While ordinary Californians are tightening their belts amid a bad economy and burdensome health insurance costs, executives for the state’s health insurance companies are drenched in money. Under a new state law, the companies publicly disclosed the salaries of top executives and other information so the California Department of Insurance can determine whether proposed rate increases are fair. The documents are available on the state Department of Insurance’s web site.
The lowest paid executives made in the high six figures, while the highest paid raked in several million dollars in salaries and stock options. It’s also astonishing that Blue Shield, the state’s not-for-profit insurer, paid out more than $4.6 million to CEO Bruce Bokaden – a salary comparable to executives at for-profit companies. At the same time, Blue Shield customers have seen their rates go up 38%. Another non-profit, Kaiser, paid its CEO, George Halverson, $6.7 million in salary and perks. The distinction between not-for-profit and for-profit health insurance companies seems to be a fuzzy one.
The excuse these companies give for paying outrageous executive salaries is always that they’ll never be to find talented people willing to work for much less. (“We offer a competitive compensation package to attract and retain top-quality executives necessary to maintain a high level of performance and service,” was Blue Shield’s canned response.) Of course it’s all nonsense. There’s absolutely no justification for these salaries. It’s pure greed. The “level of performance” and the “service” provided to ratepayers is getting progressively worse as insurance companies seek ever higher profits.
Although the extent of health insurance company excess is getting more exposure, all regulators can do is pressure the companies to drop proposed rate increases. Insurance Commissioner Dave Jones still doesn’t have the authority to reject hikes, as he has with auto insurance. What sets apart other western countries with universal healthcare systems based on an insurance model (e.g. France, Germany, the Netherlands, Switzerland) is that the insurance companies are heavily regulated and are non-profits in the true sense of the word. In the United States, regulation – especially of health insurance companies – is a dirty word. The federal Affordable Care Act doesn’t come close to the kind of regulation seen in other western countries.
If you haven’t seen Brave New Films’ excellent video series, Sick for Profit, that covers health executive compensation, click here.