)
In any event, he isn’t worth it. It is all about business and not health care. Don’t believe a one when they say they are devoted to making the best health care/insurance available and affordable.
The incessant harping on the “profit motive” is the most irrational and emotional argument one can make. Our country rose to greatness on the back of the profit motive in record time. Then, government regulations strangled the system by eliminating the inherent checks and balances, namely choice and competition.
I watched the video from the link Chris Smith posted. The only logical point that could be drawn from that deliberately narrow-minded scare piece is that the current system is working the way it should be.
The misguided compassion of those favoring the public option is one of the most reprehensible and dangerous things to confront our country. Governing by faulty knee-jerk emotionalism is quite scary.
Profit motive is appropriate for some things. Not for others. There are lots of things we don’t leave to the profit motive.
Universal health care is a topic that America has been grappling with for about 50 years, at least. The only reason it hasn’t happened yet is because of the demagoguery from people who call it socialism or communism or Naziism or “one of the most reprehensible and dangerous things to confront our country.” Such hyperbole for something so benign.
Just to clarify, I said the current system is working the way it should be because the regulations in place have ruined it.
Profit motive works for things that aren’t a necessity. Charge how much you want for those luxury items, those cigarettes, alcohol, those non necessities. Health care isn’t a non necessity. It is our ability to live longer and healthier that has led to innovation, industry and the rise of the standard of living. Compare our lives to the middle ages. Talk about profit motive run amok without any nod to human rights or civil liberties.
Where would all those people be if profit motive was never at least partially removed from education? No public school. Where would people be if profit motive wasn’t removed from fire or police services? Seriously, profit motive helped build this country; not just profit motive, but the creation of a fair playing field so the profit motive opportunity would NOT only benefit the aristocracy/oligarchy. It is so every one would have that opportunity.
alan…these guys obviously think that one day they too may be the head of some corporation and make that eight grand a day or whatever it is. i don’t know why nobody wants to attack the rich. while i don’t usually quote jesus christ, he got it right, as far as i’m concerned. off with their heads! “Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.”
Matthew 19:24
That is an assertion. How do you define when profit is appropriate? By what means do you measure success? How do you prove that the lack of profit results in a better system? Economic law already says that competition and choice (profit system) results in the most efficient means to delver goods and services and promote innovation and progress. Again, you are ignoring the fact that health care is goods and services and you are trying to rewrite economic law based on emotion.
@MikeInWNY – Your full of assertions too. The Free Market is a theory. It might do everything you and von Mises say it should do, but because of the regulations that have always been in place you don’t have any idea if it will perform as you envision. You trust it….alot of us don’t as we have seen the money as a scorekeeper makes people do bad things in order to make more money. Lots of great theories out there that fail to take into account that many humans just plain suck and would do ANYTHING TO MAKE A BUCK.
(
Cue: Mike’s lecture on how I can’t have an intelligent conversation about free markets cause I just to dumb to get it.)
Hudson is quoting the Bible…..I am paging through my Nostradamus media guide to see if the world is ending soon.
@Pete, thank you for supporting my case that the regulations must go.
China has long been struggling with the fact that government intervention in industries has not provided the desired results. China has been experimenting with more or less a free market approach in the province of Guangdong. Not surprisingly, that province now enjoys that best economy in the country. Meanwhile, we are moving in the opposite direction, a direction of failure.
@MikeInWNY – Don’t think I supported that argument at all, and if you took it that way, it wasn’t my intention. I don’t believe over reugulation caused the recent market failure, I believe bad, selfish people, making greedy decisions made the market failure because of DERUGULATION.
Why do liberals interpret the “GENERAL WELFARE” clause of the Constitution to justify every fucking thing they want?
THERE IS NO consitutional right to health insurance. This is just as ignorant as keeping children from praying in school because a bunch of liberal justices warped the constitution into the dogma of “Seperation of Church and state”
Don’t forget, The Bible says that the Beatles came to earth to signal the start of a Armageddon race war between whites and blacks. At least while Charlie Manson was reading it. I’m fed up with liberals taking the Constitution and wiping their asses with it until the words say what they want them to.
You’re disagreeing, therefore, that providing health care to the sick promotes the “general welfare”.
You’re right, Hank. Every kid in school should read a passage from, say, the Koran at the beginning of every school day. Forget all that church & state bullshit, right? That’s for pussies! If we left school curricula up to the people who demand prayer in school, we’d be teaching kids that the Earth is 6,000 years old and that man roamed the planet with the dinosaurs.
