Private Health Plans that Service Medicare Provide Lavish Compensation to Executives

New Report Documents Top Executives' Salaries, Bonuses, and Stock Options in Managed Care Plans Serving Medicare Beneficiaries

[Full Report]

Washington, DC-As debate on Capitol Hill centers on whether private health insurance plans or traditional Medicare should serve as the vehicle for providing prescription drugs to seniors and people with disabilities in Medicare, Families USA released a report today documenting the lavish salaries and compensation offered to the top executives in the leading health care plans currently serving Medicare enrollees.

The report compared the annual compensation packages for the highest-paid executives in 11 publicly traded, private health insurance companies. It found that the average compensation for the highest-paid executives in each of the 11 companies in 2002 was $15 million. The five highest paid-executives (exclusive of unexercised stock options) in each of the 11 companies were the following:

 Oxford Health Plans Norman C. Payson (Former Chairman & CEO)  $76.0 million
 WellPoint Leonard D. Schaeffer (Chairman & CEO) $21.8 million
 Coventry Allen F. Wise (President & CEO) $21.7 million
 UnitedHealth  R. Channing Wheeler (CEO, Uniprise) $  9.6 million
 Aetna  John W. Rowe, MD (Chairman & CEO) $  8.9 million

"As privatizing Medicare continues to be a threat on Capitol Hill, this report is proof once again how costly these private health insurance plans are because of their profligate spending and extravagant compensation packages paid to executives," said Ron Pollack, executive director of Families USA.

In addition, Families USA compared the largest value of unexercised stock options for the executives in each of the 11 companies. On average, the executive with the largest value of unexercised stock option in each of the 11 companies in 2002 was $67.7 million. The largest value of unexercised stock options by company were as follows:

 United Health William W. McGuire, MD (Chairman & CEO) $530.0 million
 WellPoint Leonard D. Schaeffer (Chairman & CEO) $  93.1 million
 Oxford Health Plans Norman C. Payson, MD (Former Chairman & CEO) $  25.6 million
 Aetna John W. Rowe, MD (Chairman & CEO) $  24.1 million
 Health Net Jay M. Gellert (President & CEO) $  23.5 million

"This illustrates how private health insurance plans are much more motivated by the bottom line than by serving seniors," Pollack continued. "Yet they continue to fail seniors, as evidenced by their unreliable track record of pulling out of communities, doing a poor job of serving people in rural areas, and causing patients to lose their choice of doctors."

The report examined the compensation for the highest-paid executives of the 11 for-profit, publicly traded companies that currently serve Medicare beneficiaries through Medicare+Choice. The plans included in this study are the following: Aetna, Inc.; Anthem, Inc.; CIGNA Corporation; Coventry Health Care, Inc.; Health Net, Inc.; Humana, Inc.; Oxford Health Plans, Inc.; Pacificare Health Systems, Inc.; Sierra Health Services, Inc.; UnitedHealth Group Incorporated; and WellPoint Health Networks. They all rank among the 25 largest managed care plans in the U.S. All data for this analysis were compiled from the companies' annual reports to the Securities and Exchange Commission.

For a copy of the report please visit our Web site at www.familiesusa.org.

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

1201 New York Avenue NW, Suite 1100 · Washington, DC 20005
202-628-3030 · Email: info@familiesusa.org · www.familiesusa.org