Nonprofit Blue Shield Pays CEO $4.6 Million, Fights Legislation to Limit Excessive Overhead
Assembly Committee Will Consider Health Insurance Rate Regulation Bill Friday
SANTA MONICA, Calif., May 26, 2011 /PRNewswire-USNewswire/ -- The CEO of the nonprofit health insurance company Blue Shield of California, Bruce Bodaken, earned $4.6 million in 2010, according to documents made public by the California Department of Insurance Wednesday. Blue Shield paid its top ten executives more than $14 million combined last year. In January of this year, after Blue Shield announced its third major increase in less than a year, the nonprofit Consumer Watchdog sent a letter to Bodaken demanding that he disclose his annual salary. After public protests at Blue Shield headquarters and sharp criticism from Insurance Commissioner Dave Jones the company to withdrew plans for the third rate hike, but had not disclosed executive salaries until yesterday.
Legislation being considered in the California Assembly, AB 52 (Feuer), would authorize regulators to deny health insurance company rate increases on the basis of excessive administrative and overhead costs, including executive salaries. Blue Shield and other insurance companies have been aggressively opposing the legislation.
"When a nonprofit insurance company's CEO makes more than four million dollars a year, but patients can't keep up with rate hikes, then something has to change," said Consumer Watchdog Executive Director Doug Heller. "Blue Shield's CEO has become the poster child for the insurance company greed that must be stopped."
In its letter to Bodaken in January - http://www.consumerwatchdog.org/resources/bs_letter012011.pdf - Consumer Watchdog wrote:
"The burden imposed on hundreds of thousands of Blue Shield customers by the company's massive rate hikes is almost unfathomable...Blue Shield has been able to drastically increase rates on policyholders without disclosing compensation to its executives. The public, and the policyholder members of your "not-for-profit mutual benefit corporation," have a right to know how much you and your top management team earn."
Consumer Watchdog estimates that it takes the annual premium of more than 1,000 Blue Shield policyholders to cover Bodaken's salary and more than 3,500 policyholders to cover the pay packages for the top ten Blue Shield executives. Under Proposition 103, which regulates the rates and premiums of auto and homeowners insurance the way proposed in AB 52, the insurance commissioner can limit how much policyholder premium can be used to pay executives.
"It costs Californians so many hard earned dollars to pay for health insurance, we should be making sure that our premiums aren't being wasted on corporate excess, waste and fraud," said Heller. "Since we can't afford to go without health insurance, it is imperative that we regulate insurance companies to stop the gouging.
AB 52 will be voted on by the Assembly Appropriations Committee on Friday and, if passed, will go to a vote of the entire Assembly by June 3.
Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org
SOURCE Consumer Watchdog