Blue Cross

Maryland's legislative effort to reform CareFirst BlueCross BlueShield has run into potential snags. The national association that controls the Blue Cross and BlueShield plans said yesterday the Maryland bill may violate the association's rules, putting in jeopardy CareFirst's use of its valuable trademark. In addition, Delaware Insurance Commissioner Donna Lee H. Williams ordered CareFirst not to change its board of directors, bylaws or charter without her approval, so she has "sufficient time to examine the impact of the Maryland events."

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.

CareFirst's sale is bad deal for state consumers Contrary to Jay Hancock's assertions in "CareFirst sale to WellPoint seems a deal worth doing" (Jan. 26), the proposed deal would offer Marylanders less, not more. The insurance commissioner's consultants substantiate that CareFirst, as a local nonprofit insurer, is financially healthy and viable as is. And CareFirst already has the lion's share of Maryland's health insurance market. A merger with a profit-driven company could give it an even more dominant position, which could mean less competition and higher premiums.

Facing sometimes-hostile legislators, CareFirst BlueCross BlueShield Chief Executive Officer William L. Jews said yesterday that if his company is not sold, it would be fine in the short term, but its service would deteriorate as it lost market share to larger national competitors. Members of the House Health and Government Operations committee, however, expressed interest not in CareFirst's potential problems but in ways to help it make health insurance more available and affordable if the proposed sale is blocked.

WellPoint Health Networks Inc. - once known for contentious relationships with hospitals and doctors - is working much more collaboratively now, a pediatrician and a hospital executive said in pre-filed testimony released yesterday. The statements were prepared for hearings over the next two weeks before Maryland Insurance Commissioner Steven B. Larsen, who is to rule next month on whether it is in the public interest for WellPoint to buy CareFirst BlueCross BlueShield for $1.37 billion.

WellPoint Health Networks Inc. almost certainly will not be able to acquire CareFirst BlueCross BlueShield for the $1.3 billion it has already offered - but how much higher the California-based company might be willing to go isn't known, analysts said yesterday. Also, they said, whether WellPoint completes its deal to buy Maryland's largest health insurer will depend on other issues, and ultimately on the state legislature, where there has been strong opposition to the deal. On Monday, Maryland Insurance Commissioner Steven B. Larsen released a consultant's report saying that CareFirst is worth more than the $1.3 billion price set in the WellPoint-CareFirst sale agreement.

WASHINGTON - The review of CareFirst BlueCross BlueShield's plan to convert to for-profit operation entered another phase yesterday, as the District of Columbia's insurance commissioner conducted an initial public comment session and sought additional information from CareFirst. CareFirst, based in Owings Mills, is seeking approval to convert and be acquired by WellPoint Health Networks Inc., a California insurer that operates Blue Cross plans in three states. Maryland's insurance commissioner already has held five days of formal hearings and several sessions for the public to express opinions.

CareFirst BlueCross Blue- Shield and WellPoint Health Networks Inc. will probably go ahead with their deal, despite restrictions imposed by the Maryland legislature, a number of people close to the process predicted yesterday. CareFirst, the state's largest nonprofit health insurer, wants to convert to for-profit status and sell itself to WellPoint. Although the contract between companies calls for WellPoint to pay $850 million in stock and $450 million in cash, Maryland lawmakers voted that the deal should be all in cash.

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.

MARYLAND'S General Assembly likes to provide business a friendly forum to work out turf battles and regulatory concerns. Remarkable it is, then, that a venerable member of the business community - CareFirst BlueCross BlueShield - should encounter unremitting opposition in Annapolis. The company wants to shed its nonprofit status and accept a $1.3 billion purchase offer from WellPoint Health Network, a California-based firm. Opposition has come from many directions, including a report by the Abell Foundation of Baltimore that found no "economic or business reasons why Blue Cross of Maryland should be sold."