Maryland Lawmakers to ‘Thwart’ Sale of Carefirst to WellPoint
Maryland legislators opposed to the sale of not-for-profit insurer CareFirst BlueCross BlueShield to California's WellPoint Health Networks say they plan to "thwart" the deal "and force the health insurer to better protect the poor," the Washington Post reports. Leaders in the House of Delegates, Senate President Thomas V. Mike Miller (D), Gov. Parris Glendening (D) and Attorney General Joseph Curran (D) have all "voiced misgivings" about the proposed sale (LeDuc/Mosk, Washington Post, 12/1). WellPoint has agreed to pay $1.3 billion in a stock and cash deal to acquire CareFirst, the largest health insurer in the Washington-Baltimore area. Because CareFirst is an "insurer of last resort" in Maryland, Delaware and Washington, D.C., insurance regulators and Congress would have to approve the company's conversion to for-profit status before it could be sold to WellPoint (California Healthline, 11/26). Since most of CareFirst's business is in Maryland, approval of the conversion there is "critical." But the Post reports that lawmakers there "are less interested in the company turning into a for-profit insurer than they are in returning [it] to its original mission of covering the poor."
If the sale is approved, the profits from the sale -- expected to be at least $1.3 billion -- would be divided among Maryland, Delaware and Washington, D.C., to "compensate for past tax advantages the not-for-profit has enjoyed" (Washington Post, 12/1). As a not-for-profit insurer that offers coverage to anyone "regardless of health," CareFirst receives "tens of millions of dollars" in hospital discounts and tax breaks. Also, not-for-profit insurers receive a 4% discount in Maryland on hospital rates. CareFirst earns $30 million annually through the hospital discount. The Baltimore Sun reports that CareFirst has "increasingly" withdrawn from unprofitable markets, forcing about 200,000 Marylanders -- mostly the "poor, elderly or sick" -- to obtain other health insurance. For example, CareFirst in 1999 stopped offering its Medicare+Choice plan in 17 rural counties, but by the end of the year it had dropped from the Medicare program "altogether." Last year, CareFirst said it would "cut back" on its Medicaid plans, but this year it dropped the program entirely, forcing 40,000 patients into different HMOs. While CareFirst continues to offer "open enrollment" policies -- coverage that does not require a health exam -- it has attempted to increase the premiums for such coverage by 47% last year and 50% this year. Maryland's insurance commissioner denied those requests (Salganik, Baltimore Sun, 12/2).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.