(Washington, DC) - District of Columbia Insurance & Securities (DISR) Commissioner Lawrence Mirel has urged Maryland Governor Robert Ehrlich to veto a bill recently enacted by the Maryland legislature that would restructure CareFirst, the Maryland holding company that includes blue cross plans in Maryland, the District of Columbia, and Delaware.
The Maryland legislation, known as House Bill 1179, would remove board members of CareFirst and replace them with persons selected by a commission appointed by Maryland political leaders. In a letter to Governor Ehrlich Commissioner Mirel called this “a clear attempt to politicize the operation of a private, non-profit corporation whose current members were chosen in accordance with the corporation’s bylaws and who have legal terms of office.”
Mirel notes in his letter that this legislative interference with the operations of the CareFirst board has caused the Blue Cross/Blue Shield Association to threaten to withdraw the right of CareFirst affiliates to use the “blue cross” designation. “The loss of that ‘brand’ would have a devastating effect” on GHMSI, the District’s blue cross plan and the largest asset of CareFirst, he told Governor Erhlich. Mirel says he is concerned as well with the attempt of the Maryland legislature to have Maryland politicians, including the Governor, dominate the board that would set policy for the District’s blue cross plan.
Mirel also objects to the law’s mandate to change the mission of CareFirst, so that it would operate more like a non-profit. Although Mirel admits that it is not entirely clear what this means, he writes that “it appears at the least that the legislature wants to force CareFirst and its affiliates, including GHMSI, to insure persons that competing insurers will not insure, and to charge less for insurers than its competitors charge.” That, says Mirel, will likely put GHMSI out of business. In his letter, Mirel cites the case of the non-profit George Washington University Health Plan which closed its doors last year because it was unable to compete with for-profit health companies, “leaving hundreds of former subscribers—especially those who were older or who had developed medical problems while in the Plan—uninsured and uninsurable.” Mirel said he did not want the same fate for GHMSI.
In addition to Commissioner Mirel, Delaware Insurance Commissioner, Donna Lee Williams, has expressed her unhappiness with the Maryland legislation, issuing an order that no changes in the current structure of CareFirst can be made without her specific approval. The CareFirst holding company was created by an agreement among Delaware, the District of Columbia and Maryland. Commissioner Mirel and Commissioner Williams both charge that the unilateral attempt of the Maryland legislature to change the provisions of that agreement is not lawful and could result in the abrogation of that agreement, which would harm the health insurance market in all three jurisdictions.
The DC Department of Insurance and Securities Regulation (DISR) has two missions, (1) to provide fair, efficient and fast regulatory supervision of the insurance and securities businesses for the protection of the people of the District of Columbia, and (2) to create conditions that will retain and attract national and international insurance and other financial businesses to the District.