Blue Shield of California, the largest nonprofit health insurance company in the state, has finally released information about how much salary its highest paid executives make. The information was handed to California’s Insurance Commissioner, as required by new laws that are designed to keep the cost of health care under control.
New state laws in California require insurance companies who are intending to raise their rates to file certain kinds of documents with the Insurance Commissioner of California. This is so the Insurance Commissioner can use that data to determine if a proposed rate hike is reasonable, or unreasonable.
Although the Insurance Commissioner cannot legally prevent an insurance company from deciding to burden its customers with an unfair rate hike, the office can make its opinion about why the rate hike is unreasonable known to the general public. This, of course, will make it more obvious to consumers when an insurance company is mistreating its customers.
One would assume that insurers would want to avoid having that sort of stigma placed upon them. Theoretically, the new laws that reveal information about how much an insurer pays its top executives in salary makes it harder for insurance companies to hide how much of their profits are going towards salaries.
It is going to be really difficult for an insurance company to convince its customers that a rate hike was necessary, when at the same time, it is paying vast amounts of money to its top executives. Most people will conclude that the extra amount they have to pay on their premiums every month are going directly into the pockets of the company’s executives.
The salaries of the top ten executives in each company was given to the California Insurance Commissioner. Instead of naming the person who was earning a particular salary, the amounts were listed next to a person’s title. Blue Shield of California listed that its “chief executive officer” was paid $4.6 million in salary last year. The company only has one CEO, and his name is Bruce Bodaken.
Blue Shield is a nonprofit insurance company. Nonprofit organizations are ones that were are often created for educational or charitable reasons. The shareholders and trustees of a nonprofit company are not intended to gain a financial benefit from the company. The profits of the company are used to sustain itself by paying for expenses, operations, and programs. Many nonprofit organizations have tax exempt statuses. It is unclear how a nonprofit insurance company, like Blue Shield, has the money to pay its CEO $4.6 million in salary.
Compare that to the salary of Pam Kehaly, the President at Anthem Blue Cross, (a for profit company). This would be the equivalent position to the CEO of Blue Shield of California. President Kehaly makes $800,000 a year in salary, if the company meets performance targets. She also receives stock awards, which Bruce Bodaken, as the CEO of a nonprofit company, does not receive.
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