HMO Execs Rake in Cash

By
<a href="http://more.abcnews.go.com/sections/wnt/WorldNewsTonight/douglass_linda_bio.html">Linda Douglass</a>
January 7, 2006, 11:35 AM ET
3 min read

June 20, 2001 -- Many of the top executives in the managed care industry were paid huge compensation packages last year according to a consumer report obtained by ABCNEWS, and the 10 highest paid executives raked in an average of $11.7 million apiece.

Some managed care executives also got stock options last year: Ten executives hold an average of $68 million in stock options apiece.

At the same time, patients in many of those health plans are being denied coverage, and the frustration level for millions of people is rising.

The report was compiled by a consumer group, Families USA, a critic of HMO cost-cutting.

"It puts the issue of cost in perspective," says Ron Pollack, executive director of Families USA. "It shows that the companies are not that concerned about costs when it lines their own pockets."

'Crying Crocodile Tears'

One of the authors of the patients' bill of rights said it is time for HMOs to stop crying poor.

"All this time they have been crying crocodile tears when they are paying their executives millions," says Sen. Ted Kennedy, D-Mass. "Their attitude toward the patients is let them eat cake."

The HMO industry has been cutting costs. Some groups no longer cover Medicare patients. Roughly 1 million seniors were dropped from managed care plans last year. And premiums for HMOs went up 10 percent last year to cover rising medical costs.

But managed care stocks were hot last year. Industry spokesmen argue executives' stock options come from investors, not patients' premiums. They say the Democrats are just taking political pot shots.

"We expect to see a number of diversionary kinds of reports," says Susan Pisano of the American Association of Health Plans. "These reports don't change the fact that the Kennedy/McCain bill is a trial lawyer protection bill."

The Democrats will make a lot of political hay out of this report tomorrow because they know it's the kind of thing that makes voters angry, and voter anger is what they need to pass their version of the patients' bill of rights.