A group representing the nation’s health insurance companies is calling an investigation by the U.S. House into the finances of 52 insurers a “politically motivated, taxpayer financed fishing expedition.”

Bart Stupak

The U.S. House Energy & Commerce Committee has requested information on executive compensation and other financial details from many of the nation’s largest health insurers. In what the committee says is its “ongoing investigation of the health insurance industry’s business practices,” its chairman, Rep. Henry A. Waxman (D-Calif.), and the chairman of the subcommittee on oversight and investigations, Rep. Bart Stupak (D-Mich.), authored a letter to top executives at the companies.

“This is a politically motivated, taxpayer financed fishing expedition designed to silence the health insurance industry and distract attention away from the fact that the American people are rejecting a government-run insurance plan,” Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, said in a statement to IFAwebnews.com.

Among the recipients of the letter are Aetna, CIGNA, Humana, United Health Group and WellPoint. Insurers from the mid-Atlantic receiving information requests included Owings Mills, Md.-based CareFirst, Pittsburgh, Pa.-based Highmark, Philadelphia, Pa.-based Independence Blue Cross, Bethesda, Md.-based Coventry Health Care, as well as Horizon Blue Cross Blue Shield of New Jersey and Health Now New York.
Published reports said the letters were sent to insurers with $2 billion or more in annual premiums.

In the letter, the congressmen requested two sets of information from the insurers. Due to the committee by Sept. 4 is information on executive compensation, specifically details on bonuses, salary, stock options and other benefits for those earning more than $500,000 annually, as well as board member compensation and a table listing all “conferences, retreats, or other events held outside company facilities” from Jan. 1, 2007 to the present paid for by the company.

By Sept. 14, the committee expects additional information from the 52 companies on compensation plans for each year from 2003 to 2008 and a table listing “premium revenue, claims payments, sales expenses, other general or administrative expenses and profits for all of the company’s health insurance products.” The committee also requested separate data for business segments including the self-insured employer market segment and government market segments, such as Medicare and Medicaid.

Executive compensation for large insurers has been an issue in several states over the last few years. In Maryland, state insurance regulators and William Jews, former CEO of CareFirst, have been battling over his severance package of $18 million, with Maryland Insurance Commissioner Ralph S. Tyler trimming it to about $9 million in a dispute that remains in court.

In Pennsylvania, Insurance Commissioner Joel Ario recently ruled, in an ongoing investigation as a result of the aborted merger between Independence Blue Cross and Highmark, the state’s two largest insurers, that the compensation of each company’s CEO is “reasonable” based on state law.

Kenneth Melani, CEO of Highmark, the state’s largest insurer and fourth largest nationally, earned $3.2 million in compensation in 2007. That ranked him fifth highest among Blue Cross and Blue Shield affiliates’ CEOs, according to the report.

At IBC, chief executive Joseph Frick, who earned $2.6 million in compensation in 2007, ranked ninth in salary among Blues’ affiliates, while IBC was the eighth largest Blues affiliate in the country.

Highmark and IBC executive compensation was “generally substantially less” than the compensation given to for-profit health insurers, according to Ario’s report. Ronald A. Williams, CEO of national insurer Aetna, earned $23 million and Philadelphia-based CIGNA’s chief executive, Ed Hanway, earned $25.8 million in 2007, according to the Pennsylvania Insurance Department report.