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Ex-Blues CEO's $11M Severance Package Slaps Policyholders

 |  By John Commins  
   March 07, 2011

The public fury over the news that Blue Cross Blue Shield of Massachusetts' former CEO received a compensation and severance package last year valued at between $9 million and $11 million is not a human resources debacle.

After all, Cleve Killingsworth didn’t negotiate this ridiculous overcompensation package with the folks at HR. It was voted on by the community leaders who sit on the nonprofit BCBSMA's  board – the same people who collect high five-figure salaries for a part-time job and talk about containing healthcare costs – people who really should know better.

And, BCBSMA has pointed out, the package was part of an employment contract negotiated in 2005, long before the recession began.

No. It’s not HR’s fault. However, the front-line employees in HR departments in every business in the Bay State that contracts through BCBSMA will face the disbelief and vexation of their fellow employees. They’ll rightly see this egregious payout as a slap in the face after years of ballooning premiums, co-pays, and deductibles, and tighter benefits. (In the interest of full disclosure, as a policyholder at BCBSMA, I am one of those vexed and disbelieving employees, although I don’t blame our wonderful HR folks.)

What were they thinking when the BCBSMA board approved this package? The Boston Herald notes that several members of the board – including Greater Boston Chamber of Commerce President Paul Guzzi ($84,463), and Robert J. Haynes, president of the Massachusetts AFL-CIO ($72,700)  -- “have been public advocates for trimming soaring healthcare costs — even as they sat on a panel that quietly approved the departing chief’s golden parachute.”

“Unions stand ready to be part of the solution to the healthcare cost crisis in which we all find ourselves,” the Herald quoted Haynes as saying in January. “The only way to ensure we are part of the solution is to guarantee that we have a voice and meaningful role in how cost savings are achieved.” Harrumph!

We don’t know whether or not Guzzi, or Haynes, or Bentley University President Gloria Larson ($76,400) or any of the other 18 BCBSMA board members – all of who collect between $56,000-$90,000 a year -- voted for the compensation package, because BCBSMA won’t say, and a spokesperson told the Herald that board members would not comment individually. So much for accountability!

Maybe the health plan will be more forthcoming with Massachusetts Attorney General Martha Coakley, who announced last week that her office will investigate the Killingsworth payout.

As infuriating as the sizeable severance package is, this shouldn’t really surprise anybody. It is part of a continuing and troubling trend in healthcare in which many people of positions of power and influence – regardless of their politics -- collect hefty compensation packages while they preach cost containment for the rest of us. Their relatively high compensation buffers them from the anxieties of tens of millions of Americans in lower tax brackets who find paying for healthcare coverage increasingly more difficult every year.

In all likelihood, most people who sit on insurance company boards, or who are involved in other senior healthcare management and oversight positions probably don’t have to skip a medical screening because of their high deductible, or cut their pills in half to make it to the end of the month. When they talk about being “part of the solution to the healthcare cost crisis” they’re actually talking about passing costs on to the rest of us.

And that, my HR friends, is where you come in.

 

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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