Q&A: Humana CEO Michael B. McCallister

Over his 36 years with Humana, CEO Michael B. McCallister, 58, has seen the company transform from operating hospitals to become the fifth-largest U.S. health insurer. The company sells individual and employer-sponsored insurance. It also specializes in Medicare Advantage plans, which are subsidized versions of the government's Medicare program for the elderly and disabled.

McCallister recently talked about his near 11-year tenure as CEO and the industry.

Question: You never aspired to be a CEO. Humana had lost $382 million in 1999, the year before you took over. Why did you apply for the job?

Answer: I had worked on a number of hospital turnarounds across the country. The company was in a position where it was going to need a turnaround, so that was something that didn't deter me.

I had a lot of personal investment in Humana and its history and where it was, and I hated to see it flounder. That's really what drove me to hold my hand up and ask for the job.

Q: You've been a big backer of high-deductible, low-premium insurance plans, which expose patients more to health care expenses outside the typical $20 doctor's office copay. Why do you feel this is so important?

A: In the rest of the economy, you have incredible power in the hands of the consumers. Bad services and bad products essentially get crushed. The consumers can be quite powerful when they apply their knowledge and their buying power to anything.

I just think when we have a financial stake in decision making, we pay a little more attention to what our options are, we're going to demand higher quality, we're going to demand better service and the rest of the economy has taught us that.

Q: The health care overhaul turned into health insurance reform last year. Was that misguided or does your industry need some serious repair?

A: You'd have a hard time finding people in our industry who would tell you it didn't need some major structural changes.

I mean health care itself. All the participants have a role in fixing this, and at the end of the day, the bill basically focused on health insurance.

Essentially we're moving the chairs around on the deck of the Titanic. Health care costs are still out of control, and the disruption in the market with all this chair moving is going to be pretty noisy over the next handful of years. I think it's unfortunate.

It was maybe a well-intentioned effort with some good outcomes and a lot of unintended consequences yet to be seen.

This story was originally published March 7, 2011 at 12:00 AM with the headline "Q&A: Humana CEO Michael B. McCallister."