Health insurers protecting their own paychecks?

The White House says an insurance lobbying group objected to provisions that might cut pay for insurance executives

Published October 16, 2009 8:17PM (EDT)

You can change the regulations, order them to stop dropping patients from the rolls, even mess with health insurance companies' profit margins. Just don't try to cut the pay of their top executives.

That, at least, seems to be the point of some recent objections reportedly raised by Karen Ignagni, the CEO of America's Health Insurance Plans, to the healthcare reform bill the Senate Finance Committee approved this week. Time's Michael Scherer reports on a phone call between Ignagni, Nancy-Ann DeParle, the White House's top healthcare official, and a senior Senate Finance staffer a few weeks ago. DeParle tells Scherer the health insurance lobbying group was particularly nonplussed by provisions in the legislation that would lower the amount of executive pay that insurance firms can deduct from their taxable corporate income. A Senate source gave Salon the same account of the call.

The insurers had been on board, shakily, with healthcare reform plans all year, but broke with the White House and Democrats in Congress earlier this week by issuing a widely mocked study saying the proposals would actually raise costs. (The accounting firm that wrote the study, PriceWaterhouseCoopers, later put out a statement distancing itself from its own work.)

Might an industry that makes money by refusing to pay for its customers' healthcare have been driven to the split by a more personal form of greed? The provision on pay was added to the legislation by Sen. Blanche Lincoln, D-Ark., during the Finance panel's debate in the last few weeks. It would lower, from $1 million to $500,000, the amount of executive salary that can be written off as a business expense. The effect would be either to raise taxes on insurance companies, by as much as $60 million a year over the next decade, or -- worse! -- force them to cut pay for their executives to avoid the tax hike. A Lincoln aide said "she didn't think it was right" to require millions of Americans to buy health insurance, providing the insurance companies with new revenue, and also continue to give tax breaks for high salaries at the firms.

Ignagni tells Scherer she never raised the issue of executive compensation, in any form, with DeParle. "I'm very sure about having no discussions about executive compensation," she says. "I'm not saying that they are lying. I'm saying that maybe they are mistaken in confusing me with some other person in our industry. But I very clear about what I raised and what I didn't." That doesn't mean, of course, that she's happy about the potential pay cut for her association's members.

White House and Senate staffers will work through the weekend trying to merge the Finance Committee's bill with a more liberal one passed earlier in the year by the Senate Health, Education, Labor and Pensions Committee. Now that the insurers have decided to oppose reform, though, don't expect the merged bill to go particularly easy on them -- or on their executives' paychecks.

By Mike Madden

Mike Madden is Salon's Washington correspondent. A complete listing of his articles is here. Follow him on Twitter here.

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