December 16, 2008
FOR IMMEDIATE RELEASE
Contact: Asher Corson
202.741.0932
*****STATEMENT*****STATEMENT*****
Cheh’s Statement on Passage of CareFirst Legislation
(Washington DC) In passing my CareFirst BlueCross BlueShield legislation today, (“Medical Insurance Empowerment Amendment Act of 2008”) I am proud that the Council of the District of Columbia took affirmative action to ensure that the largest health care insurance provider in the Mid-Atlantic region complies with its “charitable and benevolent” mission.
On the heels of my investigation into CareFirst, I introduced the “Medical Insurance Empowerment Amendment Act of 2008,” which proposed a framework for the District to evaluate whether the company’s surplus level is inappropriately excessive.
For months, I have pointed out that CareFirst BlueCross BlueShield holds over $753 million in cash reserves, a surplus level believed to be beyond its needs and out of proportion with other insurance providers. On December 3rd, Maryland Insurance Commissioner Ralph Tyler announced that he too would undertake an investigation to determine whether CareFirst’s surplus level is excessive.
After receiving substantial input from the public, insurance regulators in Maryland and in the District, and CareFirst itself, the D.C. Council voted today to ensure that CareFirst fulfills its obligation to pursue its “public health mission,” either through expenditures that promote and safeguard the public health or through rate reduction for its current subscribers. Like Maryland, the District owes it to CareFirst’s subscribers to have a mechanism in place to verify that CareFirst meets its obligations. The majority CareFirst’s District-based affiliate’s subscribers live or work in the District, and the District has a duty to regulate the company’s behavior.
By enacting this legislation, the District will finally join Maryland in recognizing CareFirst’s obligation to promote the public health. In Maryland, CareFirst is required to give $4 million to the Senior Prescription Drug program if its surplus grows over a certain limit. My bill does not tell CareFirst how to spend its excess surplus. Instead, it safeguards the authority of the company’s board to direct the money as it sees fit, whether it goes to reduce subscriber premiums or to support worthy community health programs. And only after independent experts have convinced the District’s Commissioner of Insurance that the surplus is too large may he order the corporation to develop a plan to spend it down. The key is that there is now a system of accountability.
Because of CareFirst’s unique nature as a non-profit health insurer, and because of its “charitable and benevolent” mission, it plays a special role in providing health insurance for those who have the hardest time obtaining it on the open market. The “Open Enrollment” program currently mandated by District law requires CareFirst to offer health insurance to those with pre-existing conditions, such as cancer or diabetes. Far too often, these individuals are priced out of purchasing insurance on the open market. My bill ensures that the Open Enrollment program will continue to provide affordable, meaningful insurance for our most vulnerable residents.
Finally, the bill eliminates the risk that CareFirst will attempt to convert to a for-profit entity to the detriment of its subscribers and the public. My legislation flat-out prohibits conversion, a step that provides assurance that the fiasco of the attempted conversion in 2003 – in which CareFirst executives ignored the company’s non-profit obligations in order to reap personal windfalls – will not be repeated.
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