Asbury Park Press

Blue Cross Boss Took Home $8.7 Million Salary As Premiums Rose In '09

Horizon Blue Cross Blue Shield of New Jersey upped CEO compensation, dropped reimbursements

Asbury Park Press — Monday, May 17, 2010

By MICHAEL L. DIAMOND
BUSINESS WRITER

William J. Marino, president and chief executive officer of Horizon Blue Cross Blue Shield of New Jersey, received $8.7 million in compensation in 2009, a 59 percent increase from 2008, according to the company's annual financial statement.

The salary and bonus were part of a windfall for Horizon's nine highest-paid executives, who received on average 61 percent more than in 2008, the statement, filed with the New Jersey Department of Banking and Insurance, showed.

Part of the increase came from compensation that was deferred from previous years, the company said. But the pay sparked anger from consumers and medical professionals who have battled Horizon over rising premiums and declining reimbursements.

"My reaction to that? I beg, borrow and steal every month just to pay for health insurance," said Pam Favocci, owner of B&E Locksmith in Freehold, whose premium with Horizon climbed 60 percent last year. She pays $1,160 a month for a policy that covers her and her husband.

Newark-based Horizon is the state's biggest health insurance company, writing policies and administering self-funded programs for more than 3 million people. It has 72 percent of the individual market and 52 percent of the small employer market, according to the state.

The company is a nonprofit, meaning it doesn't pay state taxes on policies it writes, and any profit made goes into a reserve used for emergencies. It applied in 2008 to convert to a for-profit company. But it asked the state to stop the process last year, said Marshall McKnight, a spokesman for the New Jersey Department of Banking and Insurance.

Horizon has yet to publicly release its audited financial report for 2009. But the statement Horizon Healthcare Services Inc. filed with the state Department of Banking and Insurance showed the company had a loss of $946,370 last year on revenue from premiums of $5.1 billion, which one expert said amounted to breaking even.

The compensation report showed Marino was paid a salary of $934,615 and bonus of nearly $7.8 million in 2009, compared with a salary of $900,000 and bonus of almost $4.6 million in 2008.

Meantime, Horizon's top nine executives took home a total of $24.3 million in salaries and bonuses last year, up from $15.1 million in 2008.

Horizon spokesman Daniel Emmer said the company in 2008 changed its long-term incentive plan because of changes in the tax law. It meant a number of officers received payments in 2009 of compensation that was earned since 2007.

Some $3.9 million from Marino's compensation was deferred. Without that, his compensation would have been $4.8 million, Emmer said.

Mark Pauly, a professor of health care management at The Wharton School of the University of Pennsylvania, said, "2008 was a terrible year for insurers largely because the value of their assets fell. Companies didn't pay bonuses. The recovery that did occur in 2009 could be a trigger for paying back what they postponed."

Pauly said executives also might have deferred their compensation to take advantage of tax laws.

"Unbelievable"

Crystal Snedden, health care campaign coordinator for consumer group New Jersey Citizen Action, said the executive compensation report stood in contrast to stories she has heard from small business owners whose struggles through the downturn were compounded by health insurance rates that rose by double digits.

"I have to say, in light of the fact people are experiencing the rate increases they experienced in the months leading up to health care reform, it's still unbelievable to me that these executives are making millions and millions of dollars when people can barely afford their premiums," Snedden said.

Margaret Bell, an administrator at Monmouth Hematology and Oncology in West Long Branch, whose own insurer is Horizon, agreed. She said Horizon threatened to cut reimbursements to her office by 50 percent earlier this year. After negotiations, it backed down. But the practice still laid off two of its 15 workers and froze its wages.

"It's absolutely ludicrous they should be getting such a major raise, and yet they cut back on the services for people who pay," Bell said. "I'm paying more and they're getting a major raise for that. It's a sin, actually."

Top Top | NJCA Homepage | NJCA in the News