Report blasts insurer's plan to be for-profit

The conversion of a CareFirst Blues plan could destabilize Maryland's market and raise the number of uninsured.

By Myrle Croasdale, AMNews staff. Dec. 24/31, 2001.

The conversion of CareFirst BlueCross BlueShield into a for-profit health insurer would be bad for Maryland's health care system, according to a report commissioned by the Abell Foundation in Baltimore. Such a move could increase the number of uninsured in the state without lowering premiums or improving care.

Such a bleak outlook gives opponents to CareFirst's conversion more ammunition and is one indication that the path will be a rocky one.

However, analysts said, more money may be all it takes to get the deal done. Thousand Oaks, Calif.-based WellPoint Health Networks Inc. has agreed to pay $1.3 billion for CareFirst, with the entire amount going to charitable foundations in states where CareFirst has tax-free status. Some suggest the demands of the four governing bodies involved will drive the price toward $1.5 billion to $1.8 billion.

The Maryland State Medical Society is opposed to the conversion and said CareFirst's drive to amass huge financial reserves had alienated it from the physician community.

The Abell report was written before WellPoint announced its intention to buy CareFirst and was authored by a former health insurance executive, Carl Schramm. Newspaper accounts state the foundation funded the report at the request of state Lt. Gov. Kathleen Kennedy Townsend. [...]