Democrats Scrutinize Health Insurance Executive Pay

5150235Some leading Democrats are questioning the way the health insurance industry compensates its highest-paid employees, as well as some recently announced rate increases.

Two Democrats responsible for shaping health care legislation sent a letter (PDF) Monday to various insurance companies, the Wall Street Journal reports, asking for detailed information about executive pay, company events, retreats and other business practices.

Rep. Henry Waxman (D-Calif.), chair of the House Energy and Commerce Committee, and committee member Bart Stupak (D-Mich.) say in the letter that the committee is "examining executive compensation and business practices in the health insurance industry."

The letter asks each company to identify employees compensated more than $500,000 in any year from 2003 to 2008, as well as information on how those employees were compensated. It also asks for board member compensation, each companies' total revenues, net income, dividend payments, premium revenue, claims payments and other information. The congressmen requested a response from the companies by mid-September.

One health insurance representative, Cigna Corp. Spokesman Chris Curran, told the Wall Street Journal his company's executive compensation structure is almost entirely performance-based.

Meanwhile, two other Democratic House members from Michigan, Rep. John D. Dingell and Sander Levin, are asking Blue Cross Blue Shield of Michigan about its executive compensation, as well as about a series of rate hikes the company announced late last week.

They sent a letter to Blue Cross Blue Shield of Michigan President and CEO Daniel Loepp in response to news that the company plans to increase the rates for about 163,000 people under certain plans by an average of 22 percent. Blue Cross is also increasing certain supplemental Medicare policies held by about 210,000 Michigan seniors by an average of 4.7 percent.

"We've had hundreds of medical bankruptcies across our state and these increases threaten to put more families in danger," Dingell said in a statement. "We are facing a disaster."

The letter asks Blue Cross for the yearly compensation for employees compensated more than $500,000 in the past five years. It also asks the company what percentage of the rate increase will directly go towards actual medical costs, why the company did not use its $2.4 billion surplus to offset rate hikes, and whether any health benefits will be cut or adjusted as a result of the new plans. It asks for a response by Sept. 2.

While Waxman and Stupak made no mention in their letter of the ongoing efforts in Congress to overhaul the nation's health care system and implement insurance reforms, Dingell and Levin tied Blue Cross's rate increases to the proposals under consideration.

"These increases demonstrate the urgency of the health care reform proposal we are working on in Congress, which would bring down costs in part by simplifying billing paperwork, increasing competition, and prohibiting insurers from charging more based on pre-existing conditions," Levin said in a statement.

The letters represent the latest example of Democrats painting the insurance industry in a negative light in order to promote its health reform push.

"They are the villains in this," Pelosi said of the insurance industry in a July press conference. "They have been part of the problem in a major way."
President Obama has also assailed insurance companies for reaping "windfall profits from a broken system."

As doubts have grown about some of the more controversial parts of Mr. Obama's plans, such as the government-sponsored insurance option, the president has increasingly focused on emphasizing the need for new regulations on the insurance industry. Special Report: Health Care