At a time when Blue Cross Blue Shield wants to increase premiums up to 18.3 percent, reports surfaced Wednesday that the health insurer is spending up to $227,500 to send 35 of its employees to the Grand Cayman Islands.
The expenditure seems curious in light of the "dire" financial projections Blue Cross Blue Shield of North Dakota made last year, when it once predicted a possible loss of up to $23 million, said North Dakota Insurance Commissioner Adam Hamm.
The Westin Casuarina Resort on the Grand Cayman Islands is the location of a reward trip for top sales staff at Blue Cross Blue Shield, where getaways are an annual motivational tool.
The total budgeted for the trip, attended by 35 employees, each allowed to bring a guest, was up to $227,500, according to figures from Blue Cross Blue Shield, which said it amounts to 90 cents for each policyholder.
A spokeswoman for the health insurer said Wednesday, after word of the trek surfaced on talk radio, that reward trips are an economical way to inspire a sales force at a cost that is one-third the national average.
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"It's a reward trip," said Denise Kolpack, vice president for corporate communications at Blue Cross Blue Shield of North Dakota. "They pay taxes. It's considered part of their salary."
Reward trips for top sales producers have been part of the incentive compensation package for 18 years, and past trips have included destinations in Florida and California.
This year's trip began Monday and ends Friday.
"We're clearly interested to know all the details about this," Hamm said. "I'm sure we'll be hearing from policyholders."
Blue Cross Blue Shield is seeking premium rate increases of 18.3 percent for individuals who are not covered in a group, whose monthly premiums now are about $400, as well as 11.4 percent for group coverage and 20 percent for college students.
The getaway for the Blue Cross Blue Shield sales force includes an allowance for each employee and guest up to $6,500. That includes up to $2,000 for airfare, $1,500 in cash, and $3,000 for hotel accommodations.
The Blues ended last year with a $9 million loss from operations. Combined with investment losses, the total loss last year was $28 million, Kolpack said.
To minimize the loss, the company reduced expenses by $3.2 million, which included cuts to advertising and a freeze on hiring, she said.
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Blue Cross Blue Shield's administrative expenses, which include marketing costs, are 7 cents of every premium dollar, Kolpack said. The firm's marketing costs are a third the national average, she added, and likely would be significantly more expensive if it had to pay independent brokers.
The Westin resort is billed in a travel guide as providing "luxurious accommodations and a world-class spa" on a "breathtaking beach."
It received a four-star rating by the Professional Travel Guide, which said standard rooms run $228 a night and suites cost $645.
The oceanfront resort, which includes two pools, a dive shop and swim-up bar, among other amenities, rated an editors' pick by the Professional Travel Guide.
"The posh full-service Hibiscus spa offers treatments for the mind, body and spirit," said the online guide's review. "No expense has been spared to make this the largest, most luxuriant spa on the island, with nearly a dozen treatment rooms, steam rooms, saunas and a spa gift shop."
On the other hand, the guide bemoaned the resort's "penny-pinching attitude," with guests required to pay for in-room bottled water, extra coffee, Internet access and towels by the pool and health club.
What Blue Cross Blue Shield is spending
* Hotel: $3,000 per couple
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* Airfare: Up to $2,000 per couple
* Cash: $1,500 per employee
* Total per employee: Up to $6,500 per couple; 34 couples
and CEO Mike Unhjem, who went solo
* Total: Up to $227,500, or 90 cents per policyholder.
Source: Blue Cross Blue Shield
