Snubbing the AG, Big Health Insurers Pay Healthy Compensation to Boardmembers

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March 30, 2011; Source: Boston Globe | The controversies around health insurers paying large fees to board members continue in the Massachusetts area with two large insurers essentially telling their peers – and the attorney general –that they think 5-figure payments are just fine, thank you very much.

Although Blue Cross Blue Shield and Fallon Community Health Plan responded to Atty. Gen. Martha Coakley’s investigations by suspending lucrative payments to board members, Tufts Health Plan and Harvard Pilgrim Health Care both decided to keep their board payments. The argument offered by Harvard Pilgrim is that the nonprofit “rel(ies) on [its board members] to apply their specialized experience and skills in the areas of medicine, accounting, finance and law, to support our company and its mission . . . as responsible, independent fiscal stewards for our members’ premium dollars.” Tufts went further, saying that board members of a health insurer bear “an additional overlay of responsibility” compared to nonprofits that don’t pay their board members.

Board members get paid between $21,900 to $68,100 at Harvard Pilgrim and $19,500 to $82,500 at Tufts. Payments to board members lead to very important questions about their business judgments, such as Blue Cross’s $11 million payment to its departing chief executive. It is hard to believe that board members are always exercising the best of financial oversight when they are paid tens of thousands of dollars for a relatively small time commitment every year.

The statement from Tufts, however, has to rile many board members in the majority of nonprofits that don’t have the excess capital to pay their board members 5-figure sums. One hopes they remind the Tufts overseers that the board members of small nonprofits, working frequently for no payment, work just as hard as those toiling away at large health insurers, universities, hospitals, and foundations, devoting as much or more time and commitment as the board members working for larger nonprofits.

Sometimes difference in size equates to difference in kind. Not in this case. There is no reason to impugn the hard work, diligence, competence, and professionalism of board members who happen to serve small nonprofits that neither have the cash, nor would divert it from programs if they had it, to pay their board members.—Rick Cohen