Monday, August 10, 2009

Question For United HealthGroup CEO: "Stephen Hemsley, How Do You Sleep At Night?"

Brave New Films' "Sick For Profit" contrasts the obscene profits made by Stephen Hemsley, CEO of United HealthGroup, with his company's callous denial of treatment to the most vulnerable. The film chronicles the cases of three who were denied despite life-threatening disorders: Isabella Griggs and Dylan Joshua, both children, and Holly Bailey, a young adult. Bailey received the following response when she told a United HealthCare representative that she will die without receiving medication: "OK."

The contrast is made all the more stark when we're told that one-quarter of Hemsley's daily earnings would fully cover Isabella's treatment; two-and-a-half minutes of Hemsley's pay would fully cover Dylan's treatment; and one hour of Hemsley's pay would cover 20 months of Holly's medication. Hemsley's salary is $3.2 million; the total value of his stock options is over $744 million.

United HealthGroup, along with all other private insurance agencies, have a financial interest in denying coverage. That's how the industry's shareholders and CEOs are able to rake in such huge earnings–and why they're lobbying against health care reform. All arguments for the exclusively privatized system we have now are ultimately smokescreens for the industry's sky-rocketing profits. 

Dylan's mother, Joanna Joshua, put it best: "To live in a society that would allow the CEO and higher executives of United HealthCare to make three quarters of a billion in stock–it's disgusting. ...Stephen Hemsley, how do you sleep at night?" Watch:


Capitalist said...

What ever happened to personal responsibility? Why is America expecting handouts instead of being proactive and relying on only themselves to make sure their issues are taken care of? You agree to your health insurance coverage as stated in your policy, but then get mad because some CEO makes a profit and expect the taxpayers to support you?

Welcome to capitalism. UHC, flawed as it is... is a business.. not a charity. In America, you have every opprotunity to go to school and better yourself, but people choose not to. Instead, many settle for dead end jobs and expect everyone else to pick up their slack.

Yeah.. ok.. he makes $3M a year.. perhaps he went to school and made something of himself. Is that to much to ask for all those people out there who complain about things not being fair to actually apply themsleves and make something of themselves? Maybe those people could take their hatred for UHC and come up with a better company and steal clients from UHC... but its much easier to moan and groan than actaully apply yourself. It is much easier to point fingers at those who have climbed to the top, than to actually try to climb to the top yourself.

My beef with UHC is how they treat their employees, not that Mary Jane can't get her much needed breast augmentation or Timmy can't get the overpriced drug he "needs" when there is a generic equivalent on the market for a much lower price.

People think this Obama plan is great, but I don't want my hard earned tax dollars going to support people who refuse to apply themselves and want the American people to support their laziness. It's not the "rich" who will be taxed for this, mind you... but the middle class, in order to support this healthcare reform. Destroying our kids future with deeper debt and higher taxes that they will have to pay off will do nothing to better the American people, only bring them down.

Don't like our healthcare here.. go to Canada or the UK and stand in line. Tell me that there is anything close to a high quality of care in a socialized setting. (Better yet, go to a VA hospital and take a look around...)Socialism is never the answer.

Change.. in the wrong direction is still change.

Jeff Tone said...

Capitalist: Thank you for your comment. Did we watch the same video? There are no irresponsible, lazy people shown here. We have two parents who have children with terrible illnesses, and a young adult desperately in need of medication. We’re not talking about breast augmentation or anything frivolous. If we were, I would agree with you.

These individuals did the responsible thing by taking out an insurance policy. Now, when they’re in need, they get the runaround and ultimate denial. To tell them to start their own company is not the answer. The company they contracted with should give them a responsible turn on their investment.

There are millions of responsible people who either are insured and getting the shaft or who can’t afford coverage. Meanwhile, health care premiums keep going up. Even politicians who are against reform, such as Michele Bachmann, admit that public insurance will be cheaper. As for Canada and the UK, I don’t hear them clamoring for what we have here. Instead, we are debating whether to move toward them. Nor do I hear any veterans calling for dismantling the VA. In addition, the hypocritical politicians who enjoy government insurance while denying it for the rest of us aren’t asking for their coverage to be taken away.

