July 26, 2017 6:02 PM ET
In the seven years since
the Affordable Care Act was passed, CEOs of U.S. health care companies have
made a lot of money.
Their compensation far
outstrips the wage growth of nearly all Americans, according to reporter Bob Herman, who
published an analysis this
week of "the sky-high pay of health care CEOs" for the online news
site, Axios.
Based on corporate financial filings with the Securities and
Exchange Commission, Herman did research on 113 heads of 70 of the largest U.S.
health care companies in the last seven years. Cumulatively, he says, these
CEOs have earned $9.8 billion since the ACA was first enacted. Only four of the
113 CEOs were women, he notes, and only two are right now in charge of major
health care companies.
The top earner was John
Martin, the former CEO of the pharmaceutical company Gilead Sciences, who took home nearly $900 million, Herman
says. Gilead makes, among other things, medicines to treat HIV and AIDS, as
well as two leading drugs to treat hepatitis
C.
Several other executives topped $250 million.
Robert Siegel, host of
NPR's All Things Considered, spoke with Herman about his
analysis. Excerpts of the interview follow, edited for length and clarity.
Interview Highlights
Who are these CEOs and why are
they earning so much money — on average, $20 million per year, you say?
We looked at a wide array of different companies. They include
pharmaceutical companies, health insurers, hospitals, pharmacies — it really
spans the gamut. And we found that since the Affordable Care Act went into
effect in 2010, their pay has really gone up. So the ACA hasn't really hurt
their earnings, per se. And a lot of the money that they're earning is coming
in the form of vested stocks.
Of course, an underlying issue
behind all the talk about Obamacare is not just how we pay for health care and
who gets insurance (and in what form) to pay for health care, but how much we
pay for health care. What do these CEOs' earnings say about health care costs in
the United States?
For the longest time, health care inflation has really blown
away the rate at which the rest of the economy is growing. And a big reason why
is because health care executives are not paid to slow spending. Because so
much of their pay comes in the form of stock, their incentive is to do whatever
it takes to make that stock go up. So that means selling more drugs; raising
prices above inflation; performing more procedures; getting more people into
the hospital. And those are the exact opposite things that health policy
experts believe would benefit the broader system: lower prices; eliminating
unnecessary care and drugs; coordinating better care.
But from 2010 (when the
Affordable Care Act was signed) through 2015, the Dow Jones went up from under
11,000 to almost 18,000. Wouldn't executives in most sectors of the economy be
making huge gains on stocks and stock options during the period that is also
the lifetime of Obamacare?
The stock market really has been doing quite well since the Affordable
Care Act has gone into effect, but the reason why this matters even more for
health care is a sixth of our economy is devoted to health care. And that
continues to grow more every year. So if the most influential executives of
these companies are being paid to keep that trajectory up, that's money that's
being taken away from education or infrastructure or other parts of the economy
that may not be growing as quickly, and maybe that we'd want to grow more
quickly.
Can a health care executive
argue that the Affordable Care Act brought a lot of people into coverage who
haven't had it before? We've heard this anecdotally — that lots of people are
getting treatment for things that they were skipping when they couldn't afford
it. So, more people are going to the doctor; they're getting more
prescriptions.
There is some effect there, but that doesn't account for
everything. The underlying incentives still really push these companies to do
more — even if it's unnecessary. There's still this big issue of all these
services that people are getting, are they necessary? And I think that's one of
the questions that still need to be answered.
Are there any proposals on the
table now — either in Republican bills or in Democratic proposals — that would
actually reduce health care costs significantly and reverse this trend?
In the health care debate right now, none of the proposals in
Congress address this whatsoever. A lot of what's being proposed merely tinkers
with the financing of health care and who gets health insurance. Nothing is
being addressed about drug prices, for example. Nothing's being addressed about
the actual costs of the system. The debate right now is still bickering over
how to finance the system — not around how much the system itself costs, which
I think is a big issue.
NPR editors Renita Jablonski
and Gisele Grayson,
and producer Ian Stewart contributed to this story.
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