WRAL Investigates

Blue Cross profits, exec pay spark criticism

Posted March 4, 2009
Updated March 9, 2009

— Blue Cross Blue Shield of North Carolina, the state's largest insurer, earned $186 million last year while raising premiums on customers as the economy slid into recession.

Such large profits by a nonprofit company elicited sharp criticism from health care reform and state employee advocates.

"I think it's outrageous. We have North Carolinians losing their jobs, losing their health insurance, really hurting, and then you look at Blue Cross," said Adam Searing, director of the NC Justice Center's Health Access Coalition and a longtime critic of Blue Cross.

Blue Cross sign Groups appalled by Blue Cross profits

"I think it sends the message to North Carolinians that we (at Blue Cross) care more about making money than making health insurance affordable," Searing said. "It raises a question: Where are our premium dollars going?"

Blue Cross spokesman Lew Borman defended the insurer's financials, pointing out that the company's 3.6 percent profit margin in 2008 was the smallest in at least five years. Profits also were down from $209 million in 2007, and Borman noted the company paid $162 million in federal, state and local taxes last year.

"We know times are tough and we're trying to do something about it," Borman said. "We're in solid financial shape, and it's due to the executives that put us in that position."

The top six executives at Blue Cross each made more than $1 million last year, topped by Chief Executive Bob Greczyn at close to $4 million. Greczyn's annual income included a $3 million bonus and was a 23 percent increase over 2007.

Other top executives also saw sizable bumps in their 2008 incomes. Chief Operating Officer James Wilson, for example, got a 32 percent raise, while Chief Financial Officer Daniel Glaser's compensation rose by 21 percent and Chief Sales and Marketing Officer John Roos' income went up 20 percent.

Borman said 85 cents of every $1 in revenue at Blue Cross goes to medical costs, compared with one-third of a cent for executive pay.

"I think we put our customers first and foremost," he said.

Still, the average premium increases for 2009 policies are in the "high single digits," he said, declining to be more specific.

"We understand the concerns about health care, and we're trying to do something about it," he said.

Blue Cross administers the State Health Plan, which provides medical coverage for almost 650,000 state workers, public school teachers and retirees. Lawmakers expect to spend $300 million this spring to cover the plan's ballooning deficit.

Dana Cope, executive director of the State Employees Association of North Carolina, said he finds Blue Cross' profits and executive salaries "morally reprehensible."

"How can they, in good conscience, pay their CEO almost $2,000 an hour when the majority of state employees earn $16 for that same hour of work?" Cope said in a statement.

In addition to its annual profit, Blue Cross has a $1.3 billion reserve account – enough to cover more than three months of operating costs.


This story is closed for comments.

Oldest First
View all
  • scarletindurham Mar 9, 2009

    I doubt you'll read this as long as it's been now, but let me just say this. It is quite presumptuous to assume I was at work while posting those comments. I had taken bereavement leave when I was posting on this article. At any rate, my productivity and accountibilty at my job at BCBS speaks for itself. If it didn't then they would no longer employ me, period. On other days, if I choose to take a minute here and there to express my opinion on a news article then that is my business. I'm sure most of the people posting on WRAL throughout the day are sitting behind their computers at work. It's not as if I'm browsing the Saks website all day. I don't think keeping up on issues regarding my company and community counts as being counterproductive. So excuse me when I say why don't you mind your own business and get a life?

  • exteacher Mar 6, 2009

    'I have BCBS and they pay for almost nothing, what a bunch of crooks
    That is because of the contract negotiated by your employer. BCBS is not going to cover anything that is not provided for in the contract your employer has with BCBS, or any other insurance company for that matter. If you have a complaint about coverage you need to see the HR person where you work.

  • exteacher Mar 6, 2009

    It is amazing how many teachers and state employees don't understand the fundamental fact here: You do NOT have BCBS insurance!!! You are covered by the STATE HEALTH PLAN, that is run by fellow STATE EMPLOYEES. BCBS merely administers the plan, which means they pay claims according to the rules/benefits decided by the people who head the STATE HEALTH PLAN. If you have issues/problems/complaints about your coverage BCBS is NOT who you should confront, it is the STATE HEALTH PLAN. Here is the link to their web site: http://www.shpnc.org/index.html. You can cut and paste it into your browser. George Walker is the head of the STATE HEALTH PLAN. You can go to the link and see ALL the names of the people who are in charge of your insurance. So, when your claim is denied, etc. it is NOT BCBS denying your claim, it is the STATE HEALTH PLAN.

  • gardenlady Mar 5, 2009

    It is very scary to be so dependent on medical insurance.My husband is 62 and I am 59. We pay $1,100 a month to BCBS. My husband is self-employed and as we age this premium is harder and harder to pay.I have felt that BCBS has served us well over the years, we have both had several operations and BCBS paid a substantial sum of the cost.We need insurance and have searched for something less expensive...there is nothing! Like others have posted, they have you right where they want you...raise the premiums until you can't pay.....something is wrong with the whole system.Medical care should be something we can all afford to pay for without going broke.

  • ignc73 Mar 5, 2009

    And giving $1 million and more to their executive officers is ridiculus!

    No, it isn't. If anything, it's low. That's the price for somebody who can run a company like this. It's not something that just anybody can do.

  • Watcher Of Things Mar 5, 2009

    Let me just say this ... BCNC wanted to charge me about $1200.00 a month because I am a diabetic ... and without that payment to them ... it only costs me $400.00

    The Italian Mafia tried that in New York - it was called Racketeering ... wasn't it?

  • carolinagirl20 Mar 5, 2009

    I don't understand why no one has said this before so I am going to say it now...

    If Stefany is a BCBS employee then how is it that she can respond as often as she did? Was she "on the clock" while she was doing all of her posting? I will make a safe assumption and say, "yes" as they are open during regular business hours. Now let's talk about being who is being paid too much!! I wish I could get paid to post comments on WRAL.

  • agdeppa3 Mar 5, 2009

    I think the biggest issue here is, what part of nonprofit does BCBS not get? They are continually acknowledging that they ARE making large profits, year after year. That should negate their nonprofit status. And giving $1 million and more to their executive officers is ridiculus! It's not they are brain surgeons! I know a lot of doctors, and not a one of them make even a quarter of that. Why are these folks being paid so much? Do nonprofit insurance companies get exempt from government scrutiny?

  • PaulRevere Mar 5, 2009

    92% of the cost of healthcare in America is directly the fault of lawyers.

  • FromClayton Mar 5, 2009

    As for your denied claims, yeah those happen, but remember that big old packet you get in the mail from insurance companies when you sign up for services and you kinda just throw it in a junk drawer or use it to line Spot's crate? Try reading it next time!!

    I once got 3 of those in one year. seems like a waste of trees. I check it out online before i have anything big done. I also call them every once and a while if it seems fishey and i want to talk to a real live person BEFORE i have the services provided. A phone call can save a lot of headachs.