Watchdog Group Calls For CEO Salary Disclosure

Consumer Watchdog Some Californians are seeing their health insurance rates raised a whopping 59 percent, and a prominent consumer group wants to know just how much the CEO at the top is benefiting from this. A Consumer Watchdog group called on Blue Shield to disclose its CEO's salary and justify how it can hold 12 times the surplus required by the state while raising Californians' rates so much.

"The burden imposed on hundreds of thousands of Blue Shield customers by the company's massive rate hikes is almost unfathomable," the nonprofit Consumer Watchdog wrote. "Blue Shield's refusal to temporarily delay the hikes and submit to a review by the new insurance commissioner also raises serious doubts about the company's ability to justify increases that will increase some premiums by 59 percent."

Unlike most other insurers that are either public companies or traditional nonprofit organizations, Blue Shield's corporate practices are largely hidden from public scrutiny because of its status as a nonprofit mutual benefit corporation. Consumer Watchdog called on Blue Shield to:

  • Reveal executive salaries
  • Justify its decision to grow its surplus to 12 times the amount required by the state of California in recent years
  • Provide the underlying data and analysis the company claims to have used to support the impending rate hike on nearly 200,000 individual policyholders.

In a letter sent to Blue Shield CEO, Bruce Bodaken today, Consumer Watchdog called on the insurer to make key data about the company and its rate hike publicly available. The letter also documented the increase of Blue Shield's surplus, which was about $433 million in excess of the state required "net equity" in 2002. The excess accounts increased nearly sevenfold to $2.93 billion by Sept. 30, 2010, according to the most recent information available. According to filings with the state, Blue Shield's medical expenses did not even double during the same time period.

"Blue Shield has plowed hundreds of millions of policyholder dollars into its equity and surplus accounts rather than returning the excess premium to its customers -- members of its 'mutual benefit association' -- in the form of lower rates or at the very least stable rates," Consumer Watchdog wrote.

"As a result of Blue Shield's rate hike plan, hundreds of thousands of Californians are asking the question, 'How am I going to afford to pay my health insurance premium?' What we ask is 'How did you justify a 59 percent rate increase?'" the letter said, concluding: "Your timely answers to the above questions will allow independent analysts, not paid by you, to accurately confirm or question your conclusions and the reasoning that led to the increase. It is the least you can do in the wake of setting prices that will leave too many more Californians without health insurance protection."

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