Beyond price

September 24, 2002

There's one group of citizens who ought to be at the center of Insurance Commissioner Steven Larsen's deliberations over the proposed sale of CareFirst BlueCross Blueshield: those who can't afford health insurance but aren't poor enough to qualify for state assistance.

They're the ones who'll benefit from a top-dollar sale that could solidify the safety net CareFirst was established to provide. And they will be left without coverage if a low sale price doesn't yield enough for the state to pick up where CareFirst leaves off.

In recent weeks, a consultant said the proposed sale price should be as much as $950 million higher than the $1.3 billion offered by WellPoint Health Networks.

Mr. Larsen must wonder if the $33.2 million in bonuses promised to CareFirst executives by WellPoint made CareFirst less objective in its evaluation of competing offers.

Sale price and bonus are not incidental matters, to be sure. But neither one is the most important issue for the commissioner.

There are more fundamental questions: Would a sale at any price be in the overall best interests of the state? Will Maryland be able to re-create with its share of the proceeds the health insurance they had hoped CareFirst would provide?

When CareFirst sought to become a for-profit entity and then sell itself to WellPoint , critics of the deal wondered why the state would bless a deal that left it with responsibility for the uninsured -- and insufficient resources to provide the needed coverage.

Mr. Larsen must try to determine if Maryland's share of the proceeds would allow it to provide the insurance its people need, and whether WellPoint would raise premiums or co-pays or cut benefits for those already insured by CareFirst.

So far, legislators have shown a distinct lack of enthusiasm for the proposed sale. They were concerned enough to make Mr. Larsen's decision subject to their approval, and they outlawed the bonuses and considered a number of other measures.

The commissioner plans more public hearings before making a decision later this year. Then the Assembly, which meets again in January, will have 90 days to approve or reject his recommendation.

Mr. Larsen's cautious approach has been reassuring, and it should yield the most complete picture yet of whether this sale -- or any sale -- is a wise idea. When the legislature revisits the proposal next year, the decision will be informed by hard facts, which is as it should be.

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