Executive pay and health-care costs

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One of the reasons health-care costs are so high is executive pay.

Of the nation’s top 100 highest-paid CEO’s, 19 are from the health-care field, starting out with Fred Hassan at Merck, who earned $49,653,063 in 2009, according to the top 100 database the AFL-CIO has collected via salary.com and posted  on its Web site. He’s followed by Marc N. Casper of Thermo Fisher Scientific, a maker of lab equipment and software, at $34,283,774, and J. Raymond Elliott of Boston Scientific Corp, a maker of medical devices, products and therapies, at $33,472.734.

Thomas M. Ryan of CVS Caremark made $30,429,113 in 2009, according to the database, and Miles White of Abbott Labs earned $26,213,996.

Insurers paid a lot to their CEO’s: Robert L. Moody Sr., American National Insurance, $22,325,432; H. Edward Hanway, Cigna, $18,818,467; Ronald A. Williams, Aetna, $18,058,162; Allen F. Wise, Coventry Health Care, $17,427,789.

The database sorted by industry has other subtleties, too: Pharmaceutical preparations CEOs averaged $5,066,097, while heads of “health services” companies (a catchall with some labs, some senior care and rehab groups and some radiology and other specialty providers) took home an average of $ 4,533,956. Insurance carriers’ chief executives earned an average of $ 5,203,120. Heads of companies in the “biological products, except diagnostic substances” category had average pay of $2,691,816.

When we ask “why does it cost so much?” it’s clear this is one reason.

A compelling Malcolm Gladwell piece in The New Yorker (Oct. 8, 2010) discusses high-earning sports stars in the framework of Marvin Miller’s achievements as the head of the Major League baseball Players Association, where he taught players to ask for a lot of money. He writes a bit about executive pay, also, introducing us to an executive named “Mr. C,” head of one of the nation’s “top industrial concerns,” profiled in The Wall Street Journal in the 1940’s. He said his after-tax income was $36,611, and told The Journal that his favorite relaxation is swimming, but he felt that building a swimming pool at his home was too extravagant. Another exec, a “Mr. O’Rourke,” was married to a woman profiled in 1959 in Ladies’ Home Journal. At their suburban Chicago home, she told the reporter, “We’ve bought our furniture piece by piece over the years and I’ve never thrown anything away.”  Mr. O’Rourke said, “I’m president of one of the larger companies in the U.S., yet chances are I will never become a millionaire.”