To hear Gregory Ferch tell it, the meeting was a moment of clarity. He discovered what he didn’t know. What he couldn’t know. Because the law would not let him.
Ferch, a Boise chiropractor, had received notice from Regence BlueShield of Idaho that the health insurance company was cutting back its payments for “adjustments” — his most common procedure — to 1990s levels.
Ferch and a handful of fellow chiropractors met with the medical director for Regence. Ferch asked whether the medical director’s salary was the same as it had been in the 1990s. The room went silent, Ferch says, and he decided to track down exactly how much Regence paid its leadership.
I’m a capitalist, and I think people should be paid, and be paid well, if they’re doing a good job. So I don’t begrudge the executives for being paid right, but what I don’t like is them being paid bonuses on the backs of other people.
Gregory Ferch, Boise chiropractor
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But Ferch learned that health insurers in Idaho do not have to follow the same rules as nonprofit health organizations such as the St. Luke’s and Saint Alphonsus systems, or for-profit publicly held health insurers such as Aetna.
When Regence and Blue Cross of Idaho say they are nonprofit, they do not mean they are the kind of federally tax-exempt charities most people think of as nonprofits. They are mutual insurance companies beholden to policyholders instead of profit-seeking shareholders.
Unlike nonprofit hospitals, Idaho’s nonprofit insurers pay taxes on property, and they are not exempt from federal taxes. They also do not have to take all customers regardless of ability to pay.
But, like charitable nonprofits, they get a large share of their money directly or indirectly from government support. And they get what can amount to a large tax break: paying premium taxes of 1.5 percent instead of any other state or local tax except for property. (The premium tax is not a guaranteed break: If the insurer loses money, it still must pay premium taxes.)
In Idaho, mutual insurance companies also differ from federal tax-exempt nonprofits in that they do not tell the public what they pay their leaders. Idaho law forbids regulators from divulging that information.
The companies file reports to the Idaho Department of Insurance each year showing what they pay their top executives and board members. The department has denied the Idaho Statesman’s request for the documents, saying they are specifically exempted from public records laws — and have been for decades.
But most of Idaho’s neighboring states do release those forms. So any member of the public can find out what CEOs make at four of the five insurance companies that sell policies on the Your Health Idaho exchange. Blue Cross of Idaho — the only Idaho-based insurer on the exchange, the largest insurer in the state, and the company Idaho pays to manage its government-employee health benefits — is the lone exception.
Health insurer executive and board of directors pay is a public record in Montana, Oregon, Utah and Washington. It is not a public record in Nevada or Wyoming, according to the states’ insurance regulators.
Those four Idaho exchange insurers paid as much as $760,000 in salaries and bonuses to CEOs in 2014. Most did not pay board members. Disclosures have not yet been filed for 2015.
In neighboring states, insurance companies paid CEOs up to $2.1 million and board members up to $122,000 in 2014.
If the insurance form was public in Idaho, it would reveal how much Blue Cross of Idaho and Regence BlueShield of Idaho paid their top executives and board members in recent years. Current board members include hospital CEOs, physicians and executives in charge of some of Idaho’s largest employers.
Blue Cross and Regence BlueShield declined to voluntarily give the Idaho Statesman copies of their forms.
“As a private, not-for-profit, taxpaying company, we do not share salaries or our compensation ranges for any employees or advisers,” said Josh Jordan, a spokesman for Blue Cross of Idaho.
Regence and its sister company that sells on Idaho’s exchange, BridgeSpan, pays its employees and executives compensation that “is rigorously reviewed and market appropriate,” said spokesman Lou Riepl. “Any incentive compensation is based on performance to ensure we’re achieving our mission of providing high-quality, cost-effective care for our members.”
But he said the company would not release compensation records.
“For market competitiveness reasons and out of respect for the privacy rights of our employees — as well as our executives and board members — we keep compensation information confidential,” he said.
TRANSPARENCY THE GOAL
Some lawmakers over the years have made attempts to pry open that information in Idaho.
Advocates say the companies should be accountable for how they spend policyholders’ money. They also point to other taxpayer-supported sectors where paychecks are a public record, such as government. Idaho’s largest nonprofit hospitals and its publicly traded companies each year file public reports showing what they pay top executives and employees.
Shortly after Ferch learned of the public records exemption, he reached out to state Rep. Thomas Dayley, a Republican. Ferch had an ax to grind, but his complaint still resonated with Dayley.
“It’s not necessarily that it’s right or wrong what they’re doing; it’s just that it’s useful to have that information available to the public,” Dayley told the Statesman. “If they want it, they can go and look at it. ... It fits the scenario of transparency that most people like.”
