Managed Care Companies Contend "Costs and Losses" Are Forcing Them
To Abandon America’s Seniors

At the Same Time, Their Top Executives Take Home Millions



Managed care companies that are pulling out of Medicare because they can’t make enough money, and continue to provide multi-million dollar compensation packages to their top executives, according to a national consumer health watchdog organization.

Sixty-one of the 90 HMOs that are pulling out of the Medicare market this year are owned by nine for-profit, publicly traded companies. These companies are required by law to report compensation for their top executives to the Securities and Exchange Commission. They found that the top executives in these companies received an average of $2.4 million per year in compensation, exclusive of unexercised stock options, in 1997. In addition,


bulletTop executives at United HealthCare, which is pulling out of the Medicare market in parts of 13 states, received, on average, over $2.8 million in compensation in 1997.


bulletTop executives at Aetna, which is pulling out of the Medicare market in parts of 11 states and the District of Columbia, received, on average, $1.7 million in compensation in 1997.


bulletTop executives at Oxford Health Plans, which is pulling out of the Medicare market in parts of Connecticut, New Jersey, New York, and Pennsylvania, received over $6.4 million in compensation in 1997. Oxford’s former CEO, Stephen Wiggins, took home over $30 million in compensation exclusive of unexercised stock options in 1997, making him the highest paid for-profit HMO executive that year.


These companies’ priorities are definitely out of whack. At the same time they abandon our elderly because there isn’t enough profit in Medicare, they pay their top executives millions of dollars in compensation. Clearly, lining the pockets of their top executives is more important than living up to their promise to provide care for this country’s senior citizens and disabled.


The average compensation in 1997, exclusive of unexercised stock options, for for-profit, publicly traded companies who own HMOs pulling out of the Medicare market is as follows:



Medicare HMO Withdrawals
Average Compensation for Top Executives (1997)
Aetna California, Connecticut, Delaware, District of Columbia, Florida, Maryland, Massachusetts, New Hampshire, Rhode Island, Texas, Virginia


CIGNA California, Florida


Coventry Ohio, Pennsylvania, West Virginia


Foundation Health Systems California, Colorado, Connecticut, New Jersey, New Mexico, Oregon, Washington


Humana Florida, Texas


Mid-Atlantic Medical Services Delaware, District of Columbia, Maryland, Virginia


Oxford Connecticut, New Jersey, New York, Pennsylvania


PacifiCare Arizona, California, Nevada, Utah, Washington


United HealthCare Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Louisiana, Maryland, New Jersey, New York, Ohio, Texas



A spokesperson for United HealthCare has been quoted as saying that United HealthCare "cannot continue to serve markets which cannot be economically viable for us in the foreseeable future." This poses new problems for seniors who will face a bevy of Medicare choices in the coming months.

The pullout of these HMOs leaves many Medicare beneficiaries in a precarious position.  If they choose another HMO, they have no guarantees that the company won’t pull out of the market next year."

Beneficiaries who are dropped from HMO coverage can join another HMO or return to traditional Medicare. If they return to traditional Medicare, they will need a Medigap policy to cover co-pays, deductibles and other health care costs. Unfortunately, some seniors may have difficulty finding a Medigap policy that will take them, that they can afford. On the other hand, if beneficiaries choose to enter another Medicare HMO, there are no guarantees that their new HMO will serve Medicare patients the following year or that benefits offered will remain the same from year to year.

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