We need to further explore actions taken by United Health, and the connection between health insurers CEO compensation and their acquisitions.
Brian Thompson
Brian Thompson’s death on December 4, 2024, captured much attention, both for the murder and hateful backlash against United Health Care.
Before proceeding, I want to say that IMO, the end does not justify the means here. On my home page I argue it is important to focus on HOW things are done, not just on the end result.
It is important to note that Mr. Thompson was the CEO of United Health Care, but Andrew Witty is the CEO of the parent company, United Health Group. Also, Tim Noel has recently been appointed to replace Mr. Thompson.
United Health Care
Fortune 500 magazine has United Health Care in the top 10 of 500 companies, ranked by revenue, for 2023.
ProPublica reports they have been criticized in the past for denying coverage of mental health claims. According to the article, UHC had been using algorithms instead of reviewing all claims independently.
United Health is not the only one to do this. EviCore by Evernorth, owned by Cigna is the major player here, providing decision-making services to multiple health insurers based on algorithms.
CEO Compensation
Insurance Business magazine provides data on the CEO compensation by the top health insurers in the United States. It includes CEO compensation and the ratio between that and the salary of the average employee. Published in November 2023, it is based on statistics provided by the National Association of Insurance Commissioners. Here are the top 5 earners:
Joseph Zubretsky Molina HealthCare $22.1 million 278:1
Karen Lynch CVS Health $21.3 million 380:1
David Cordani CIGNA HealthCare $20.9 million 277:1
Gail Boudreaux Elevance Health Care $20.9 million 383:1
Andrew Witty United Health Group $20.8 million 331:1
United Health Group is reported to have made 25 acquisitions, spending over $36 Billion for them. That’s B as in Billion. Its largest has been Change HealthCare. Hovering over some of the other company names you will find links to their acquisitions as well. If United Health Care had not made these acquisitions, do you think they would be as big as they are today? Same with the others. If they had taken that $36 billion and invested it on R&D, better coverage or on increasing employee salaries, do you think that ratio would be as big as it is?
The Economic Policy Institute has recently released a report of CEO compensation since the 1970s. It spiked in the 1990s when Mergers and Acquisitions began to take off beginning (but not ending) under the Clinton administration.
What Can Be Done
I do not have the resources that institutions have to crunch the data and spit out results. A direct relationship between acquisitions and income inequality between CEO and average employee, in my opinion, may exist. This may “contribute” and not necessarily “cause” this inequality. There may be other factors that contribute, such as CEO pressure on corporate boards to increase compensation.
What can be done here? One would be for Congress to institute an annual “acquisition tax” on the top companies with the largest number of acquisitions. Or have the Federal Government break off companies that have been acquired. Another could be tax incentives to encourage “divestiture” or to block future acquisitions being made. Also, prohibit future acquisitions.
One thing that shouldn’t be done is for individuals to take it upon themselves to attempt to assassinate executives or to celebrate it. As a result of this act some people lost a family member and others lost a colleague. Nothing changed for policy holders…. did it?
What Do You Think?
What do you think? Is there a connection between acquisitions and the size of CEO compensation? Should algorithms be the main source for accepting or rejecting claims? Do you have a problem with this? Has not only the compensation gap but the physical barriers between the decision makers and customers grown too impersonal?
