Health insurance exec compensation: 5 things to know

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Growth in compensation for top health insurance executives outpaced their companies' revenue growth from 2019 to 2020, according to a brief from consulting firm BDO.

For its brief, BDO surveyed several Blues insurers and others like Molina Healthcare and UnitedHealth Group on their executive compensation. The survey reports compensation, benefits and contract agreements for more than 40 executives and senior managers at health insurers. 

Five things to know from the study:

1. Total direct compensation for top health insurance executives increased between 8 percent and 14 percent year over year. That's higher than the 3 percent increase in total revenue the health insurance companies saw.

2. CEOs and other top executives at health insurers are seeing their salaries increase faster than a typical merit increase of about 3 percent.

3. BDO found executive pay levels usually increased as the company grew. The median salary for CEOs in companies that have more than $4 billion in revenue is about 20 percent higher than the median salary for CEOs at companies with less revenue.

4. BDO said this insight doesn't mean "larger companies overpay their CEO. We compared pay levels relative to revenues and found that larger-sized companies seem more efficient with regard to the revenue earned per dollar of CEO pay," according to the brief.

5. Some of the most commonly used metrics in annual incentive plans for health insurance executives are contract/member growth (86 percent); customer satisfaction (86 percent); and net income/profit growth (57 percent).

Read more here.

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