Healthcare

CEO pay and your health insurance premiums.

There is no meaningful connection! CEO pay does not drive up the cost of health insurance.

The media and advocates for a Medicare-for-all concept reinforce the notion that a cause for growing premiums is the salary of CEOs. That is not true.

The cost of medical insurance continues to rise and will get even worse with the Republican attacks on our health care system.

As a senior citizen with Aetna supplemental insurance, my co-pay has tripled from $10 in 2013 to $30 in 2016. Aetna’s CEO’s salary was $18 million in 2016—up more than 8 percent from 2015. His salary is typical. If we can find a doctor to head up the Center for Disease Control for $375,000, why are our health insurance executives making 10s of millions?

State Sen. Terrence Murphy and Assemblyman Kevin Byrne, what have you done to protect us from excessive executive salaries driving up the cost of health insurance?

CEO pay, in fact all compensation, is an insignificant part of health insurance premiums. And, in the case mentioned above, the company derives it’s income from sources beyond health insurance.

What are celebrities, sports stars, media executives, college coaches, ex presidents and many others making tens of millions? All of which directly impact what average people pay for various services.

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13 replies »

  1. I have never heard anyone claim that CEO salaries were the only problem with health costs in the US. It’s a problem, but one of many, many issues. Ridiculous waste and administration required by private insurance existence to make profits is by far a greater waste of our money. Remember, we are already paying enough to cover everyone’s care. It’s just unfortunately being spent in non-productive ways and too much of the cost burden is falling to patients.

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    • CEO pay which is mostly stock is insignificant. The administration is also not the major problem as most is for cost control which any system must do. Medicare does far less and as a result loses 10% of what it spends to fraud. M4A will have to greatly ramp up admin or costs will soar.

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      • That’s my point, CEO small part of the problem. In fact getting rid of insurance companies is biggest savings… roughly 30% is waste, because of the admin for multiple plans, companies, and their requirements. Having price negotiations on behalf of everyone will also create huge savings and stop the costs pushed to patients. Medicare as proposed in HR1384 is comprehensive unlike current Medicare. I highly recommend reading the info about it if you don’t want to read the full 120 pages. No more seniors going into Mexico for dental care… it’s covered. Long term care, including care in the home are also included. No more making themselves broke to qualify for Medicaid to be able to have skilled nursing care.

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      • I think your numbers are way off. I have read the proposals. They are unrealistic and unworkable and nobody talks about all the changes that must result. M4A cannot possibly operate efficiently without substantial increases in admin costs.

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      • Have you read all the economic studies? You will see my numbers are well sourced, from research organizations, not think tanks or lobbyists. Check out the PERI study, which is the most recent. Even Koch brothers found m4a would save $2 trillion over 10 years versus the current system… just by eliminating private insurance. These are jobs that don’t need to exist and the bill provides 5 years of assistance with severance and transition for anyone no longer needed in private insurance. Some will be needed for the new program, but far fewer.

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      • I have studied various systems in other countries. I managed health plans for fifty years. There is no way the Sanders or the new proposal will save anything. The assumptions used in projections are flawed. Also, to the extent ins workers are replaced by government, federal workers compensation costs are 44% to 90% higher than the public sector. Under the proposals any savings from admin will be way offset by unlimited access and no cost sharing should that come about. And if fees are cut as proposed, there will be provider shortages just as in the UK now (45,000 professional shortage). Finally, it’s proposed to be a national budget. What do you think it will take to stay in that budget?

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      • Your understanding of us healthcare is not what it could be. In fact dozens of studies show that any single payer plan saves money. Again, I’ll direct you to the koch-funded mercatus study and the PERI economic study as necessary reading to enable you to speak accurately based on current research. No proposals exist to cut fees. UK is government owned…us proposals are private providers and clinics. HR1384 has plans for getting providers into underserved areas. Your information and understanding is inaccurate according to the plethora of current data available.

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      • You are very sadly mistaken. The two major M4A proposals would be government run with no private insurance although providers would not be employed by govt. AND the assumption is that providers would be paid at Medicare rates for the entire population which is equal to a 20% cut. All those studies make grand assumptions and for the most part ignore human nature. They fail to adequately consider what will happen when all costs are in taxes and unlimited services appear to be free. Some individuals will save money, most will not.

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      • You are incorrect about cut rates. They would bring Medicare payments up to a fair level with providers actually at the table to help establish rates. As to your latter point about increased utilization, the PERI study did address increased utilization and actually applied the highest estimates of all other countries that went to full insurance. Taiwan might be the best analog, when you account for the millions not seeking care when they need it. They saw much less than the 12% increased utilization that Peri used. It came out Nov 30th if you want to see the estimate on Bernie’s plan. I assume you will be ready to comb through what must impending economic study of HR1384.

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      • No sense more discussion, but at least recognize this “Senator Bernie Sanders’ Medicare for All (M4A) bill’s specification that healthcare provider payments would be cut down to Medicare rates, well below providers’ reported costs of providing services.” There is nothing about any fair level or providers at the table. Where do you think net savings will come from? All administrative costs that will be able to offset “free” health care service, new dental, vision, hearing and especially long-term care coverage while also raising the fees existing Medicare pays. Think about the logic of all that. One final point, don’t compare foreign populations with Americans, we a unique when it comes to health care.

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      • What you attached was very interesting and I think proves my point. The assumptions are way off. To run a M4A system will require administrative costs way above the current Medicare level, if for no other reason than better fraud control than is currently exercised. Plus the system would be dealing with a new population as well. But here is what stands out.

        “With estimates as low as 8.4% of payroll, new taxes on employers would be significantly lower than what they currently pay for commercial insurance. Businesses will be able to invest in raising wages, new jobs, new technologies, or staying competitive in the global market.”

        Employers who currently provide benefits already pay about 8% of payroll according to the BLS and that is for benefits greatly lower than being proposed. As I recall Vermont came up with 11% of payroll several years ago.

        I estimate that to provide the benefits proposed in the latest dream bill will cost about 16% of payroll.

        More than money though, Americans seem to think nothing will change, it will be access unlimited. That cannot happen. As with all such systems there will be budgets, limitations, possibly shortages and indirect rationing in one form or the other. And for a hint of how future Congresses will deal with it all simply look to Medicare today which is underfunded.

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  2. I often wonder why CEOs make millions of dollars in general. I wonder what their board of directors are thinking. I believe only a hand full of CEOs are actually worth a few million a year. But then I also can’t believe athletes get millions of dollars to play games. But chances are that $18m is a bargain compare what the government would waste per year in creating a bureaucracy for managing M4A.

    As far as the stating that the head of CDC only makes $375k, so what. The US President only makes $400k. People who take that job are not taking it for the money. As far as I can tell the last non-millionaire president was Truman. I am sure that the head of the CDC could find a 7-figure job at some pharmaceutical company as the head of research if he was into the money.

    These arguments are very weak and do nothing but distract from the real cause of higher healthcare costs.

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