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CareFirst’s proposed converstion has lawmakers singing the blues

Although Maryland lawmakers appear united in their distaste for CareFirst BlueCross BlueShield’s proposed conversion to a for-profit company, the General Assembly seems still divided on how best to deal with the situation.

Numerous bills running the gamut of issues have been introduced regarding CareFirst’s intention to convert to for-profit and merge with California-based WellPoint Health Networks. One is aimed at blocking the merger, several deal with limiting benefits to the company’s officers if the merger goes through, and still more focus on regulating the company as a nonprofit in the meantime.

One of the most heated issues for legislators is just how far their powers stretch and — with that in mind — whether or not the General Assembly should act now to legislate against the conversion or wait for state Insurance Commissioner Steve Larsen’s report.

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“The conversion is not in our hands,” said Speaker of the House Casper R. Taylor Jr., D-Allegany. “It’s in the insurance commissioner’s hands. I think the legislature is satisfied that the insurance regulator will do his thing and make a report at the end of the process.”

But not all lawmakers feel the same. Del. Shane E. Pendergrass, D-Howard, has introduced the first bill aimed at blocking the conversion altogether.

“I can let the process go out and let the insurance administrator spend two years getting all the information and making a very responsible decision, or I can stop the process much earlier and say, ‘Legislators are the policy-makers — this is what I think the policy should be,’” Pendergrass said.

Pendergrass’ bill — House Bill 1254, co-sponsored by Del. Van T. Mitchell, D-Charles — is being heard this afternoon in the Economic Matters Committee.

Mitchell said the legislation is intended to redirect lawmakers’ dialog back to the core issue.

“I was somewhat tired of the rhetoric” in the legislature regarding CareFirst, Mitchell said. “The more I listened to it, the more I felt that the majority of people we had heard [in hearings] and from the constituents’ side were saying they would prefer [CareFirst] did not convert at all.

“Why don’t we get that argument back to the forefront? The decision should be made by the General Assembly of Maryland rather than by the insurance administrator. I believe that’s what we got elected for.”

Del. Michael E. Busch, D-Anne Arundel, has introduced several bills dealing with the issue, including one that requires CareFirst to prove that its conversion is in the best interest of Marylanders, shifting the burden of proof from the state, where it currently rests.

That bill, HB 2, passed the House earlier this month and now is in the Senate Finance Committee.

Busch said the issues surrounding the conversion are extraordinarily complex, and the legislature still is in the early stages of dealing with the situation.

“There are bills in to forbid the conversion completely,” Busch said. “I don’t know what legal ramifications there would be, whether it would stand up in court or not.”

Legislators also are examining how to fill the void left by CareFirst if it is converted and acquired, how much it is worth to the state and how to improve its current performance as a nonprofit, Busch said.

He also said none of the legislators to whom he has spoken have shown support for conversion and a merger, but added that Maryland is only one piece of the puzzle for a company that straddles three states and Washington.

“The process we’re in here is only one of four wheels on this bus,” Busch said. “There still are [the decisions of] Delaware and Virginia and D.C. and the federal government. The conversion in Georgia [of its BlueCross BlueShield plan] took four years. I would think [the process] would take a much greater amount of time in this case.”

CareFirst Vice President for Government Affairs Frances P. Doherty was not available for comment yesterday.