WA Rep. Wants Health Care CEO, Board Pay Regulated By Customers

GIG HARBOR, WA - Many of the largest health insurance companies in Washington are organized as nonprofit corporations, which means they are exempt from paying taxes even as they collect billions from health insurance ratepayers. And some are paying executives and corporate board members — many who work only a few hours per week — six or seven-figure salaries.

State Rep. Michelle Caldier, R-Gig Harbor, doesn't think healthcare nonprofits should be setting such high compensation in private. She's introduced a bill that would establish a public board to oversee nonprofit health insurance compensation.

Under her bill, any nonprofit insurer with a paid board of directors would have to create a board comprised of 10 customers. They would vote annually on board pay, and the pay of the top five highest paid executives. The law would only apply to the top five biggest healthcare nonprofits in the state.

"My logic is, if this is what the people paying the premiums think is justified, then I think I'm OK with that," Caldier said.

Caldier, who is a dentist, wrote the bill after seeing recent pay raises for Delta Dental of Washington executives. The dental insurer covers some 2 million Washington residents and pulled in $1.2 billion in earnings in 2016, according to federal tax filings. That same year, Delta Dental gave large raises to some of its top leaders.

Included in that compensation: a $766,943 raise for then-CEO James Dwyer and raises for Delta Dental's board of directors, who work, on average, between seven and 12 hours per week. For example, the then-board chair, Douglas Beck, got a raise from $96,732 in 2015 to $154,573 in 2016. Beck worked 11 hours on average per week for Delta Dental, according to tax filings.

Total executive and board compensation in 2016 was about $10 million. The company gave out about $2 million in grants and charitable gifts that same year.

(Delta Dental's leadership has changed since 2016, but the nonprofit's most recent tax filings were not available.)

Delta Dental did not respond to questions about Caldier's bill, or about its executive compensation. Caldier said a Delta Dental lobbyist had told her that compensation is high so the company can attract talented executives.

Other insurers offer similar compensation, but board pay is varies. CHI Franciscan, for example, paid CEO Ketul Patel about $1.4 million in 2016, but the nonprofit did not pay its board.

Caldier introduced the bill originally in 2018, but has pre-filed it again for the 2019 session, which begins Jan. 14.

Photo via Getty Images