Fighting off Question 5, HMOs delay salary data

By Frank Phillips, Globe Staff, 10/26/2000

s they spend millions of dollars fighting a ballot question that calls for universal health coverage, the state's major health insurers have moved to conceal their most politically sensitive expenditures: salaries for their executives.

Four HMOs - Harvard Pilgrim Health Care, Tufts Health Plan, Fallon Community Health Plan, and Blue Cross and Blue Shield of Massachusetts - have sought and received extensions, until after the Nov. 7 election, for filing disclosure forms with the attorney general that would reveal compensation packages for top managers.

The documents would detail the most recent salaries that the nonprofits paid to their executives, which in some cases exceed $1 million a year. They also contain details of the insurers' assets, revenues, contracts with their own for-profit subsidiaries, and a slew of other administrative expenses.

The HMOs say the delay is necessary because they also need extensions to complete their 1999 federal income tax forms, which must accompany the reports. The state documents were due in February for the 1999 salary reports.

''We got the extension to Nov. 15, and that is standard,'' said Alan Raymond, a spokesman for Harvard Pilgrim, referring to the firm's request to the Internal Revenue Service.

Ballot Question 5 calls for sweeping changes in the state's health care system, including requiring universal coverage, allowing patients to seek care from any doctor, banning temporarily all for-profit medicine, and placing a 10 percent cap on HMOS'spending on administration.

The HMOs say that there is nothing unusual in their seeking extensions and that many of them have done so in previous years.

But critics and Question 5 supporters contend that this year, more than any other, the public should have the most recent information on the HMOs. They charge the the HMOs have held back the reports to avoid scrutiny during a heated campaign over a health care proposal that has far-reaching implications.

Secretary of State William F. Galvin, a strong critic of HMOs who has questioned their tax-exempt nonprofit status, said he is ''deeply disturbed'' that the latest salaries and other fiscal information are being concealed from the public.

''They are being asked to limit administrative expenses, yet for no good reason the reports to the attorney general that would detail salaries and benefits conferred on allegedly nonprofit administrators won't be filed until after the election,'' Galvin said.

He said the information is particularly relevant in the campaign battle over the health care ballot initiative, because the insurers are spending millions of dollars from their members' premiums to defeat Question 5.

''I questions how these ... nonprofit corporations, while cutting back on services to their members, could find the money to wage the most expensive ballot campaign this year in Massachusetts,'' Galvin said.

Raymond defended the expenditures on Question 5, saying that the costs amount to about $1 per member. By defeating the initiative, insurers will save those members an average of 43 percent of premiums, or about $200 per member, he said.

''The financial consequences on members and employees far exceed any of the cost of our investment in the Question 5 campaign,'' Raymond said.

After earlier reluctance, Raymond called the Globe late yesterday and said Harvard Pilgrim's current president, Charles D. Baker Jr., is paid a straight salary of $500,000. Harvard Pilgrim has given $500,000 to the No on 5 campaign.

According to 1998 reports, two of the heads of other insurers made more than $1 million in salary and other compensation. William C. Van Faasen, president of Blue Cross-Blue Shield, made $1,224,872 that year. The insurer has contributed $1.2 million so far to the campaign to defeat Question 5.

Harris Berman, chairman and chief executive officer of Tufts Health Plan, was paid $1,106,000 in salary and benefits in 1998. Tufts has donated $535,000 to the No on 5 effort.

Fallon's chief executive, Batig S. Maini, received $532,000 in salary. Fallon has spent $241,045 on the No on 5 campaign.

Larry Rasky, a spokesman for the No on 5 Coalition, said the salaries and other financial information to be included in the public disclosures are not relevant to the campaign.

''What is relevant to this campaign is Question 5 would overturn the recently enacted patients bill of rights and add costs and uncertainty to the health care systtem,'' Rasky said.

John O'Connor - chairman of the Coalition for Health Care, which placed Question 5 on the ballot - said the insurers' failure to disclose the most recent figures is ''an outrage.''

''When they are pumping millions of dollars to defeat a health care reform, the top officials at the state ought to be jumping on the table, pounding their fist,'' O'Connor said. ''You can't be spending that kind of money and not tell the public what you are spending it on.''

The health care insurers have contributed the bulk of nearly $3 million that has been raised so far to defeat Question 5. The insurers and other business interests are expected to raise another $1 million before the Nov. 7 election.

Despite all the spending to defeat Question 5, a poll taken this month by Opinion Dynamics shows the measure has the support of 66 percent of the voters, while 21 percent oppose it.

Last summer, the HMOs and some Question 5 proponents joined to fashion a compromise, which the Legislature passed, that addressed some of the issues in the ballot initiative. But others in the coalition, mostly doctors, are still pushing for Question 5 and its more radical changes, such as universal health coverage.