Blue Cross compensation

Blue Cross and Blue Shield of Maine and Anthem Insurance have worked hard for months to persuade the public that the sale of Blue Cross to the Indiana insurer is in the best interest of subscribers specifically and Maine generally. Now, with a debate over executive compensation, they have a chance to prove it.

The Maine Medical Association, which opposes the sale, wants the state to release information on Blue Cross change of control agreements — contracts that outline new executive salaries, stock options and benefits after the sale is completed. Maine statute may make the state the wrong entity to release the change of control information, but Blue Cross itself could release it immediately.

Blue Cross’s small size in a business of increasingly larger competition make it necessary for it to grow, but its lack of reserve money restricts it. The company appears to need a significantly larger partner. If Anthem’s offer were the only one on the table, the question over executive compensation wouldn’t mean much. But because it is apparent that another suitor, Blue Cross of Massachusetts, also is interested in an alliance with the Maine Blue, executives and directors at the local insurer should want to show that the decision to go with Anthem was made for reasons other than deals that would directly benefit them.

If the Maine Blue were controlled by the state, the Freedom of Information Act likely would make the change of control documents available to the public; if it were a publicly traded company, the information would be available to stockholders. For that matter, there would be no deal if it were a public company because the equivalent of its largest shareholder, the Maine Education Association, representing 60,000 residents insured by the company, opposes the sale. But though the Blue Cross has benefitted from its tax-free status, its duty to the state is limited. At least that is the strict interpretation.

A broader one might recognize that the sale to Anthem is generally opposed by the public, according to recent polls; that subscribers have expressed doubts and distrust of Anthem here and in other states; that goodwill in the health-insurance industry is a precious commodity; and that telling the public executive compensation is none of its business is a tough way to win friends.

Organizations like MMA would make it easier for Blue Cross to be more forthcoming if it publicly recognized that there are some good reasons for the insurer to be hesitant about releasing this information. There is, after all, a degree of mere curiosity in this request for information: What kind of great deals have these well-paid executives struck for agreeing to the Anthem purchase? The public, however, is well aware that these executives earn far more than the state average; what ought to be revealed is whether the new compensation is enough more for them to likely color their directors’ decision-making process.

It’s a fair question, and a fair way to demonstrate what sort of relationship this new Blue Cross-Anthem insurer will have with the Maine public.