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| SEPTEMBER
16, 1998 1:08 PM FOR IMMEDIATE RELEASE CONTACT: Families USA Lorie Slass 202-628-3030 |
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| Despite Industry Losses for 1997 Average Compensation of Top HMO Execs Tops $2 Million ; Industry Hypocritically Wages Advertising Campaign About Lawyers Profiting From Consumers and Costs of Protections | ||||
| WASHINGTON
- September 16 - As the managed care industry posted losses for 1997, its top executives
continued to take home millions of dollars in compensation according to a new report
released today by Families USA, the national consumer health watchdog organization. Top
HMO executives in the nation’s largest for-profit managed care companies, on average,
made $2 million in 1997. As an update to an analysis of 1996 compensation for managed care executives, Families USA compiled 1997 compensation and stock options numbers for top managed care executives and found the highest paid executive, for the second year in a row, was Stephen Wiggins, former CEO of Oxford Health Plans, Inc., who took home over $30.7 million in 1997 and was sitting on almost $8.7 million in stock options. In 1996, Wiggins made $29.1 million and was sitting on stock options valued at $82.8 million. Despite industry losses in 1997, four out of five of the top paid HMO industry executives saw compensation, exclusive of unexercised stock options, increase significantly in 1997. In addition to Wiggins; Wilson Taylor, Chairman and CEO of CIGNA went from $11.6 million in 1996 to $12.5 million in 1997. William McGuire, CEO of United HealthCare saw his compensation increase by over $7 million, from $1.2 million in 1996 to $8.6 million in 1997. Compensation for James Stewart, Executive Vice President of CIGNA, went from $4.8 million in 1996 to $7.3 million in 1997. Of the top five, only Robert Smoler, Executive Vice President at Oxford Health Plans, saw a decrease in compensation, going from $10.1 million in 1996 to $6.9 million in 1997. (See the 25 highest paid HMO executives.) "The hypocrisy of the industry on the issue of health care costs is startling," said Ron Pollack, executive director of Families USA. "They lose money in 1997 but spend millions to compensate their top executives, spend millions on advertising and lobbying to kill patient protections, and then they go around scaring the American public saying they will need to raise premiums to cover the very minor costs of comprehensive patient protections." At the launch of a recent advertising campaign against managed care consumer protections, the Health Benefits Coalition, an organization made up of for-profit managed care companies said patient protections would "boost trial lawyer’s profits" and would force premiums to go up. Aetna/US Healthcare, CIGNA, United Healthcare and Humana are members of the Health Benefits Coalition. According to the Congressional Budget Office analysis of the Patients’ Bill of Rights Act, comprehensive consumer protections would raise premiums only four percent. For consumers that means less than $2 per month. "The industry’s duplicitous concerns about costs are an attempt to hide the fact that they don’t want to ensure that patients are protected and they do not want to be held accountable for the health care decisions they are making," added Pollack. The analysis also found that the executives were sitting on stock option packages averaging $4.5 million, up from $4.2 million per executive in 1996. The five executives with the largest unexercised stock options packages were, William McGuire, ($61.2 million); Alan Hoops, President and CEO, PacifiCare Health Systems ($32.8 million); Wilson Taylor, Chairman and CEO of CIGNA ($20.0 million); Jeffrey Folick, Executive Vice President of PacifiCare ($19.1 million); and Malik Hasan, Chairman of the Board and CEO of Foundation Health Systems ($17.8 million). The companies with the highest average compensation, exclusive of unexercised stock options, per top executive were: CIGNA at $7.2 million, up $2 million from the 1996 average of $5.1 million; Oxford Health Plans at $6.4 million, down over $5 million from the 1996 average of $11.7 million; United Health Care Corporation at $2.9 million, up almost $2 million from the 1996 average of $.9 million; Aetna at $1.7 million, down from $5.6 million in 1996; and Humana who up from $1.5 million in 1996 to $1.6 million in 1997. All averages are for the top executives as reported to the Securities and Exchange Commission. The companies with the highest average unexercised stock option packages per top executive were: United HealthCare ($17.0 million); PacifiCare Health Systems ($15.5 million); CIGNA ($10.6 million); Foundation Health Systems ($7.5 million); and Oxford Health Plans ($3.2 million). The analysis examined executive compensation using each company’s filings to the Securities and Exchange Commission in 1997. Companies included in the analysis are Aetna, CIGNA, Coventry, Foundation Health Systems, Inc., Humana, Maxicare Health Plans, Mid-Atlantic Medical Services, Oxford Health Plans, PacifiCare Health Systems, RightCHOICE Managed Care, Sierra Health Services, Trigon Healthcare, United HealthCare, United Wisconsin Services, and WellPoint Health Networks. ### |
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