How we Bear the Burden of Paying Their Taxes and the Health Insurance Industry Still Denies Our Claims

When all this uproar over reforming our health care insurance began, I (among others) blogged about how the health insurance industry and its lobbying arm, AHIP, were doing and saying anything to obfuscate in the minds of the American people the real intention of health care reform: giving private insurance some competition. 

Most people who come to this blog don't know that the insurance industry is immune to federal anti-trust laws because of something called the McCarran Ferguson Act of 1945.  Most people can't conceive that the company they pay premiums to, for health care or for disability, would do anything to not have to pay a claim.  Like Coventry denying a 5-year old boy, Kyler Van Nocker, his cancer treatment.  Or CIGNA denying a 6-year old girl hearing implants or denying that Jo Joshua Godfrey had cancer let alone treating her for it.

And why deny life-saving treatments or deny a child the ability to hear?  Well, because of profits, that's why.  Profits have to be made and paying for treatments takes away from profits.  And how are we bearing the burden of their taxes?

With the industry's practices involving their executives' pay.  Let's look at an excerpt from a story from Reuters below taken from 2008, link embedded.  United's CEO is now Stephen Hemsley.  Interesting story here about a class action lawsuit (now settled) for back dating of stock options--former CEO McGuire was charged with fraud.

The biggest loss comes from a "stock option accounting double standard" that allows corporations paying executives stock options to deduct more than their actual expenses, they said.  For example, when UnitedHealth Group Inc paid CEO William McGuire 9 million stock options, it put on its financial statement that the compensation cost the company nothing, according to the Institute for Policy Studies and the group United for a Fair Economy.  But it claimed a tax deduction of $317.7 million, the groups said.

United claimed a $317.7 million tax deduction.  Wow.

Here is another study done by Global Subsidies Initiative.  Link to full report here.  Who Global Subsidies Initiative is, here.

US taxpayers provide 20 billion dollars in subsidies for executive salaries according to report

Taxpayers in the United States are subsidizing the salaries of country's top business executives to the tune of US$ 20 billion a year, according to a report by the Washington-based Institute for Policy Studies (IPS).

The report "Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay," presents the result of IPS' 15th Annual CEO Compensation Survey, which highlights five major tax and accounting loopholes it argued were directing taxpayer dollars to fund excessive executive pay.

The largest of these tax loopholes, the so-called stock option accounting double standard, cost taxpayers US$ 10 billion last year, according to IPS. The tax rule allows companies to account for stock option expenses on their financial sheets when they grant the options, but then claim the tax deduction when the CEO actually cashes out the options, often years later when their worth has usually increased. The result is tax deductions that are much higher than the original expenses.

Another major loophole is the unlimited tax deductibility of executive pay, which allows companies to deduct executive pay from their income taxes as a business expense so long as the pay is ‘reasonable'. The IRS has failed to define reasonable, and a 1993 attempt by then President Clinton to cap these deductions at US$ 1 million failed.

Senators Levin and McCain introduced a bill to amend the Internal Revenue code to stop all this,
S.1491 - Ending Excessive Corporate Deductions for Stock Options Act.

And what has happened to that bill?  Business as usual.  It sits.  And you and I, who do pay our taxes and our insurance premiums, what do we have to show for it?

We are chained to an industry that preys upon the sick and dying for profitability, an industry that denies a man with Progressive Multiple Sclerosis his disability benefits, an industry who regularly kicks sick people off their policies, who looks at acne and rape as a pre-existing conditions for which to deny life-saving treatments and an industry that doesn't pay its fair share of taxes.  They burden us, America.

We need a single payer system.  There is still time to be heard, I urge you all to please call your members of Congress and explain to them that the health insurance industry has served up too many abuses, rate hikes and denials to really be in the "Health Care" business.