Dayley, then in his first two-year term representing Southwest Boise and part of Meridian, introduced legislation in 2014 to make compensation records available to everyone. It survived a committee vote but died after that.
This legislation would delete the confidentiality language ... and thus make available to the public the information regarding compensation of officers, directors, trustees and employees of any health carrier offering policies ... on the Idaho Health Insurance Exchange or any nonprofit health carrier.
Legislation introduced in 2014 by state Rep. Thomas Dayley, R-Boise
“It didn’t get an overwhelmingly positive response,” Dayley said, noting that he did not market the bill aggressively to colleagues in the Legislature. “As a matter of fact, it was printed with only one vote — it was a one-vote margin.”
He was not the first to pitch the idea. Former Sen. Charles Coiner, a Twin Falls Republican, introduced a similar bill in 2009. Coiner told the Statesman that he, too, had not pushed the bill as hard as he should have.
The lack of disclosure “doesn’t seem fair to me,” Coiner said.
He also questioned whether nonprofit insurers merited that status.
“My contention was: If it looks like a duck and it quacks like a duck, then it’s a duck,” he said. “If it looks like a for-profit and it acts like a for-profit, then it is a for-profit. Then the question becomes: For whose profit? We should know.”
Why did Blue Cross need to raise rates every year when their carry-overs and reserves grow every year?
Former state Sen. Charles Coiner, R-Twin Falls
Dayley has not decided whether to reintroduce a bill in this session, but he has heard from people who support the idea.
One supporter is Steve Ackerman, a professor of economics at the College of Western Idaho.
“The goal is not to reveal the salary. The goal is to demonstrate whether the salary brings the value it should,” Ackerman said. “(We need) some kind of disclosure.”
DISCLOSURE CAN PROMPT ACTION
Idaho’s insurance regulators cannot limit executive compensation. The federal Affordable Care Act introduced a cap on administrative overhead but not on salaries and bonuses.
In states where compensation is a public record, critics have accused insurers of overpaying their CEOs.
The parent company of Blue Cross and Blue Shield of Montana was sued in 2014 over allegations of hoarding profits and overpaying its executives.
The Boston Globe reported that former Liberty Mutual CEO Ted Kelly had been paid $200 million over four years, based on the same types of disclosures that are sealed from the public in Idaho.
After the Globe’s investigation, Kelly stepped down as chairman in 2013, and the Massachusetts insurance department launched a wide-ranging review of how insurers paid their executives, among other changes.
PUBLIC RECORDS EXCEPTION
In the mid-1990s, the health insurance industry was going through changes, and Idaho revamped its statutes. Then-state Sen. Dean Cameron, a Rupert Republican who owned an insurance agency, was involved in that process. He helped cement the exemption in Idaho’s law books.
Blue Cross of Idaho backed legislation then to convert its legal status to what it is now — a “mutual insurance company.” The Legislature in 1995 approved that change.
Cameron was the floor sponsor for legislation in 1996 that, he recalls, simply made a technical correction by carrying over a law that already made secret any documents about what insurance companies paid top leaders.
While the House Business Committee was considering that legislation and others related to the legal conversion, a representative of Regence BlueShield of Idaho “thanked the Idaho Legislature for helping to create and foster a positive business environment in the state and for promoting a collaborative relationship between government and industry,” according to minutes from the January 1996 committee meeting.
Now that he is director of the state’s Insurance Department, Cameron told the Statesman that he cannot offer opinions about whether compensation should be a public record.
Coiner, the former senator, is happy to offer his.
“If you’re holding yourself out as a nonprofit, there should be daylight and clarity on how you’re operating,” Coiner said. “It bothered me that Blue Cross — I have no idea what they were paying their board, I have no idea what they were paying their executives. ... We shouldn’t have these little enclaves of special privileges for certain nonprofits. It should be a level playing field for all nonprofits.”
Other top executives
Board of directors
BridgeSpan Health Co.
Allegiance Life & Health
$7,573 - $13,754
Arches Mutual Insurance Co.
$152,707 - $334,627
$250 - $77,003
Montana Health Cooperative
$62,885 - $204,446
New West Health Services
$54,272 - $295,006
$2,550 - $36,000
Regence BlueCross BlueShield of Oregon
$231,354 - $950,833
$9,230 - $12,970
Regence BlueCross BlueShield of Utah
$198,688 - $528,067
$5,520 - $13,370
231,447 - $388,798
$5,500 - $29,800
$102,680 - $1,140,633
$10,890 - $19,800
$269,988 - 387,274
Premera Blue Cross
$651,442 - $3,255,352
$55,000 - $121,593
Group Health Cooperative
$409,704 - $1,262,494
$21,932 - $44,523
Regence BlueShield of Idaho
Blue Cross of Idaho
Blue Cross Blue Shield of Wyoming