Attorney General Outraged Over Reported $102 Million Payday For United Healthcare CEO

States News Service, Hartford, CT
April 30, 2010


The following information was released by the office of the Connecticut Attorney General:

Attorney General Richard Blumenthal today expressed outrage over reports that United Healthcare paid its CEO $102 million in compensation last year and called on the state Department of Insurance to consider executive pay in future company rate cases.

United Healthcare recently acquired Health Net.

"I was shocked to learn that United Healthcare, the company that just acquired the membership renewal rights of Health Net customers in Connecticut, paid its CEO, Stephen Hemsley, $102 million in total compensation for 2009," Blumenthal said in a letter to the Insurance Commissioner. "The company also reported that its first quarter profit for 2010 rose 21 percent to $1.2 billion. This news is especially troubling in light of the Insurance Department's recent approval of a 19% rate increase for Health Net group plans sold through Connecticut employers for 2010 (which followed approval of a similar 13 percent rate increase for 2009).

"These double-digit rate increases imposed on Connecticut Health Net consumers are staggering -- and stupefying in light of the lavish sums paid to its new CEO. In this economic climate, consumers should not be subject to soaring health insurance rate increases while insurance companies and their executives continue to reap outrageously surging profits. I urge you to strongly consider United Healthcare's profits and its generous CEO pay package when reviewing any future rate increase requests filed by United Healthcare."

Blumenthal reiterated his concern that the commission approved 26 of 26 rate increase requests since 2006 and urged it to strengthen its standards by requiring rates be reviewed for "reasonableness" instead of the current "excessiveness." He noted that the recently passed federal healthcare reform law requires insurers to spend at least 85 percent of premiums on care, a figure that is now often below 80 percent.

Blumenthal said that the a recent report, "Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System" by the U.S. Department of Health and Human Services named Connecticut as a state where health insurers have been requesting unjustified premium increases.

"Whether they are insured through an individual plan or a group plan like those offered by Health Net -- now United Healthcare -- premium increases are becoming unaffordable for Connecticut consumers," Blumenthal said. "Our rate increase process fails to consider consumers' ability to pay and company profitability -- allowing insurance companies to blame every increase on rising medical costs. This system is broken and must be fixed."

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