Santa Monica, CA -- The announcement that Blue Shield CEO Bruce Bodaken will retire at the end of this year comes as insurance companies face the prospect of new rules to curb health insurance company excesses, said Consumer Watchdog. The group has sharply criticized Bodaken for keeping his CEO pay -- which reached $4.6 million in 2010 -- secret until he was forced to disclose it last year, and for Blue Shield’s double-digit premium increases even as its invested reserves grew to 10 times the required state minimum.
Blue Shield has $3.2 billion more in reserves than the state requires. In the last three months alone, Blue Shield’s reserves have increased by $300 million while it has raised consumers' rates.
On Friday, Consumer Watchdog Campaign filed 800,000 signatures to qualify a California ballot measure to require health insurance companies get permission before raising rates. The initiative allows the insurance commissioner to disallow excessive executive compensation, political expenditures, excessive reserves and lobbying costs in rate setting. Blue Shield is one of the five insurance companies funding the opposition to the initiative.
“It’s a good time for health insurance CEOs who don’t want sunlight on their operations and prices to retire,” said Jamie Court , president of Consumer Watchdog and proponent of the Insurance Rate Public Justification And Accountability Act. “Bodaken’s Blue Shield has exemplified the greed and excess that led to the filing of our ballot measure and the accountability that will come with it.”
Consumer Watchdog has been particularly critical of Blue Shield’s amassing of excess reserves, even as it proposed cumulative rate increases of up to 86% in less than a year during late 2010 and early 2011. The ferocious backlash forced Blue Shield to back down on one increase, and later promise to “voluntarily” limit the profits of the legally nonprofit company to 2% per year for an unspecified time.
However, the company refused to dip into its reserves to keep rates down further -- in fact, its reserves grew by $300 million dollars in the last quarter, according to company documents.
“More Californians are waking up to the fact that the state is in the minority in letting health insurance companies charge what they please,” said Carmen Balber, campaign manager for Consumer Watchdog Campaign To Make Health Insurance Companies Justify Their Rates. “Those days are coming to an end, and so are the days of arrogant CEOs who pick their numbers out of the air and tell the middle class to take it or leave it -- even though leaving it means going without any insurance.”
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