Thursday, June 11, 2009

The Reasons for Alarming Health Costs!

We have to talk about this because the American government is being bombarded, bombed, hounded and harassed by constituents in the "health care insurance" business. We have to talk about this, person to person, without all the hype and politics.

I can't believe that I keep hearing from the "news" shows that we have the best health care in the world, yet when the studies are done, we fair somewhere around Sri Lanka and Afghanistan in infant mortality. This is a slight exaggeration, but according to The British Health Journal, "The United States spends twice as much on health care as a percentage of gross domestic product as other industrialized countries. But the United States is behind the other countries in providing its citizens with good health outcomes, quality of care, access to care, efficiency, and equity, the report concludes."

Well, for twice as much money, we must get something.... Let's look at this report by The Conference Board of Canada. What are our scores?

Report Card:

1 Japan A
2 Switzerland A
3 Sweden B
4 France B
5 Australia B
6 Norway B
7 Italy B
8 Germany B
9 Austria B
10 Canada B
11 Finland B
12 Ireland C
13 Netherlands C
14 U.K. D
15 U.S. D
16 Denmark D

It is notable that the United States got one A, in "self-reported health status". You might realize that this has nothing to do with the health industry. This is simply a measure of our knowledge of health. We know when we are sick. However, we were the only country on the list to get a D in "life expectancy", "premature mortality" and "infant mortality". Denmark and UK have D's in specific diseases. But, no one else has D's for general mortality rates.

Our only B, is in "mortality due to cancer" which means, I think, that statistically speaking, it's better to get cancer than to be overweight or to have high blood pressure or respiratory disease. An unhealthy American is at greater risk of death than an otherwise healthy cancer patient.

Well, we could solve this if we had more competition, couldn't we? Isn't competition the stabilizing and equalizing element in a capitalist system? Yes. So, why are the lobbyists for the insurance industry fighting any talk of a government single payer system? Why do they keep saying that "They don't want the government to come between them and their doctors"?

I don't understand why the news commentators are so happy with a junior college graduate working for the insurance company coming between their doctors and their treatment, but let's look at the salaries of the top insurance companies. I think this it the reason for the intensity of the arguments.

Health Insurance Company CEO Salaries for 2005:

The numbers are numbing, which is why we should do something about this:

* United Health Group
CEO: William W McGuire
2005: 124.8 mil
5-year: 342 mil

* Forest Labs
CEO: Howard Solomon
2005: 92.1 mil
5-year: 295 mil

* Caremark Rx
CEO: Edwin M Crawford
2005: 77.9 mil
5-year: 93.6 mil

* Abbott Lab
CEO: Miles White
2005: 26.2 mil
5-year: 25.8 mil

* Aetna
CEO: John Rowe
2005: 22.1 mil
5-year:57.8 mil

Ron Williams
2008: $24,300,112 and personal use of an aircraft and
vehicle, financial planning and 401(k).

* Amgen
CEO: Kevin Sharer
2005:5.7 mil
5-year:59.5 mil

* Bectin-Dickinson
CEO: Edwin Ludwig
2005: 10 mil
5-year:18 mil

* Boston Scientific
2005:38.1 mil
5-year:45 mil

* Cardinal Health
CEO: James Tobin
2005:1.1 mil
5-year:33.5 mil

* Cigna
CEO: H. Edward Hanway
2005:13.3 mil
5-year:62.8 mil

* Genzyme
CEO: Henri Termeer
2005: 19 mil
5-year:60.7 mil

* Humana
CEO: Michael McAllister
2005:2.3 mil
5-year:12.9 mil

* Johnson & Johnson
CEO: William Weldon
2005:6.1 mil
5-year:19.7 mil

* Laboratory Corp America
CEO: Thomas MacMahon
2005:7.9 mil
5-year:41.8 mil

* Eli Lilly
CEO: Sidney Taurel
2005:7.2 mil
5-year:37.9 mil

* McKesson
CEO: John Hammergen
2005: 13.4 mil
5-year:31.2 mil

* Medtronic
CEO: Arthur Collins
2005: 4.7 mil
5-year:39 mil

* Merck Raymond Gilmartin
2005: 37.8 mil
5-year:49.6 mil

* PacifiCare Health
CEO: Howard Phanstiel
2005: 3.4 mil
5-year: 8.5 mil

* Pfizer
CEO: Henry McKinnell
2005: 14 mil
5-year: 74 mil

* Well Choice
CEO: Michael Stocker
2005: 3.2 mil
5-year: 10.7 mil

* WellPoint
CEO: Larry Glasscock
2005: 23 mil
5-year: 46.8 mil

Angela Braly
2008: $9,844,212
Other compensation included use of a private jet for
her and her family and just under $10,000 for legal

* Wyeth
CEO: Robert Essner
2005:6.5 mil
5-year: 28.9 mil

Who would have guessed that they earn more than Major League Baseball players? What does this mean per minute? William McGuire is paid $234 a minute. If he takes 5 minutes to walk to the men's room, and spends 5 minutes in there, we have paid him $2,374.43 to take a piss. This is based on working 24 hours a day and 365 days a year. If he only works a 12 hour day, double the amount to piss -- $4,748.86! If he takes weekends off, McGuire's pee break costs us $6,641. If he takes an hour for lunch, his lunch costs his insurers $39,846.74. This does not improve our health care! I am going to say that again. Paying a man $6,641 to pee does not improve our health!

