WITH A METAPHORICAL drumroll, Maryland's insurance commissioner, Steven B. Larsen, this week rejected the proposed sale of CareFirst BlueCross BlueShield, the largest health insurance provider in the Washington region. CareFirst's board of directors, arguing that the nonprofit needed better access to capital in order to grow, had proposed to sell the company for $ 1.37 billion to for-profit WellPoint Health Networks. Mr. Larsen denounced the sale on the grounds that the price was too low, that company executives would be illegally enriched by $ 119 million, and that the company had failed to even prove the necessity of the sale: CareFirst does not, in fact, suffer from a shortage of capital. There is little to add to Mr. Larsen's analysis, which was so concise and so devastating that the D.C. insurance commissioner already has said that he will drop the District's review of the sale. And neither the Maryland legislature nor any other local jurisdiction is likely to look favorably on it.
Yet the CareFirst saga is not over. Local officials' responsibility for the company, which is failing to operate in the best interests of the 3.2 million people it serves in the District, Maryland, Virginia and Delaware, does not end either. On the one hand, area legislatures could call for the dissolution of the company's board and force the management to return to the company's original, founding mission: to offer insurance at "minimum cost and expense." Alternatively, the sale of CareFirst -- for a different price, under different conditions -- could be reconsidered. But before any decision is made, authorities need to know much more about its potential effect on local health care. Would premiums rise or fall? Would benefits increase or diminish? Would coverage increase or shrink? As Mr. Larsen pointed out, WellPoint did not provide enough information to enable the Maryland Insurance Administration to make these judgments. Next time around, CareFirst's management, and CareFirst's overseers, owe it to the public to do so. |