As long as we have a purely privatized monopoly, these outrages will continue. That’s because health care is viewed, as you say, purely as “a business” and not the right of all American citizens. The insurance industry has a financial interest in denying as much coverage as they can. We desperately need a public option to keep unscrupulous companies like UHC honest. We certainly can’t rely on the consciences of CEOs like Stephen Hemsley.

Hunter W said...

You obviously overstate your point and you surely don't believe in all aspects of it.

"The insurance industry has a financial interest in denying as much coverage as they can." False. They could deny every claim but that would be bad for business. But let's look at the other side of your argument:

The government has self interest in accepting every single claim. You don't get reelected by denying health care sick people or by charging them more for it. You don't keep your job if your boss is in hot water with his constituents.


82% of all the premiums collected by UHC goes to paying medical expenses for its customers.

Their operating margin (super-basic definition: gross profit) is less than 6.5% of total revenues -- which is low compared to other industries.

The "outrageous" salary of the CEO is less than 0.005% of the total revenues of the company. Compare this to many other businesses and industries. My salary is equal to nearly 100% of my company's revenues.

The "outrageous" bonuses given to the executives is less than 1% of the total revenue of the company -- hardly anything when compared to other industries. Given their tiny salaries this is actually a good thing.


The stock options given to the executives (as the outrageous bonuses stated above) are their incentive to run the business well. This means being profitable yes -- which sometimes means denying claims -- but it also means not being fined or punished by the states or the federal government. Additionally -- it means keeping your current customers happy (so you can keep receiving premiums) and having a good track record so you can bring in more customers who pay premiums. This is econ 101 -- something that our president fails (and apparently you as well) to grasp. There is zero incentive or free-market principles in play with the government plan.


You'll always have stories like this one -- you can do searches for the same kinds of stories in places like Canada, France, and Great Britain and find them. Videos like this are merely a red herring.

Jeff Tone said...

Hunter: Again, I must tell you that I have no intention of misleading people. I write what I believe. While I may disagree with you, I don’t question your sincerity. Please don’t question mine.

The insurance industry does indeed have a financial interest in denying as much coverage as they can. The operative words are “as they can.” That’s not the same as saying that they could realistically deny every claim. They’re cynical and callous in their operations, but they’re not stupid.

These statistics can not deny the fact that we spend much more on health care than any other Western democracy without the results to show for it. According to the World Health Organization, we spend 16% of GDP on healthcare while the UK spends 8.4%, yet we have lower rates of life expectancy and higher rates of infant mortality. At the same time, we’ve got more uninsured than any other Western democracy–in fact, the concept of “uninsured” makes no sense elsewhere. We’ve also got more bankruptcies due to health expenses than our allies–again, the concept of going bankrupt because of illness is unheard of elsewhere.

All the CEOs need do is make a fraction of the outrageous profits made by their companies to live, undeservedly, like kings. Are the businesses “running well” when we see the types of denials in this video? We’ve got children here with life-threatening illnesses who are being denied–something that the Republicans (and apparently you as well) fail to grasp. There is no incentive to improve private service without a public option. An econ 101 course that doesn’t take that into account is outdated.

“You don’t get elected by denying health care to sick people or by charging them more for it.” I agree with these words of yours. They’re actually a strong endorsement for a government plan.

I’ll close with one more example of another health insurance company’s denial of critical care in favor of profits. These outrages can only exist in a completely privatized system like ours:

"I am 36 years old and have Blue Shield HMO health insurance coverage through my employer. In January 2009, I was diagnosed with metastatic (stage 4) breast cancer.... My doctors prescribed a medication that targets and removes the cancer throughout the body like a "smart bomb"; however Blue Shield of California denied coverage of my doctors' recommended treatment. Blue Shield also denied a radiation procedure that would target and remove the two lesions in my brain. In both cases, Blue Shield denied the original requests and subsequent appeals I filed on the grounds that the treatments are not a medical necessity. I have learned that insurance companies will use "medical necessity" as an excuse to not cover treatment when it appears that the patient is "too sick" (read: not worth it)."

