Executive pay keeps climbing at Health Care Service Corp., even as the health insurance giant lays off workers and looks for a new strategy.

The 10 highest-paid employees at the parent company of several of the nation's Blue Cross Blue Shield plans received a combined $70 million last year, up 58% from 2018. The biggest winner was Paula Steiner, who stepped down as CEO in July. Her total compensation surged 120% to $31 million—about $12 million of which was severance pay.

Board member David Lesar, who took over as interim CEO, pocketed $6.2 million; Maurice Smith, who was named president, got $3.6 million; and board Chairman Milton Carroll got a 429% boost to $4.9 million.

The massive raises come amid increasing cost pressures and rising uncertainty for the entire health care industry, and HCSC in particular. The nation's sixth-largest health insurer cut "a few dozen" staffers late last year—followed by an additional 400 in January—and needs to step up growth to compete with rivals.

The pandemic's financial impact on insurers isn't clear yet. With unemployment skyrocketing in the wake of anti-contagion measures that have essentially locked down the economy, HCSC could see enrollment in its employer-based insurance plans drop. HCSC and some other large insurers have agreed to cover certain patients' out-of-pocket costs for COVID-19 treatments, a move that could cost them money, unless they make it up in premium hikes.

"With COVID-19, any losses incurred by these insurance companies because they're waiving copays will directly come out of insurance premiums the next year, or negotiated prices with providers who are going to have to accept lower reimbursement rates," says Attila Hertelendy, a health care expert and business professor at Florida International University.

HCSC, which owns Blue Cross plans in Illinois, Montana, New Mexico, Oklahoma and Texas, is navigating the pandemic without a permanent CEO. The turnover has been expensive. For example, the company's longtime board chairman profits when there's a transition at the top. Carroll, an energy industry executive, pocketed $4.9 million last year as part of a deal—the terms of which were not disclosed—"to ensure a smooth transition" and provide "proper support" to Lesar and Smith, spokesman Greg Thompson says in an email. Carroll's compensation "reflects the additional time, effort, focus and input during this time of transition."

Thompson did not say how many hours per week Carroll, who is also a director at oil services company Halliburton, devotes to HCSC business. He's not the only high-level connection linking HCSC and the Houston-based energy industry giant. Lesar previously served as executive chair of Halliburton, and Patricia Hemingway Hall, who retired five years ago as CEO of HCSC, joined Halliburton's board last year.

While an outgoing chief executive moving into a chairman role or a board member stepping in as interim CEO, like Lesar, often get pay bumps during transitional periods, sources say Carroll's arrangement is unusual for an outside director.

Since HCSC is not a public company, "there's very little oversight and very little transparency," Hertelendy says. "Nobody is holding them accountable so, realistically, they can do whatever they want."

Carroll collected $930,347 in 2018, after getting nearly $5 million in each of the two previous years as part of a deal to oversee the leadership transition when Steiner succeeded Hall. Steiner, who spent more than three decades at Blue Cross & Blue Shield companies, left after disagreeing with directors over long-term growth plans.

Carroll's compensation is far more than nonexecutive board chairmen got at comparable publicly traded health insurers. Humana and Cigna, for example, paid their chairmen $544,044 and $575,352, respectively.

Board compensation at HCSC "is designed to attract and retain the most qualified business leaders with broad and diverse experience to provide strategic counsel and guidance in the dynamic and rapidly evolving health care industry," Thompson says. He notes that executive compensation is determined by the board, with guidance from outside advisers.

Some of the most common performance metrics that health insurance companies use to determine executive compensation are enrollment, market share and customer satisfaction, says Judy Canavan, leader of BDO's compensation surveys practice. Revenue is also considered, but companies should be mindful that growth could result from higher prices, she says.

Thompson says metrics at HCSC include "expanding access to coverage and efforts to help control the rise in medical costs for our members," in addition to market competitiveness and relevant peer data.