Managed health care in the United States includes almost 1,000 companies representing revenues of more than $500 billion per year. The largest companies in the industry include members of the Blue Cross & Blue Shield Association, Aetna, Humana and UnitedHealth. Chief executive officers and senior leaders earn substantial compensation awards, including salary, bonus, options and deferred compensation plans.
Many health insurance companies have suffered lower revenues, credit declines and portfolio losses since 2007, according to the Bureau of Labor Statistics. Author James W. White considers chief executive officers' salaries at health insurance companies in "Contemporary Moral Problems." Health insurance CEOs earn from several hundred thousands to millions per year while more individuals struggle for basic health care. According to U.S. Government Affairs, each citizen's health care costs rose to $7,498 in 2007. Projected costs of $12,782 per person by 2016 create more stress on an overburdened health insurance system.
Health insurers' profitability comparisons demonstrate the broad range of CEO compensation structures in place in recent years. High-performing health insurance companies may pay the CEO less than a company struggling for higher profits. For example, Aetna of Connecticut earned $34.76 billion in 2009 and achieved gross sales growth of 12.32 percent. The company's net income was $1.28 billion, and the year-to-year net income declined about 7.77 percent against net income in 2008. Aetna paid the exiting CEO about 1.4 percent of the company's net, or $18,058,162. Comparatively, UnitedHealth Group earned $3.82 billion in net income on improving profitability and margins. The company's CEO earned two-tenths of a percent of the company's net income, or $8,901,916.
Authors Or N. Rose, Margie Klein, Jo Ellen Green Kaiser and David Ellenson of "Righteous Indignation: A Jewish Call for Justice" discuss national health insurance. High CEO salaries, inconsistent profitability of health insurers and unregulated pharmaceutical costs predict increasing health insurance premium costs and taxes. Excessive health insurance executive compensation doesn't help Main Street individuals gain access to health care.
If you work for a health insurance organization, your clients may discuss the topic of CEO and executive management compensation. CEOs manage myriad details within the organization under heavy scrutiny from clients and individual customers and U.S. regulators.
Knowing how executive compensation for your company compares to others in the industry may help diffuse concerns clients have about how generously management rewards itself.
Some executive management teams earned as much as 10 percent or more of company revenues while laying off substantial numbers of the work force in 2010.
A national health care program implies greater government interaction with health insurance companies and compensation plans. Looking ahead, perhaps more insurance companies will adhere to compensation plans that reflect company profitability and insurance access.