| Insurance Firm Doesn't Ensure Peace of Mind |
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| The Washington Post |
| Marc Fisher |
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| When Whitman Ridgway opened a letter from his health insurance company announcing changes in his coverage, he instinctively braced for the worst.
Sure enough, the missive from CareFirst, the region's largest health insurer, declared that Ridgway's catastrophic health plan would henceforth provide "no benefits . . . for any illness suffered as an act of war, declared or not declared."
Ridgway, who lives in Silver Spring, was alarmed: Did this mean that if Washington were hit by another terrorist attack, injured CareFirst customers would have no coverage?
As it turns out, according to CareFirst spokesman Jeffrey Valentine, the notice was "a very poorly drafted letter" that actually meant to send entirely the opposite message: CareFirst henceforth will cover injuries from acts of terrorism. The insurer had been ordered by Maryland regulators to eliminate its old exclusion for coverage stemming from terrorist acts.
The letter, which was sent to 150,000 customers in Virginia, Maryland, the District and Delaware, "gave the mistaken impression that we were actually reducing coverage when we were expanding it," Valentine says.
CareFirst spends a lot of time trying to defend itself these days.
Researchers at George Washington and Georgetown universities have released a study concluding that CareFirst is failing to meet Washington's health needs and, more important, is doing less here than other BlueCross BlueShield companies across the country do for their communities.
The study -- commissioned by the D.C. Appleseed Center, an advocacy group that examines some of the District's most intractable problems -- says that even though CareFirst is a nonprofit that is required to act in a charitable fashion, it does only the minimum expected under federal and state laws to market policies to high-risk groups.
The rates CareFirst pays to doctors and hospitals are "among the lowest offered by any insurer and are lower than their cost of providing care," the study says. And researchers found that CareFirst lags behind other insurers in providing grants to the area's many low-income residents.
In all, the report paints a damning picture of the company that insures nearly 3.3 million people in the region.
CareFirst does not contest the accuracy of the report. "We're not finding fault with the Appleseed report," Valentine says. "We're constantly striving to improve our product offerings."
Valentine says CareFirst would happily spend more to subsidize health insurance for those who can't afford it -- but "the real question is, who pays and how much?" Those who pay for insurance might be willing to pay an extra nickel a week to insure the needy, but would they accept premiums going up by $100 a year? "These costs must be shared by our members," he says. "These are not easy answers."
The researchers and CareFirst praise WellPoint, the for-profit insurer that CareFirst tried to sell itself to before Maryland regulators put the kibosh on the deal. The researchers note that WellPoint is more innovative in its offering of subsidized policies than CareFirst, and Valentine says that "frankly, that was one of the reasons we were looking to have a partner."
But it's clear from the record of that aborted sale that CareFirst cares first about its own share of the pie. A report by former Maryland insurance commissioner Steven Larsen earlier this year concluded that CareFirst's attempt to sell itself to WellPoint in 2001 for $1.4 billion was an effort to enrich its top executives.
And the Appleseed report contrasts CareFirst's relatively meager grants to local charities with its huge surpluses ($40 million in the second quarter of this year, up 66 percent over the previous year) and the staggering compensation paid to its executives. CareFirst chief executive William Jews was paid $2.8 million in salary and bonuses last year.
Valentine rejects any connection between CareFirst's spending on health care and payments to its top dogs. "Our compensation for executives is developed by the board of directors following external counsel on what is competitive pay," he says.
Is it any surprise that hundreds of CareFirst customers who received that letter were only too ready to believe that their insurer would cast them out in the event of terrorist attack?
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