Governor opposes CareFirst conversion

He's for forcing return to nonprofit roots

February 15, 2002|By Michael Dresser | Michael Dresser,SUN STAFF

Gov. Parris N. Glendening told lawmakers yesterday that he supports a bill that would force CareFirst Blue- Cross Blue Shield to return to its roots as a nonprofit provider of affordable health care coverage for the hard-to-insure.

In a letter to House Economic Matters Committee Chairman Michael E. Busch, the governor endorsed legislation that would tie CareFirst's exemption from the state insurance premium tax to significant changes in the way it does business.

The changes would include a restructuring of the CareFirst board and regulation of directors' pay by the state insurance commissioner.

Glendening made the endorsement as the committee held hearings on the legislation, which is billed by its sponsors as a "nonprofit reform" measure and by others as a way of derailing CareFirst's sale to a for-profit California company.

WellPoint Health Networks has agreed to pay $1.3 billion for CareFirst. It is now seeking approval from Insurance Commissioner Steven B. Larsen for the deal.

The legislation, sponsored by Busch and House Speaker Casper R. Taylor Jr., received support from a diverse group representing hospitals, physicians, service station owners, social workers and health care advocates.

Larsen urged lawmakers not to adopt provisions that would interfere with his review process, but the only outright opponent was CareFirst.

Busch, an Annapolis Democrat, sparred with CareFirst General Counsel John Picciotto over the insurer's board.

Board is praised

Picciotto praised the performance of the current directors and objected to the provision reconstituting the panel.

He said the board had done a great job of bringing the insurer back from the brink of insolvency in the early 1990s.

Busch countered that the directors were doing a great job of making CareFirst a profitable company, but a poor job of carrying out its mission. He said it was never the legislature's intent for CareFirst to act like a "Fortune 500 company."

Conversion losing friends

The hearing came at a time when sentiment is running strong against the conversion deal and CareFirst itself.

The General Assembly is widely expected to pass a bill to shift to CareFirst the burden of proof that the deal is in the public interest.

That bill, which CareFirst is not opposing, passed the House unanimously last week. It is sponsored by Senate President Thomas V. Mike Miller.

CareFirst's main objective is to head off a bevy of proposals that chip away at various aspects of the WellPoint deal. Its best hope is to stop the bills in the Senate Finance Committee.

A gloomy view

But Miller gave a gloomy view if the insurer's position.

"Blue Cross Blue Shield has a case to make and thus far they've fallen woefully short," the Prince George's County Democrat said.

"They've lost the public relations battle in the eyes of the public as well as the General Assembly."

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