IT IS NOT EVERY DAY that tensions between the District of Columbia and its neighboring jurisdictions turn into a shouting match. But ever since the Maryland insurance commissioner's decision to scrap the privatization of CareFirst BlueCross BlueShield, the region's biggest health insurance provider, quite a lot of bad feeling has come out into the open. In one corner stands Steven B. Larsen, the Maryland insurance commissioner, whose devastating report on the underpricing of CareFirst, a nonprofit, put an end to the proposed sale of the company to WellPoint Health Networks. Alongside him stands Maryland's General Assembly, which took Mr. Larsen's criticism of the CareFirst board to heart and has passed legislation, now awaiting the governor's signature, that commands the company to return to its nonprofit origins and its original mission: to offer insurance at "minimum cost and expense." In addition, the legislature's bill calls for the removal of 10 of the current CareFirst board members and their replacement by people selected by Maryland politicians.
The District's insurance commissioner, Lawrence H. Mirel, initially agreed with Mr. Larsen's verdict on the sale of CareFirst. Nevertheless, he has since called the Maryland legislature's proposals a "direct and unwarranted attack on the District's health insurance system." He says he is concerned that the Maryland proposal will weaken the company's ability to compete with for-profit insurers, "burden it with unspecified requirements" and eventually force it to go out of business. The 10 new board members will, he fears, "politicize" a well-run company, one that provides insurance for half the District's residents (a judgment with which the national BlueCross BlueShield Association concurs). He has ordered CareFirst to defy the Maryland legislation. Mr. Larsen has questioned his legal right to do so.
The issue here is whether it is still possible for a health insurance company to remain a genuine nonprofit. Can a company still be run with the deliberate aim of insuring the most people at the smallest price and at the same time avoid bankruptcy? Mr. Mirel says no, correctly noting that few nonprofit insurance companies still exist. Mr. Larsen says yes. But the truth is that neither has produced the facts to prove his case. D.C. Appleseed, a charity that funded research into the valuation of CareFirst and is currently working on a "health impact" study of the company's privatization, believes both Maryland and the District are "putting the cart before the horse." What is needed is a systematic investigation into what CareFirst might usefully do with its $ 100 million annual profit and how the few surviving health insurance nonprofits around the country are -- or are not -- managing. Then they can get on with the important business of deciding the future of CareFirst, preferably without the mudslinging. |
