Saturday, March 05, 2011

The Gilded Parachute Age

The bloated pay scales for corporate CEOs are outrageous, but just as outrageous are the money they get when they move out and move on. The Boston Globe's editorial board took a look at one particularly egregious farewell gift and found it galling because it involved a non-profit insurance company.

BLUE CROSS Blue Shield of Massachusetts couldn’t have made a better case for a “public option’’ health plan than it did by granting an $11 million golden handshake to its former CEO. At a time when elected officials, hospitals, doctors, and insurers are all trying to hold down health-cost inflation, the pay, severance, and retirement money doled out to Cleve Killingsworth is an insult to well-meaning reformers: Why should those who treat patients receive lower reimbursments when even unimpressive suits like Killingsworth make out like bandits? ...

Like any insurer, Blue Cross is supposed to earn the roughly 10 cents it takes from each premium dollar by finding ways to keep doctors, hospitals, and other providers from taking advantage of the system. But its credibility as a referee on health care funding is undermined when its CEOs leave the company with gilded packages that make a mockery of the company’s nonprofit status.

The editorial also points out that the company's generosity extends to its board of directors, some of whom earn nearly $90,000 a year for their service. This is hardly consistent with its non-profit status, especially since many of the hospitals whose bills are chopped by Blue Cross from have boards which serve free.

Apparently even the non-profits can't resist playing the expensive CEO game. That public option, or (even better) that Medicare for all, is beginning to look even more appealing.

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