People have their say on CareFirst conversion

Most oppose insurer's plan to switch to for-profit, sell itself

March 01, 2002|By M. William Salganik | M. William Salganik,SUN STAFF

It didn't seem, said Dr. James Chesley, like a fair deal.

WellPoint Health Networks Inc., a California insurer, is proposing to pay $1.3 billion to buy CareFirst BlueCross BlueShield, which has about $800 million in reserves.

"That's like buying a new Jeep Grand Cherokee for $32,000, driving it away, then opening the glove compartment and finding $18,000 there," said Chesley, a gastroenterologist who practices in southern Prince George's County.

Chesley was one of about 150 people who spoke at a series of five "opportunities for public comment" around the state over the past three weeks. Most opposed the deal, which would include CareFirst converting to for-profit status.

State Insurance Commissioner Steven B. Larsen, who will rule on whether the CareFirst deal is in the public interest, said he conducted the sessions to learn the concerns of Marylanders so they can be addressed during a series of formal hearings that are scheduled to begin March 11.

"The arguments raised here are useful in putting questions to CareFirst," he said after the final session Wednesday night in Clinton.

David D. Wolf, executive vice president of CareFirst, who attended some of the sessions, said he was pleased with them, despite the degree of opposition to his company's plans.

"They've been effective," he said. "They've allowed the [insurance] commissioner, the attorney general and ourselves to hear the concerns so we can be prepared to address them in the hearings."

Many of those who spoke in opposition, like Chesley, who is president of the Prince George's County Medical Society, were doctors or administrators and trustees at hospitals. Both the state medical society and the hospital trade group are fighting the conversion and sale.

Other speakers were simply among the 2 million Marylanders insured by CareFirst - some expressing opposition; others asking state officials to look carefully at the impact on the cost and availability of insurance when considering whether to allow CareFirst to proceed.

For example, Katherine Davies of Bethesda, who said six people in her family are Blue Cross members, spoke Wednesday, citing figures she had culled from the World Wide Web on high salaries for WellPoint executives. She said the deal would lead to "one of three things - they will charge more, they will cover less or they will pay doctors and hospitals less, whereupon there will be a stampede out of this plan."

Muriel Nickerson of Solomons, who said she had been a Blue Cross member "for probably about 50 or 60 years," said she lived in a senior community, where concern was high over health insurance, and that she was confused by the deal.

"I just got my little letter from CareFirst, and I didn't find it very helpful at all," she said. "They're just saying, `Oh, it would be nice.'"

Each of the five sessions - others were in Bel Air, Wye Mills, Rockville and Hagerstown - began with Larsen giving a brief introduction to the process. Then, a CareFirst representative talked for about 15 minutes about why it wanted to convert to for-profit and sell itself.

At Wednesday's session, conducted under an elaborate chandelier in the Cotillion Room of the Colony South Hotel, Wolf spoke for CareFirst, saying that as part of WellPoint, the insurer could offer better service through new technology and "premium increases would be lower than they otherwise would be."

He said there were "many myths and misconceptions as a result of coverage in the media," including concerns that the deal could lead to layoffs of CareFirst workers or changes to the state's system of providing hospital treatment to the uninsured.

CareFirst and WellPoint executives will testify at length - and field questions from Larsen - at three days of hearings this month at University of Maryland, Baltimore County. The third day will also include a public comment session, Larsen said.

By the end of the month, he hopes to have hired consultants to review the finances of the deal and the potential impact on consumers. They will file preliminary reports in 120 days and final reports in 180.

Larsen said he expects to hold additional hearings when the reports are ready.

Because CareFirst also operates Blue Cross plans in the District of Columbia and Delaware, the insurance commissioners there will also conduct hearings - none is yet scheduled - and rule independently on the proposal.

"We will watch the Maryland hearings and look at something down the line," said Tammy Velasquez, a spokeswoman for Washington's Department of Insurance and Securities Regulation.

Michael Rich, legal counsel to the Delaware Department of Insurance, said hearings there would probably be held in "late fall at the earliest."

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