Also, there’s nothing in the constitution mandating roads. Or schools. Or convenient parking. Or clean water. Or clean air. Or unadulterated foods. But they’re all things we’ve legislated pursuant to the constitution. Now, if the Republican Party wants to argue that the constitution only permits that which it explicitly states, then by all means I invite them to do it.
Yes. Maybe we should all self-immolate, as you suggested in another thread.
No one is stopped from praying anytime they want. Judges stop people from forcing others to pray with them. Thank God the constitution was “warped” in that way.
I also noticed that the right has blinked on the health insurance issue. I hear a lot of talk now which admits that the status quo is no good. This is huge. I hope the administration recognizes the opening given to them..
Ah, the General Welfare Clause – Hank is correct, it has been used wrongly to justify all kinds of programs and services. It is simply nothing more than a reference to the narrowly enumerated powers of the federal government. Any other interpretation would be contradictory and illogical given the text of the Constitution. The Constitution was written to protect property and protect against government tyranny. Taking people’s money for every fell good idea is not only economic folly, it is tyrannical. It is consistent with the general welfare clause to promote self-responsibility and innovation, not theft and nanny statism.
Care to elaborate?
What is there to elaborate? The enumerated powers are specifically laid out. In essence, the enumerated powers are the definition of “general welfare” – any other meaning would be illogical. The powers are further delineated with the “necessary and proper” clause, “proper” meaning within the scope of the enumerated powers.
Are you referring to the recitation of “general welfare” that is contained within the preamble to the Constitution?
Shorter Mike in WNY: Upkeep of our national highways, paying our police/fire/emergency personnel, ensuring public education for all children are but a few examples of the burdensome tyranny our federal government subjects us to.
I would substitute “poor quality and inefficient” for “burdensome”, then you will have my correct meaning.
Not the preamble, Article 1, Section 8:
That is then followed by the enumerated powers for Congress.
Read it, Mike. That first paragraph is one of the enumerated powers for Congress. Otherwise, the bits about laying and collecting taxes, duties, imposts, and excises, etc. would also be non-powers.
If you look at the actual constitution you will see that the first paragraph is an introductory paragraph which is further refined by the subsequent clauses.
Not that anyone is particularly interested in substance anymore, but this post and thread are yet another example of identifying the right problem and the wrong solution. In a properly functioning insurance market, a new competitor would come in with lower overhead, lower costs, and a better solution (think GEICO versus State Farm or Wal-mart versus Montgomery Ward). What the government should do is NOT create it’s own costly overhead but, instead, to create a $10 billion venture capital fund to invest in new health insurance / healthcare players and to free up the regulations to let more firms compete.
And the problems we have now continue unabated. The only way to ensure that insurers don’t rescind contracts, deny valid claims, cover pre-existing, and are affordable for anyone is to have an attractive public option. I haven’t seen much clamor from insurers or wanna-be insurers demanding easing of the rules
you mention, most likely because they’re quite happy with the status quo, thanks.
Most anyone who gets into serious dealings with a health insurance company, whether physicians thanks to volume or patients due to catastrophe despise the insurance companies. There’s no predictability, harmonization, or reason to anything.
The system is very broken. I’m not convinced the health insurers offer the solution.
For better or for worse, I am quite familiar with the inner workings of about 20 health insurers around the country and they are among the most pathetically run organizations I have ever come across. You will not find a peep of disagreement from me on your second paragraph. Where I disagree vehemently is on the solution. We need a smart bomb – not a nuke. The issues you cite in the first paragraph – denying valid claims, covering pre-existing, etc. – can be solved by laws that force certain actions (cover pre-existing) or prevent others (contract rescinding). In fact, every reform bill in both the House and the Senate already include these provisions, few Republicans oppose them, and the health insurance trade association supports these rules. If solving these problems alone were truly the agenda of the Obama administration, a bill would have been signed in July and we’d be talking about Afghanistan now.
The cost and service issues you mention need to be handled completely differently from the denial of claims and pre-existing condition type issues, because regulation alone is not the answer. And here, reasonable people can differ. But, in my opinion, there is absolutely nothing inherent about a public plan that will solve either problem.