Hunter W said...

I apologize for doubting your sincereity -- I ask for your forgiveness on that.

The point I was making is that the government option would have no reason to deny care in any manner or to suggest care other than what the constiuient wants. This would mean the costs would get higher and higher. There would only be two ways to continue to pay for it: cut payments for services or raise taxes.

Cut payments -- I already know doctors who don't take any medicare/medicade patients because it isn't a financially viable option for them. They've been in business for 20+ years and already have a steady customer base they've earned with years of good service. Cutting payments further will drive more of the experienced doctors out and will require the poorest and neediest patients to go to the doctors who have the least experience (hence the need for regular patients) or have a record of the worst care (hence they continue to lose patients).

I also know very good doctors with years of experience who take on medicare patients. They do it because they see the need these people have and do it out of the compassion of their hearts but they figure that they, at best, break even on these patients.

If I have the choice of signing a contract with a client for my business and one will pay me $5,000 and the other will pay me $3,000 for the same project I'm going to go with the $5,000 and I'm guessing you would too -- right? The same is true of doctors.

Raise taxes: People would be opposed to this to a certain extent. If the government option -- the one proposed by the Dems -- subsidizes premiums and makes it cheaper for businesses to put their employees on the government plan then the costs will skyrocket. This will eventually lead to a single-payer option (SPO). We've already discussed how many trillions of dollars a SPO would cost. It isn't economically feasible.

I agree that denying care hurts and something needs to be done. But I don't think we've extinguished all of our free-market options yet. I have a family history of cancer (my father died of lukemia when I was a child) and I have a genetic disorder (NF1) -- I can't get health insurance on my own. However, once I grow my business to the point where I can afford to hire an employee my business qualifies for "group insurance" that is much easier to get, although it will be expensive because of my history.

I think a wonderful way to help with this problem would be to allow me to join up with other small business owners from around the nation to form a large group where we can get economies of scale to get lower premiums and the insurance company can use the law of large numbers to reduce their risk with the group.

Of course, with this option, you'd need to be able to put rules in place to help reduce the gaming of the system that would go on (people signing up just before expensive surgery and leaving immediately afterwards). Something like growing benefits where the first year you have a $50,000 limit on medical coverage, the second year that grows to $250,000, the third year $500,000, the fifth year $1,000,000 and your tenth year and beyond unlimited coverage. Different groups could be formed to set their own standards as a way to attract new participants. This would drive down the cost of insurance and increase the number of people covered as well as maintaining profitablity for everyone involved in the health care process. The trick to this is dropping the government regulations that require you to get insurnce in your state. By expanding this to a national plan we drive competition which always brings options of lower costs and higher quality.

I have three questions for you:

(1). What is the incentive for government to keep costs under control?

(2). What is an acceptable profit for UHC -- a company with $80 billion in revenue and over 80,000 employees?

(3). What are your thoughts on the idea I proposed?

Jeff Tone said...

Thanks for your first sentence. No problem.

I don’t believe that a government option would not “deny care in any manner.” If the government were willing to pay for breast augmentation, of course I would be against that use of taxpayer money. Your premise of cutting services or raising taxes is based on this assumption, which I think is faulty. I also don’t agree with the assumption that a public option would result in skyrocketing costs. See my point above on the percentage of GDP used for healthcare in the U.S. and the U.K. Again, I’m still not sure why something that is economically feasible for every other Western democracy is impossible in America. Seems we now have a “can’t do” spirit.

The incentive for a government to keep costs under control is to keep their own program viable. Why would breast augmentation be covered? It seems, though, that there’s no incentive for private insurance to keep costs under control. Why should they, under the monopoly they now have?

I do not have an “acceptable profit” in mind. My problem with Stephen Hemsley and UHC is not that they’ve made a profit per se. It’s the way the profit of $80 billion is made, all too often by shafting the consumer. There’s simply no excuse for the case histories in this video, among too many others.

