Insurance Execs Don’t Feel The Pain Firms Raise Their Salaries While Raising Premiums

As health insurance companies raise premiums in Washington state, the salaries of their top executives climb, too.

Blue Cross increased rates for individual policyholders by 19 percent in December to cover losses the company says it endured last year.

But chief executive officer Betty Woods didn’t see the pinch in her paycheck. Her salary jumped 40 percent last year to $360,000. She also pocketed a $370,000 bonus, bringing her total earnings to $742,000.

State Insurance Commissioner Deborah Senn said she is surprised and appalled by the executive salaries disclosed in annual reports filed with the state this week.

“If the president of the United States runs the country for $250,000 a year, I don’t think the head of a non-profit company needs to make $742,000,” Senn said.

She also said increases in executive pay are galvanizing her efforts to block what she considers unwarranted rate increases for individual policyholders throughout the state.

“I find this disturbing because this is a time when working people are trying to hang onto their health insurance,” she said.

Spokesmen for Blue Cross and other insurance companies paying six-digit salaries say the earnings are within industry averages and necessary to hire the best talent.

“That’s what it takes to keep and attract the quality of the CEO we need,” said Jack McRae, spokesman for Blue Cross of Washington and Alaska.

Last year, Senn began demanding that companies report their top 10 salaries in the annual reports filed with her office.

Medical Service Corp., which along with Blue Cross, provides most of the health insurance policies in Eastern Washington, raised its rates on individual policy holders by 22 percent last year.

The company said it needed the increase to offset losses. Last year, MSC also delivered a big check to its departing CEO.

Fred Jacot got his $229,000 salary last year, but also got a $1.3 million pension package at retirement.

“He chose to take (his pension) in one lump sum,” explained Cher Desautel, MSC spokeswoman. She said Jacot’s buyout was extraordinary because of his many accomplishments.

Desautel said the company’s top salaries should be kept in perspective. Executive salaries and pensions last year totaled less than 1 percent of all the premiums the company collected, she said.

Senn was particularly outraged by the executive salaries at Pierce Medical Bureau, considering the company recently asked for a 34 percent raise in premiums for its individual policies.

The West Side insurance company gave CEO Donald Sacco $378,600 last year in salary and bonuses - 30 percent more than he got the year before.

“We are losing money hand over fist,” said Julie Pisto, company spokeswoman. Pisto said even if all Pierce’s administrative costs were eliminated, the company would still lose money on its individual policies. “Salary is a drop in the bucket.”

Group Health Northwest imposed a 13 percent rate increase on its individual policy holders last year at the same time that CEO Henry Berman’s salary crept close to $300,000.

From 1993 to 1995, Berman’s salary jumped by about 12 percent to $294,865.

But Berman and other top Group Health officials will see their paychecks fall this year, said Sharon Fairchild, an executive with the company.

Fairchild also said the company cut premiums about 4.5 percent for many of its policy holders last year.

She said the company gets what it pays for in a top executive. “It’s getting the expertise we need to run a very complex organization.”

, DataTimes ILLUSTRATION: Graphic: Health insurance CEO’s premium pay