In the annals of corporate tone-deafness, UnitedHealth Group's recent move might deserve a special chapter. The healthcare giant is asking shareholders to approve a staggering $60 million compensation package for CEO Andrew Witty—a request that lands with all the grace of a piano dropped from a skyscraper.
I've been covering healthcare economics for years, and even in an industry known for eye-watering executive compensation, this one stands out. Sixty. Million. Dollars.
The timing couldn't be more awkward. UnitedHealth is still cleaning up the mess from the Change Healthcare ransomware attack that sent ripples of disruption throughout the American healthcare system. Pharmacies couldn't process claims. Doctors couldn't get paid. Patients were left wondering if they could afford their medications.
And in the midst of this chaos, the board essentially said: "You know what would help? Paying our CEO enough money to buy a small island."
Look, there's always been this peculiar logic in corporate America that you need to pay astronomical sums to attract "top talent." It's the same argument trotted out whenever these packages come up for a vote. But at some point—and I'd argue $60 million is well past that point—we should question what exactly we're incentivizing here.
UnitedHealth defends the package as necessary for "righting the ship." (I'm not making this up.) There's something darkly comical about acknowledging your vessel is taking on water while simultaneously arguing the captain deserves a bonus that could fund a small hospital.
The healthcare industry presents a uniquely troubling context for these compensation packages. Unlike luxury brands or entertainment companies, health insurers deal in a product people literally cannot live without. When premiums rise and coverage shrinks, real people face devastating consequences.
I spoke with Melissa Thornton, a UnitedHealth customer from Ohio, who put it bluntly: "My deductible went up $1,000 this year, and they're paying their CEO how much?"
It's a fair question.
The justification for these packages typically revolves around "performance incentives" tied to metrics like stock price and quarterly profits. But here's the rub—those metrics can be improved by raising premiums or denying claims. The incentives don't necessarily align with making healthcare better or more affordable for actual humans.
(Side note: Imagine if CEO compensation was tied to patient satisfaction or healthcare outcomes. What a concept!)
There's a circular logic at work in healthcare executive compensation that would make even Escher scratch his head. Insurance companies raise premiums to increase profits, which boosts executive pay, which requires more profits, which necessitates higher premiums... and round and round we go on the merry-go-round of misaligned incentives.
The shareholder vote on Witty's package will be interesting to watch. Institutional investors have grown marginally more willing to push back on excessive compensation in recent years, though they still rubber-stamp the vast majority of packages put before them.
And yes, UnitedHealth's stock has performed well under Witty's leadership. The company posted a $5.5 billion profit in the first quarter of 2023 alone—up 12% from the previous year. But at what cost?
Healthcare now consumes nearly 20% of American GDP, with administrative costs (including executive compensation) accounting for a disproportionate chunk of that spending. Every dollar that flows toward a CEO's bank account is, theoretically, a dollar that could have reduced a premium or covered a claim.
Now, I'm not suggesting executives should work for peanuts. Managing a healthcare behemoth is complex, demanding work. But $60 million? That's not compensation—it's a wealth transfer program with a healthcare company attached.
Perhaps the most frustrating aspect is how these packages reinforce what I call "the accountability gap" in American business. When things go well, executives reap enormous rewards. When things go poorly... executives still receive enormous rewards, often in the form of golden parachutes or "retention bonuses."
As one industry analyst told me (requesting anonymity because, well, healthcare is a small world): "If your average doctor made mistakes at the rate some of these healthcare companies do, they'd lose their license. But executives just get another zero on their bonus check."
The UnitedHealth vote comes at a particularly sensitive moment for the American healthcare system. Between post-pandemic burnout, staffing shortages, and rising costs, the industry faces profound challenges.
In that context, a $60 million CEO package isn't just excessive—it's a symptom of a system whose priorities have become dangerously distorted.
Will shareholders push back? History suggests they'll likely approve the package. But maybe—just maybe—we're approaching a tipping point where even the most patient investors will say enough is enough.
After all, in a healthcare system where patients are choosing between medication and food while CEOs take home eight-figure packages, something has clearly gone terribly wrong with our understanding of value.
And that's a diagnosis that requires more than just another executive bonus to fix.
