Thought experiment: if you were the CEO of a health insurance company, would you care more about your company’s profits, or the lives of your customers? Yes you need living customers to make money, but at times in the health industry some people end up costing a lot more money than you can make off them. For example…
Meet Mr. A, an average guy with a randomly picked, real life individual health insurance plan. The first year of Mr. A’s coverage he spends an average of $500 a month on health care and his policy costs $450 a month. At this rate he reaches his deductible after ten months and the insurance company then picks up 100% of medical costs.
Fast forward to four years at the $500 a month usage. Between the health care costs and his monthly insurance premium, Mr. A has spent $41,600 out of pocket (opposed to $24,000 he would have spent without coverage for the same usage), and the insurance company has made $14,200.
For the next two years let’s throw in a major medical event, one year his usage is at $1,000 a month and the next year $3,000 a month. At the end of the second year his out of pocket expenses since coverage began is $69,250, and the insurance company is now in the red at -$6,150 profit.
If Mr. A makes a full recovery and goes back to his regular usage the insurance company will recover this loss in two years. Unfortunately there is a complication and Mr. A needs a costly surgery with a 60% chance of survival, and without it he will be dead in a manner of weeks. If he does get the surgery and survives, it will still be unlikely that the insurance company ever recovers the loss through Mr. A’s current monthly payments.
Now it is time to play CEO. Does your insurance company’s policies support Mr. A and pay out this costly surgery, or do they drag the process out and let him expire before the company takes a major loss?
Correct answer: let him die. Is that evil? Well, yes. But it’s also good business sense.
Health insurance companies play this game on a daily basis. They deny transplants to sick children, deny coverage for overweight babies, deny artificial limbs for veterans, kick people out of hospitals who awoke from a coma the same day. Just google health insurance horror stories to read true story after story of people who were killed or put at serious risk by their insurance company.
But maximizing profit is the ultimate goal of any for profit business, so why should health insurance be any different? That is the fundamental flaw in a privatized for profit health insurance system, greed and self-indulgence are incentivized over humanity and empathy.
Mark Bertolini, President of Aetna, made a total compensation of almost 9 million dollars in 2010. David Cordani of Cigna made over 15 million. And Stephen Hemsley of UnitedHealth Group made almost 11 million. You can see how these salaries were broken down at Forbes.com. And those are just three out of many health insurance companies, we pay out billions of dollars to these companies and their CEO’s every year.
While health care costs skyrocket and wages for the average American worker have stagnated, the CEO’s salaries have been on a steady rise. While people lie on their deathbeds waiting for an insurance approval that will never come, the insurance companies are enjoying growing profits.
Could you accept a CEO salary with the health insurance industry being in the sate it is in? To be fair, 10 million dollars is difficult for the average person to fathom. If you make $38,000 a year, imagine making that every business day. Sound tempting? Remember, health insurance isn’t personal, it’s just business.