Buttigieg's work for Michigan Blue Cross Blue Shield under scrutiny

click to enlarge South Bend, Indiana, Mayor Pete Buttigieg. - JStone / Shutterstock.com
JStone / Shutterstock.com
South Bend, Indiana, Mayor Pete Buttigieg.

On Tuesday, 2020 Democratic presidential candidate Pete Buttigieg released a list of nine clients he advised while working at the consulting firm McKinsey & Company, following pressure from progressives and the campaign of rival Elizabeth Warren. One of those clients was Blue Cross Blue Shield of Michigan, which Buttigieg consulted as the company was preparing to slash jobs and raise its rates.

The campaign released the list shortly after McKinsey agreed to release Buttigieg from a nondisclosure agreement. Buttigieg was quick to downplay it, saying, "There’s nothing particularly sizzling about the list of clients that I served," during an MSNBC interview on Tuesday.

But The New York Times called the BCBS stint, Buttigieg's first assignment at McKinsey, perhaps "the most politically troubling element of his client list."

The BCBS work occurred in 2007 as the insurance company was preparing to cut 10 percent of its workforce and raise premiums. In a Tuesday interview with The Atlantic, Buttigieg said he was not involved in the decision-making and says he was taken off the project after three months, before the layoffs were announced. The layoffs occurred in 2009.

"I don't know what the conclusions were or what it led to," he told the magazine of his work there. "So it's tough for me to say."

But while running for mayor of South Bend in 2011, Buttigieg seemed to claim ownership of his BCBS work, touting his ability "to reimagine our budget from the bottom up."

"One of the things I did for a living was just that," Buttigieg said during a candidate forum. "So I remember one client organization that was a large insurance firm that had grown in such a way that there was a great deal of duplication and some people didn't even know what the people working for them were doing."

Buttigieg's campaign provided this statement to Metro Times:

"As we’ve said, Blue Cross Blue Shield of Michigan was Pete’s first assignment in his first job after graduate school in 2007, and he spent about three months working on it. He was part of a team of analysts that looked at overhead expenditures such as rent, travel costs, and utilities. He wasn't a part of any decision making or in charge of making recommendations. While he was speaking about what he observed while on the Blue Cross Blue Shield assignment, his comments at this forum weren’t about any recommendation he made or analysis he provided. What he was offering at that moment was an observation about what large organizations like a city or an insurance company face."

"I was assigned to a team that was doing an analysis on the overhead costs that they had, nothing to do with claims, or what they do with patients, but kind of as an organization — buildings, rent, utilities, travel, that kind of thing," Buttigieg told MSNBC's Rachel Maddow. "I certainly saw how big and complicated an insurance company can be."

Buttigieg said that what he learned at BCBS was part of why he supports a public option for health care. He does not, however, call for replacing private insurance companies with public health care, as his Democratic rivals Bernie Sanders and Warren do.

Earlier this year, it was revealed that BCBS of Michigan CEO Daniel Loepp earned $19.2 million in 2018 — more than most for-profit executives in the state. In fact, Loepp's compensation, which included a base salary of $1.5 million and a $16.2 million bonus, is exceptional nationwide — a study by healthcare information firm AIS Health ranked Loepp as the seventh highest-paid health insurance exec in the country, and ranked him first among all Blue Cross Blue Shield companies.

"The CEO of Michigan Anthem Blue Cross Blue Shield was paid $19 million in 2018, a 43 percent increase in pay from his $13 million in 2017, while 790,000 Michigan residents go without health care and many more can't afford to use the insurance they have," Sanders wrote on Facebook. "We must pass a single-payer health care system so ordinary Americans won't have to forgo getting the care they need because they can't afford it."

The release of the client list comes as Buttigieg's campaign has taken heat for lack of transparency, exemplified best by a recent exchange with reporters in which he curtly said he would not open his closed-door fundraisers with big-money donors. His campaign soon reversed course, saying it would allow reporters into the fundraisers.

Though Buttigieg was allowed to release the list of his McKinsey clients, he is still prohibited from discussing "confidential, proprietary or classified information obtained during the course of that work." Aside from Blue Cross Blue Shield of Michigan, the clients also included the Natural Resources Defense Council, the Environmental Protection Agency, the United States Department of Energy, the United States Postal Service, the United States Department of Defense, the Energy Foundation, and Canadian supermarket chain Loblaws.

Buttigieg admitted to Maddow that scrutiny over his time at McKinsey is "well deserved."

"I can think of at least four times in the decade or so since I left that I've opened up the newspaper and seen them doing something that was upsetting," he said of the firm. McKinsey has come under fire for its clients, which includes advising the Trump administration's immigration policy and working with Saudi Arabia's autocratic leadership.

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About The Author

Lee DeVito

Leyland “Lee” DeVito is the editor in chief of Detroit Metro Times since 2016. His writing has also been published in Hour Detroit, VICE, In These Times, and New City. He once asked porn star Stormy Daniels to spank him with an issue of Metro Times. She obliged...
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