Blue Cross revenue, executive compensation rise in 2013

Feb. 28--Blue Cross and Blue Shield, North Carolina's largest health insurer, posted an 11 percent gain in revenue last year as the company began signing up new customers under the Affordable Care Act.

The financial performance and membership growth in 2013 was reflected in the larger compensation packages of Blue Cross executives, six of whom broke the $1-million-a year barrier last year.

The Chapel Hill health care organization said Friday it enlarged its customer base to 3.84 million people last year from 3.75 million in 2012 and revenue grew from $5.8 billion to $6.4 billion.

Enrollment under the Affordable Care Act got underway in October but isn't reflected in Blue Cross membership totals for 2013 because the insurance policies didn't become effective until this year.

Blue Cross expects to see a larger-than-normal increase in revenue and membership growth this year, however, as a result of the health care law that requires most Americans to obtain health insurance, said Blue Cross Chief Operating Officer Gerald Petkau.

Still, the health care law, also known as Obamacare, accounted for millions of dollars in extra expenses as Blue Cross bulked up its computer network capacity to include new health plans and to exchange information with federal databases. Petkau said the Affordable Care Act, and the implementation of a new operating system, accounted for $65 million out of a total of $220 million in infrastructure and technology expenses in 2013.

The health care organization has not disclosed how many people have signed up for individual insurance under the Affordable Care Act, also called Obamacare. More than 150,000 have signed up statewide since October with Blue Cross and with Coventry Health Care of the Carolinas, the only two insurerers offering subsidized coverage under the health care law.

Blue Cross said that claims and medical expenses rose 11 percent to $5 billion last year. Petkau said that a rise in premiums is usually mirrored in a rise in health care expenses.

Overall, the organization said consolidated net income rose to $92.6 million in 2013, up from $57.7 million the year before.

The organization's top 10 executives netted more than $13 million in compensation last year, each getting an annual pay increase, in several cases the raises exceeding $100,000.

Blue Cross reported that CEO Brad Wilson's compensation increased by nearly half-a-million dollars to $2.96 million in 2013, from $2.48 million in 2012.

Chief Information Officer Jogenia Abernathy, the lowest-paid of Blue Cross's top 10 earners, was paid $675,465 in 2013, an increase of $167,733 over the previous year.

Spokesman Lew Borman said executive compensation is pegged to pay packages at similarly sized companies in related industries.

Blue Cross board members pulled down annual compensation ranging from $61,803 to $101,608, depending on the number of meetings they attended and subcommittee chairmanship responsibilities they held. Board duties are part-time jobs taken by corporate executives, university chancellors, retired executives and others in leadership positions.

Murawski: 919-829-8932

___

(c)2014 The News & Observer (Raleigh, N.C.)

Visit The News & Observer (Raleigh, N.C.) at www.newsobserver.com

Distributed by MCT Information Services