We're often told the American healthcare system is "broken."
Conservatives blame government interference and Barack Obama's Affordable Care Act for handcuffing the flow of a truly free market. Liberals blame the market itself for driving up prices of procedures and medicines.
UnitedHealth CEO Stephen Hemsley can hardly hear the debate anymore. He's up to his ears in profits.
For major managed care organizations like UnitedHealth -- the Minnetonka-based juggernaut that makes more money than Target and Comcast combined -- these past few years have been swell. That is especially true for publicly traded companies, like UnitedHealth, which focus on improving stock price, and can leave the worrying about access to affordable healthcare to everyone else.
That stock price is what determines nearly all of Hemsley's annual compensation. Last year, he got a combined $3 million in salary and a bonus. (He deserved a bonus, the company had a good year; see below.)
But Hemsley also received compensation in the form of $6.5 million worth of UnitedHealth stock and $8.7 million in options, Modern Healthcare reports, bringing his 2016 earnings to almost $18 million. Sounds more like it.
But even that is just over half the $33.4 million Hemsley will get for 2016, once his company stock is fully vested and options are exercised. That's a 66 percent raise over the roughly $20 million Hemsley received in 2015. Hemsley's deal with UnitedHealth made him more last year than the highest-paid player in the National Football League.
A recent New York Times analysis explains how Hemsley and his company have whined their way to huge profits under Obamacare. First, UnitedHealth "segregated" about $1 billion in losses, allowing investors to judge the company's value based on its other "products." And those did fabulously: UnitedHealth reported $7.3 billion net income for 2016, on total revenue of $133 billion.
Second, UnitedHealth stopped offering insurance to anyone it didn't like, withdrawing from 31 out of 34 state-level insurance exchanges last year. (United skipped Minnesota's MNsure exchange altogether, never offering plans in the local insurance exchange.)
The company is not skipping the part of Obamacare that makes it more money: The expansion of Medicaid, which added a lot of new, taxpayer-backed "customers" to UnitedHealth's rolls, and helped boost its insurance-related income just north of $2 billion.
Those kinds of numbers do wonders for your reputation on Wall Street. As the Times notes:
"Since March 2010, when the Affordable Care Act was signed into law, the managed care companies within the Standard & Poor’s 500-stock index — UnitedHealth, Aetna, Anthem, Cigna, Humana and Centene — have risen far more than the overall stock index. This is no small matter: The stock market soared during that period."
In August 2012, about a month after the U.S. Supreme Court ruled Obamacare was constitutional, UnitedHealth stock was valued at $51 a share. These past five years, it's more than tripled. This morning, UnitedHealth is trading at $174. That's probably why its CEO is cool with taking $3 million in checks and $30 million worth of stock.
Don't try telling Stephen Hemsley something's broken. It's working out just fine for him.
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