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House Democrats examine major health insurer's profits, and executive pays

20 08 09 - 12:48



House Democrats Examine Health Insurers’ Pay, Profit
By Lorraine Woellert and Brian Faler - Bloomberg.com

Aug. 19 (Bloomberg) -- House Democrats asked the nation’s biggest health insurers to provide details on executive pay, spending on entertainment, and other financial records, a move that an industry spokesman denounced as an intimidation tactic.

House Energy and Commerce Committee Chairman Henry Waxman and Representative Bart Stupak, chairman of the panel’s oversight committee, sent a letter to 52 insurance companies, including Hartford, Connecticut-based Aetna Inc., Louisville, Kentucky-based Humana Inc. and Philadelphia-based Cigna Corp.


In a separate letter, Representatives John Dingell and Sander Levin, both Michigan Democrats, today asked Blue Cross Blue Shield of Michigan to explain a series of rate increases the company announced last week.

Waxman, of California, and Stupak, of Michigan, along with Dingell and Levin, are among a team of House Democrats trying to beat back criticism of legislation to revamp the nation’s medical-care system. House Speaker Nancy Pelosi, a California Democrat, has complained about the insurance industry’s “immoral” profits.

A spokesman for the Washington-based industry group, America’s Health Insurance Plans, criticized the Waxman letter.

‘Fishing Expedition’

“This is a fishing expedition that is designed to silence the health-insurance industry,” said Robert Zirkelbach. “It’s an effort to change the debate to focus on health insurers rather than focus on the solutions to the health care concerns that the American people have raised.”

Zirkelbach declined to say whether the group believes the companies ought to comply with the lawmakers’ request.

“We are reviewing the letter from Chairman Waxman and will respond as appropriate,” Chris Curran, a spokesman for Cigna, said in an e-mailed statement. He said some of the information is already available in public documents. Humana spokesman Tom Noland said the company plans to cooperate “fully” with the committee. An Aetna spokesperson didn’t immediately respond to a request for comment.

The energy and commerce panel is investigating “executive compensation and other business practices in the health insurance industry,” Waxman and Stupak wrote in the Aug. 17 letter. The lawmakers asked the insurers to provide most of the pay information by Sept. 4, and the other data by Sept. 14.

Targeting High Earners

The letter asks the companies to name all employees who were paid more than $500,000 in a single year between 2003 and 2008 and to itemize their pay, including bonuses, stock options, perquisites and deferred compensation.

The letter asked the companies to explain how they determined what to pay executives and provide documentation used by their boards’ compensation committees. It also seeks information about corporate events held off company grounds since Jan. 1, 2007, including how much was spent on transportation, entertainment, gifts and food.

The lawmakers asked the companies how much they earn through programs such as Medicare Advantage, which allows private insurers to deliver federally funded benefits. They called on the companies to provide data on profits from the individual insurance market and insurance provided through employers.

‘Tough Decisions’

Dingell and Levin questioned Blue Cross Blue Shield of Michigan’s need for a rate increase. The lawmakers asked the Detroit-based company to explain why it didn’t use a $2.4 billion surplus to offset the rate rise.

“These rate increases have the potential to force more and more families to make tough decisions that no one should be forced to make -- whether they pay the mortgage or utility bill or pay health insurance premiums,” the Michigan lawmakers wrote. They also asked company president and chief executive officer Daniel Loepp to provide pay data for employees who earned more than $500,000 a year.

Blue Cross Blue Shield of Michigan Vice President Andrew Hetzel said the company accepts everyone for coverage regardless of medical condition and limits its profits. Last year, the company paid $133 million more for care for its individual members than it collected in premiums, Hetzel said.

“Even with the rate increase, Blue Cross will continue to lose money to its individual products,” he said in a written statement.

The Obama administration has proposed financing its overhaul of the nation’s health-care system in part by cutting federal subsidies to insurers participating in the Medicare Advantage program by $175 billion over the next 10 years.

Some plans under consideration in Congress would offer Americans the option of purchasing health insurance from a government-run program. Republicans say this proposal would harm private insurers and hurt consumers.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net, or Brian Faler in Washington at bfaler@bloomberg.net.


 

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