CareFirst is now facing a difficult course, indeed

March 09, 2003|By JAY HANCOCK

TALLY HO, CareFirst BlueCross BlueShield of Maryland. The path is clear.

A year of regulatory deliberation, 15 days of hearings, hundreds of witnesses, 89,911 pages of evidentiary documents and incalculable legislative kibitzing have produced a stirring consensus about the kind of CareFirst that Maryland deserves.

As the state's biggest health insurer, CareFirst, here is your new assignment:

Make low-price policies your top priority, but for gosh sakes be nice to the doctors, hospitals and other providers who help drive up the cost of insurance.

Shower Maryland with affordable, generous medical coverage, but stay in business, too.

Don't build up big reserves to cover unexpected claims; that makes it look like you're making a "profit." In fact, don't follow sound underwriting practices. We Marylanders have decided that "affordable coverage" means "below cost." Put people first, not profits.

But whatever you do, don't get into financial trouble, either! You remember the last time that happened, CareFirst. A decade ago you landed in deep political mud for making too little money, almost as much as you are in now for making too much.

If this sounds like prescription impossible, that's because it is.

Insurance Commissioner Steven B. Larsen's mighty rejection of CareFirst's merger bid with WellPoint Health Networks Inc. may prove a landmark in Maryland history. But the landmark looks less like the Sears Tower and more like Topeka, Kan.; the view ahead and the view behind are pretty much the same.

No matter how much reformers wish it, a forever-nonprofit CareFirst will not make a big difference for Maryland's uninsured and will have little effect on insurance premiums.

CareFirst wanted to turn for-profit and sell itself to WellPoint for $1.37 billion. The $1.37 billion would have gone into a health care foundation for Maryland, Delaware and Washington.

Larsen's justifiable and courageous rejection of the deal was based on an outrageous money grab by CareFirst executives and a wimpy auction that probably sold the company too low. I supported the merger because of WellPoint's excellent reputation, the prospect of a $1 billion Maryland medical foundation and the assumption that Larsen could bump up the price and chop down the executive loot.

But Larsen spiked the whole shebang. The bonuses killed the deal, as I predicted, and now policy-makers are dreaming about remaking CareFirst as a truly nonprofit, community friendly Blue Cross plan.

Maybe their model will be the nonprofit Blue Cross Blue Shield of Michigan, which lost $500 million in the small-group market and raised 2003 premiums for small-group and individual subscribers by 22 percent and 23 percent, respectively. How's that for affordable?

Or perhaps the model will be the nonprofit Blue Cross and Blue Shield of Minnesota, where the top boss makes $2.8 million and which closed its Medicare HMO in the 1990s because of big losses.

CareFirst might fashion itself after the nonprofit Blue Cross and Blue Shield of Massachusetts, where the chief makes $3 million and which pulled out of the Medicaid program for the poor. Maybe the nonprofit Blue Cross and Blue Shield of Louisiana is a template. Louisiana has the fourth-worst percentage of uninsured in the nation.

Larsen noted disapprovingly that the for-profit WellPoint "is viewed as a tough negotiator" by doctors and hospitals.

Every nonprofit Blue Cross anywhere beats the Beelzebub out of its medical providers, too, with no apologies. Nonprofit Blues have been suing or sued by providers over reimbursement in Illinois, Louisiana, Minnesota and Tennessee, and I probably missed some.

All over the country, nonprofit plans act like the for-profit plans. It's not that they're greedy; it's that they must run good organizations, stay solvent and pass along the cost of care over which they have little control.

There are two ways a CareFirst overhaul could significantly broaden Maryland coverage.

The first, a wholesale inclusion of the now-uninsured at below-cost rates, with no other adjustment, would bankrupt the company in the short run. The second, shifting the cost of wider coverage to big employers, would drive away customers, bankrupting the company in the long run.

Meet the new plan. Same as the old plan.

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