Ultimately, I think the rub in this debate over a public plan seems to be where one lands on the question of whether a “profit” motive drives improvements in cost, quality, and service or whether it feeds illicit behavior such as bad service and claims denials. I think it does – with a significant caveat. The profit motive helps when, and only when, (a) the proper regulation is in place to prevent bad behavior and (b) there is the opportunity for real competition. Today, we have neither. We’ve already covered the need for proper regulation. On the other point, there are too many barriers to entry (state-by-state regulations, doctor networks, and capital reserves are but three) that prevent real competition. So existing players can sit back in a protected position, spend more than they need to, stay bloated, and act adversarially toward their customers. There is no consequence to poor performance – not dissimilar from oil & gas companies, cable companies, and formerly the phone companies (before wireless), where similar barriers to entry blocked competition. In every other industry with competitive markets (cars, airlines, retail, and, by the way, most other types of personal insurance), the quest to make a couple points of profit motivates people to bring down costs and improve service. Lastly, in today’s health insurance market – it is ironic that so many point to “profit” as the problem when the so many players are in fact “non-profit.”
Clearly, others have a different point of view – one that profit leads to a misalignment of incentives of when it comes to paying claims. Again, I would agree with that if our thinking is constrained to the current system where there is too much regulation, too little competition, and the lack of a few targeted laws to prevent obvious missteps (like pre-existing condition exclusions). In a proper environment (think in Buffalo, if we had 10 options to choose from and not 3), companies would clamor for your business and the last thing any insurer would want attached to its brand is to become known as the “carrier that doesn’t pay claims.” It would be the kiss of death.
I am not surprised that you and others feel such mistrust of the private market to solve the problem. Things are very broken, as you say. There is no doubt that fundamental change is needed. And there is a significant fork in the road as to how that fundamental change can be delivered – allowing for the creation of a real insurance market and allow competition, choice, and transparency to help us out of this mess or pivot in a completely different direction and create a public entity that will become a new institution in this country, cost a lot of money, and never go away – no matter how well or poorly it performs. Though the intentions of those who support a public plan are well-intended and the problems that they cite are real, this cure would be far worse than the disease itself.
The debate on this blog and elsewhere in this country has become so poisoned because it’s so bipolar – that health insurance reform requires either “Government Intervention” or “No Government Intervention” and the “Government Intervention” advocates seem to always voice that “Government Intervention” = “Public Plan.” What I’m trying to say is that reform MUST include a government role but that the role can and should be targeted and appropriately focused. So here’s another idea: How about the government creates a “catastrophic re-insurance plan” that every insurer would buy into to pay for all claims over $100,000. Insurance companies would be comforted knowing that all large claims would be the responsibility of the federal government and could pass on the savings to their customers. Coupled with mandates for carriers to provide insurance and for individuals to buy insurance – this would make obsolete the oft-cited “medical bankruptcy” issue. Government backed reinsurance would empower new firms to enter the market without having raised hundreds of millions of dollars in capital reserves to get started – and these innovators would surely find opportunities to improve service, cost, and quality since we know there’s plenty of room for that. Now that would be a “public plan” that I could live with.
One last point. if you look at the income statement of any health insurer, 85-88% of all medical premiums are a straight pass-through to pay medical claims. 12-15% goes toward administration. For-profit insurers typically have a 3-4% profit margin. Whatever one believes about the efficiency or inefficiency of 12-15% administrative cost – what is clear is that the only way to substantially address rising costs is to do something about the 85-88%. And not a single proposal on the table in Washington does anything to meaningfully tackle the root causes of rising medical claims (behavior, food subsidies, lack of access to preventive care, reliance on the outdated model of general hospitals, flawed physician reimbursement model, excess tort, excess pharmaceutical marketing, etc. etc. etc.).
Great ideas but they don’t solve the basic inefficiencies of our system. For the government to assume all catastrophic excess claims only extends the private insurers transferring the high cost aged clients to Medicare so that they can maintain an attractive premium.
It would seem that since the U.S. is the only industrialized country without Universal Health Care and our healthcare cost is approaching 17% of our GDP (gross domestic product), almost twice the average of all the other countries, we could choose any one of these other country’s programs and have a better health system than the present.
This is not re-inventing the wheel. Every other industrialized country has Universal Health Care (no small print exclusions) with better results (longevity, infant mortality, public satisfaction, cost, etc.) than our current system. Pick your program; France, Japan, England, Germany,Canada, every citizen is covered, no exceptions, no family bankruptcy no fear of non-coverage. Independent Health Insurance companies still exist and thrive with government payor system.
Unfortunately our healthcare industry has successfully protected their extremely profitable monopoly with dire warnings of death panels, doctor choice, socialism and other ominous consequences, all of which are ludicrous lies.
Take your pick, any other country’s system is better than ours, and cost less. They all have their warts but ours has more and they’re more expensive.