CA doctors say state health plans made $4.3B in profits

Anne Zieger — Thu, 26 Jun 2008 01:08:11 -0400

In a study sure to raise the stakes in its battle to regulate HMO spending, the California Medical Association has released a study concluding that California health plans generated $4.3 billion in profits last year, while in some cases paying their executives high salaries. It also noted that HMOs spent $6 billion on administrative costs last year--including some high executive salaries--which it contends should have gone toward lower premiums or better benefits. It singled out annual salaries topping $1 million for CEOs at Aetna, CIGNA, Health Net, UnitedHealth Group and WellPoint.

The report comes as part of the group's longer-term campaign to enact laws governing how health plans spend their money. The association is backing a bill which would require health plans to spend at least 85 percent of their annual income from premiums on medical care. The CMA study notes that if the bill were already in place, almost $1.1 billion dollars would have been spent on patient care.

To learn more about the study:
- read this San Francisco Chronicle article

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DC sues area Blue plan, demands it donate millions to community

Anne Zieger — Thu, 26 Jun 2008 00:37:24 -0400

The government of Washington, DC, has launched a two-pronged attack on the region's largest health plan, filing a suit alleging that the non-profit plan must donate millions to the community, while also launching an official investigation of the plan. Both the District and the state of Maryland have criticized CareFirst BlueCross BlueShield for many years, arguing that it wasn't making appropriate charitable use of its annual surpluses. Over the past year, the District has been at war with CareFirst, upset that the plan didn't donate the expected annual $5 million contribution to a universal healthcare program officials planned. When CareFirst posted a $754 million surplus for 2007, that was the last straw for District officials. Not only did interim Attorney General Peter Nickles file a suit against the Blue plan, but the D.C. Council Committee on Public Services and Consumer Affairs also voted to begin an investigation, giving chairman Mary Cheh the authority to issue subpoenas. In the suit, Nickels contends that CareFirst is required to put $100 million into the community, but that it's handing out large executive salaries instead.

To learn more about the suit and investigation:
- read this Washington Post article

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Executive Salaries

CA doctors say state health plans made $4.3B in profits

DC sues area Blue plan, demands it donate millions to community