Executives Should Roll Back Their Salaries

TheLundReport.org makes its first splash on the pages of The Sunday Oregonian
Originally in The Oregonian, Sunday Opinion section
April 19, 2009 -- It's time to call a halt to the excessive salaries and bonuses earned by Oregon health insurance executives. Who gives them the right to draw huge salaries while increasing our insurance premiums and causing more people to forgo health coverage?

As an example, while Regence BlueCross BlueShield of Oregon raised individual policy rates by 26 percent in 2008 and is asking for another double-digit increase this year, its president and CEO, Mark Ganz, is the highest-paid insurance executive in Oregon. After receiving an 11 percent raise, his 2008 salary and bonus totaled $872,665. In fact, Regence handed out raises to its entire executive team, according to documents filed with the Oregon Insurance Division.

So what did Regence do that resulted in its leaders being rewarded so well? If you take a look at the company's performance last year, it's hard to find the merit. Not only did the state's largest insurer lose 32 percent (334,228) of its members, bringing its enrollment down to its lowest level in five years (776,647), Regence's profit margin barely reached 1 percent. However, the company collected more in premiums than during the previous year.

Yet, Regence scored on one important front: to the dismay of consumers, its executives persuaded Cory Streisinger, Oregon's Department of Consumer and Business Services director, to approve a 26 percent rate increase on individual policies last year (insurers can raise group policies at-will, without state approval), which is being challenged by a disgruntled customer. Regence is back again this year, this time asking for a 19 percent hike.

Isn't there something wrong with this picture? Isn't it time for Regence's executives to rescind their pay increases and think about the people who'd have to pay these higher premiums?

That might be too much to ask. The situation leaves an important decision in the hands of Streisinger. Unless Regence executives turn back their raises, she should do what's in the best interest of all Oregonians and reject Regence's rate hike or, at the very least, reduce it substantially.

It's time for our Insurance Division officials to look out for consumers. Otherwise, it's certain that some of the 88,340 people who currently rely on Regence for their individual health coverage will find themselves among the newly uninsured when next year's numbers are reported.

Regence isn't the only insurer that gave raises to its executives last year. The regional president of Kaiser Permanente Northwest, Andrew McCulloch, received $691,830 in salary and bonus, while Robert Gootee, CEO of ODS Health Plan/ODS Dental, was next in line, taking home a total of $668,188. Jack Friedman, CEO of Providence, received $484,277 in salary and bonus, while Majd Fowzi El-Azma, CEO and president of LifeWise, was paid $360,848. Chris Ellertson, CEO of HealthNet, received $248,639.

Only PacificSource had the social conscience to realize enough is enough. Led by President Kenneth Provencher, its entire executive team lowered their salaries, with Provencher taking a 7 percent decrease and earning $372,184.

It's time for all Oregon insurance executives to do what's right and follow PacificSource's lead. If Regence, the market Goliath, were to follow that example, it would save $85,625 just by turning back its president's added compensation (salary and bonus) alone. Perhaps the savings would lead to lower premiums. Imagine the savings if this action were repeated by all the health insurance CEOs and their executive teams.

When are insurance executives going to realize they work for us? We pay insurance premiums to cover our medical expenses, our hospital stays, our pharmaceuticals, not to reward executives with excessive pay. What have they done to earn these enormous salaries?

Oregon is at a crossroads, with an ever-growing number of uninsured. According to a report issued in March by Families USA, nearly 1.1 million Oregonians -- 34.4 percent of residents under age 65 -- were uninsured at some point during 2007-08.

As our state and national leaders take a serious look at reforming our broken health care system, they should not overlook executive compensation. Otherwise more people will find themselves unable to afford health insurance. Oregon's insurance executives should take the first step by rolling back their salaries. They owe it to us.

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For an in-depth look at health insurer executive compensation and overall health insurance financial statements, see our related story here.

Further details of the Regence rate filing and rate review reform can be found here and here.

To view the most recent Regence rate increase request click here.

To comment on the rate increase, send an email to [email protected]

Or write to:

Oregon Department of Consumer and Business Services
Insurance Division
Attn: Sue Munson
P.O. Box 14480
Salem, OR 97309-0405

To search for any Oregon health insurance rate filing click here.

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Submitted by Mary Newcomer I have been self- employed for 28 years. I bought health insurance for most of the 28 years. My husband and I had coverage thru his job for a couple of years, then he was layed off. We tried to buy back into the system but can't afford it. The premiums run about 600.00 to 800.00 a piece with a deductible of anywhere from 2500 to 7500. Tell me we're not the forgotten tax payers who pay for the healthcare of state, county and federal workers only to not have the option to affordable health care? If everyone realized just how many people can't buy into the system and how many more will follow in the coming years, they would see that this is about as real as life and death gets. People that are fortunate to have coverage turn a blind eye on others because they do not want what they have taken away. We protest Wars because we don't want the blood of people on our hands. People are dying every day in the U.S., because they are limited on their options for care. All I want as a tax paying citizen is to have the same rights as anyone whom that I provide monies for their healthcare. Thanks for listening.