I don't know about you, but I think the government could do this for less.... Maybe they would need 4 guys to do the work that McGuire does. At $90,000 per person, it would still save us about $124,440,000 per year against United Health Care costs. This is the reason that the "health care" insurance industry is fighting any thought of having a government single payer system.

Whereas Republicans normally speak highly of competition, they do not want any competition in this field. It's no wonder. Any government program that pays it's executives $90,000 a year to administer a government health insurance, is going to win the competition hands down. My goodness, these companies might have to lower their executive compensation to compete!

Shake up Your World View:

It is also worth mentioning, since our auto industry is in such dire straits that Japan, in first place for health outcomes, gives health care to every citizen. Their auto companies, Honda and Toyota, have never had to supply health insurance to their employees or retirees! This has been, as you can imagine, a great savings for them and has helped to make them the most competitive companies in the world. So, when someone complains about the American auto unions, please remind them that the Japanese worker gets the best health care in the world from his government, while General Motors has to pay for the health care of their workers. The playing field is not even.

In China, a family pays a doctor to keep them healthy, so they keep him on a monthly retainer. If anyone in the family gets sick, they stop paying him until they are all well again.... Do you see how this changes things? The health industry in China is really a health industry, where we really have a sick industry. Our medical people are paid when we are unhealthy.... Go ahead, have another cigarette and that Big Mac and support your local health care professional. Just a thought....

Please Put in Your Two Cents!

It was never more important to let your public officials know what you want. Believe me, it is not intuitively obvious to them. There is way too much "stupid talk" clogging the airwaves.

To contact your Senator, Congressman or any other government official, go to

Put in your zip code, and they will give you the names of every State and Federal elected official. Click on any name, and you'll be taken to their record with an opportunity to click again to go to their individual website where there will be another link to click on to email them.

You are on the internet now to be reading this blog. Please, do not put this off. We have thousands of lobbyists paid thousands of dollars to win against our best interests. Support your Congressman and Senator in doing the right thing for you. Write them or call them ASAP. Take back your government.


Gertrude said...

CEO and other executive pay is a part of the high cost of health care...but that is just the beginning. There is so much more layered cost.

Look my involvement in the system, for example.

I am a CNA who provides 24/7 care for a blind diabetic. The care is paid for by the woman's insurance. Despite being licensed, I am not an insurance-eligible provider (individual providers can't qualify), so care has to be arranged through a qualified "nurse registry." So, I'm hired on a contract basis by the registry (1099 basis, no benefits, plus I have to get my own liability policy). For every dollar the insurer pays to the registry, 55 cents gets passed to me.

I'm not begrudging the registry anything, but just that step alone almost doubles the actual cost of care. I also understand safeguards and such (then again, I'm a licensed contractor and there's no supervision involved.)

Likewise, I can't be an eligible Medicare provider (I would need a staffed commercial office and 10 clients to even apply for qualification...but then I'd be the added-cost layer and not the caregiver). Medicare has some of the same issues of layered costs, but it does have some efficiencies versus private insurance. That's for another time, though.

OK. So far, that's for home care. Let's look at the nursing home alternative, where for most people the Medicare and private insurance incentives push people toward higher-cost institutional care, instead of lower-cost (but not covered, and therefor more expensive for the consumer) home care. More on that another time.

I'll get to those and other issues in my Elder Care Notebook. There are also some medical testing and other issues where the US practices are not terribly efficient, in my opinion.

Thanks for bringing up the subject,and bringing up some points I wouldn't have considered.


Nancy from said...

Thanks Gertrude. The insurance companies have specific State by State laws. In New York, Social Workers can be independent contractors and still bill Medicare or Medicaid without large billing depts as long as they learn the billing rules.

- Nancy

egb said...

There are two areas you have overlooked.
1. USA has 60% of Nobel prizes in Medicine for last 60 years.
2. Canada, UK,... have price controls on drugs. I pay $18,000/yr, UK pays $800/yr. Marginal cost of production makes that profitable. It also allows America to give away AID's drugs to Africa.

Please factor that in to your "analysis".

There is a third major factor (an maybe more), but it is too complicated and controversial to present here.

E.g. Go to Rush Memorial Hospital
in Chicago and say:
a. I will pay in cash
b. I have insurance
Guess what the price differenetial is.