The idea you proposed is worth exploring–but it still leaves the larger problems intact. Does it help the millions of uncovered, including those who are not part of these groups? Does it drive down costs to the extent that the uninsured can afford coverage on their own? And what about the many who have coverage but are still forced into bankruptcy? Will it reduce costs for them substantially enough? So while you idea can help those in the groups and may drive down costs incrementally, I have many questions about millions of others who still will need help.

Personally, I’m for universal, single payer coverage with an option for personal supplemental insurance, which is what they have in the U.K. Since that is politically impossible here, the talk is about the public option. That could be a viable means of keeping the government and the private sector honest. The closest analogy is the post office, a public institution, competing with FedEx and UPS. Honestly, I don’t stay awake at night worrying about the fate of private healthcare insurance; since I see their abuses as so egregious. The example I gave, however, points to the fact that public and private options can co-exist.

Now it seems, though, that even the public option may not pass. Then we’re left with the idea of health cooperatives, which may have some resemblance to what you propose. I don’t seem them giving enough competition to the private companies. I’m disheartened by what’s now taking shape.

Hunter W said...

Have fun on your vacation! I know you're headed out and may not have a chance to answer this before you go.

What is the monopoly you're talking about? There are many health insurance companies so no monopoly exists. Are you talking about only having a private option and no competition from the government?

You make a valid point with the Post Office. However, one major difference is that the post office is self-funded -- there is no government subsidy. Additionally, despite mail being down something like 20% over the last 10 years there still have been no layoffs. Additionally new technology has made sorting mail faster, easier, and less human interactive than ever before. The government has a monopoly on door-to-door service and therefore has no incentive to reduce costs or to be innovative in creating new income streams so it hasn't done so. It has only been in the last few months where there has been talk of consolidating postal distribution centers. If it needs more money it only has to raise the cost of postage. One can only speculate what the cost of postage would be if the government ran itself like business. $0.35? $0.25? It would be hard to dispute that it would be anything but lower.

That is one of the main problems I have with the SPO plan -- it gives zero incentive to be innovative and zero incentive to be efficient.

You said that the incentive to the government to keep costs under control is to keep their own system viable. We have not seen this with other large scale social programs. Social Security would have been easily fixed 30 years ago when the talk about continuing to fund it when the Boomers retired first started. However the changes that needed to be made (like raising the retirement age) were unpopular and Congress was afraid to do it because it wasn't in their own self interest. The changes Bush made -- pushing the retirement age back between a few months to 2 years -- would have added over 100 years of viability had it been done in 1982.

The viability option only comes into play when the collapse is imminent or nearly so. Private industry can't wait that long. Because politicians from 30 years ago failed to act you and I are going to see a minimum of a 50% increase in the SS tax in the next few years. My guess is by 2012 but definitely by 2016.

I agree that we should look out for those who are the most vulnerable in our society -- the poor, the widows, the orphans. I think the best option would be to provide tax credits to insurance companies equivalent to premiums for bringing these folks into their programs. There should be an income threshold for that and/or some sort of slide-scale of co-pay of the premium. The $85,000 or the $125,000 threshold that has been proposed is preposterous. It doesn't matter where you live in the country if you're making $100,000 and you don't have health insurance for your family then that is your fault. You're making decisions to spend your money on other things. Instead of a 6,000 square foot home go buy one that is 4,500 square feet and have your kids share a bedroom and medical coverage.

As for denying coverage why not put stricter guidelines & regulations in place? I hear some of the stories you have posted and I wonder "what is the insurance company thinking" and "how is that legal". Let's close those loopholes.

However, I do believe that it is okay to deny coverage for someone who lied on their application. If I said there was no family history of cancer in my family and no other medical problems with me and suddenly I get cancer and also need to have tumors removed from my brain stem (something that can happen with my genetic disorder) then I can't be disappointed when the insurance claim is denied. It was my own fault.

Jeff Tone said...

Hunter: Sorry it took me so long to post your comment. You wrote on the night I took a vacation. I just want to comment that, contrary to what you state above, a public option is not supposed to be subsidized. From the NY Times:

"...While a public plan might require some government financing to start up, the idea is for it to be financially self-sustaining and require no subsidies, Mr. Axelrod said."