Blue Cross Blue Shield of Michigan disclosed Friday that it paid its top executive a record amount of money last year as he guided the state’s largest health insurer to strong overall financial results.
Total compensation for Daniel Loepp, CEO of Blue Cross since 2006, hit $19.2 million in 2018. That was up from his $13.4 million payday in 2017 and $9 million in 2015.
Loepp is now among the five highest-paid CEOs of any Blue Cross Blue Shield insurer in the nation.
“We are keeping health care affordable to the best of our ability here in Michigan,” Blue Cross spokesman Andy Hetzel told reporters Friday. “We think he earns the money that he makes.”
Yet Loepp is still not the best-paid executive in Detroit. For instance, General Motors Chairman and CEO Mary Barra had total compensation of $21.9 million in 2017.
Loepp’s specific compensation in 2018 was a $1.5 million base salary, a $16.2 million bonus and $1.4 million in “other” compensation, such as car allowance and life insurance.
His bonus was $5.8 million bigger than in 2017. His bonus depended on achieving performance objectives that were set by The Blues’ Board of Directors, Hetzel said.
“The enterprise is performing strongly, and he’s being paid for that strong performance,” Hetzel said.
A nonprofit mutual insurer, Blue Cross ended 2018 with a positive 2.1 percent operating margin on $29.3 billion in revenue. Over the past 10 years, Blue Cross’ average operating margin has been zero.
The insurer pays out an average of $68 million every day for claims and benefits.
“We are growing our membership while moderating our health insurance prices and keeping overall profitability to an average of zero over 10 years,” Loepp said in a statement. “At the same time, we’ve grown beyond health insurance by diversifying our lines of business and expanding the reach of our products and services.”
Blue Cross is in compliance with financial rules set by the Affordable Care Act to prevent profiteering and exorbitant administrative spending by insurance companies.
Those rules require insurers to pay out on claims at least 80 percent of the money they take in as premiums from customers, or issue refund checks.
For its large groups insurance plans, Blue Cross paid out an average of 88 percent between 2015 and 2017. That figure was 85 percent for individual plans and about 78 percent for small groups. (Some sma
On the cost-cutting front, Blue Cross under Loepp has reduced its administrative expenses by $360 million during the past three years, Hetzel said.
Blue Cross is the largest health insurer in Michigan with a roughly 70 percent share of the commercial market. Reports Freep