A terminal case

January 23, 2003

TALK ABOUT a patient that's past reviving: CareFirst BlueCross BlueShield and its would-be new owner say they will bring their sales agreement into compliance with Maryland law, hoping to make it palatable to regulators and a skeptical General Assembly.

With a final decision on their sale proposal at hand, they are offering concessions that should have been made months ago. If the issue were not so important, this last-minute promise to follow the law would be almost laughable.

The proposed conversion of CareFirst to for-profit status has been in trouble for months in Annapolis, where it has few supporters. Disclosed belatedly - long after rumors of their existence - the bonuses for CareFirst executives seemed certain to sink the deal without regard to its more fundamental aspects. As word circulated in Annapolis on Tuesday that the bonuses were out, legislators showed their feelings by wondering if the $70 million had been tucked into a remote corner of the $1.37 billion sales proposal.

Having been made illegal last year by the Assembly, the bonuses had "deal killer" stamped all over them.

The companies' agreement to see if CareFirst might fetch a higher price is also welcome. The $1.37 billion offered by WellPoint Health Networks, a California company, has been regarded as too low by some legislators and by a consultant who pegged the value at $1.8 billion - $500 million more than the WellPoint offer. Whether allowing others to bid now will represent a fair test of the company's value seems open to question. If there are other buyers - and there were, earlier in the process - they might conclude the picture is too muddled.

After months of expert testimony and careful study, Insurance Commissioner Steven B. Larsen will decide if CareFirst has proved the conversion and sale are in the best interest of Marylanders. Will conversion be good for CareFirst subscribers and for the state, which had looked to the company as an insurer of last resort?

Mr. Larsen's report is expected by Feb. 20. He can approve, reject or amend the plan. Legislators will have 90 days to approve or disapprove the ruling.

The commissioner and the Assembly may still find that a for-profit conversion and sale are in the best interests of the state. Given that possibility, it's a pity that CareFirst and WellPoint have made such a finding so difficult.

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