[July 10, 2019] SACRAMENTO, Calif. – Healthcare giant Kaiser Permanente would no longer be able to hide details of a $7.7 billion compensation scheme with its already highly paid executives and doctors under legislation passed by the Senate Judiciary Committee. The gimmick exists even as the corporation raises rates for patients and threatens to outsource hundreds of jobs in communities it serves.
Kaiser is composed of three separate entities:
Under the arrangement between the non-profit and for-profit arms of Kaiser, the Kaiser Foundation Health Plan furnishes a supplemental retirement plan to the for-profit Permanente Medical Groups’ executives and doctors that carries a $7.7 billion obligation. In effect, the non-profit part of Kaiser serves as financial backstop to the for-profit medical group.
“The Kaiser Foundation Health Plan receives billion-dollar tax breaks in return for being a ‘non-profit’ organization that is required under California law to put the community’s interests first, and yet it refuses to fully disclose what it’s doing with taxpayers’ money,” said Assemblymember Miguel Santiago (D-Los Angeles), the author of AB 1404. “The public deserves to know who exactly is benefitting from this secretive arrangement, how much they are receiving, and why the for-profit medical group doesn’t take financial responsibility for its own retirement plans.”
The supplemental retirement plan for the Permanente Medical Groups is unusual for several reasons:
AB 1404 would mandate that Kaiser and any other similar non-profit healthcare system report to the public more information about the use of the non-profit assets being allocated as benefits for executives and doctors at for-profit businesses. It would close a loophole that allows non-profits to keep such arrangements in the dark.
The $7.7 billion financial guarantee is among a series of recent disclosures raising questions about whether the non-profit parts of Kaiser have lost their way in recent years, acting less like non-profit organizations and more like for-profit corporations:
More than 55,000 Kaiser Permanente employees in California are members of SEIU-United Healthcare Workers West (SEIU-UHW). Their contract with Kaiser Permanente expires Sept. 30, 2019.