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Posted at 12:06 PM ET, 10/21/2009

D.C. health reform in one simple step

By washingtonpost.com editors

By Walter Smith
Washington

Many insurance companies are using their influence on Capitol Hill to oppose the health-care reform proposals before Congress. However that congressional battle plays out, here in the District we have an opportunity right now to compel our largest health insurer to reduce premiums across the region.

Acting D.C. Insurance Commissioner Gennet Purcell is weighing whether CareFirst BlueCross BlueShield’s D.C. affiliate has been overcharging its subscribers, with the result that it has accumulated too much of a surplus. Carefirst’s surplus now totals $687.million. Under a law passed last year by the D.C. Council, the commissioner can direct CareFirst to develop a plan to spend those funds on community health needs — including reduced premiums — if she finds that the surplus is larger than the company needs for financial stability. She would also work with the commissioners in Maryland and Virginia to make sure the plan is fair to all three jurisdictions in which the company operates.

Many people do not realize that CareFirst is a nonprofit insurance provider. In the District, the company operates under a federal charter requiring it to serve as “a charitable and benevolent institution” whose assets are owned by the public. With its 2008 legislation, the D.C. Council determined that it was time to hold the company accountable to that public.

The legislation was necessary because in 2005 the previous insurance commissioner determined that the company should reduce what was then a $500 million surplus, but since then the company has increased it nearly another $200 million.

D.C. Appleseed has long argued that CareFirst has accumulated larger surpluses than needed and is therefore not meeting its nonprofit obligation to the public. Recently, independent experts testified before the insurance commissioner that CareFirst’s surplus is well above industry standards and that of its competitors. The commissioner’s ruling could bring almost immediate premium relief to millions of people in the national capital area. Furthermore, because CareFirst is the dominant insurer in the area, a reduction in its premiums could benefit not just its own subscribers but also those of its competitors, which would be under pressure to cut their rates to keep pace.

The insurance commissioner has invited the public to weigh in on this issue by Nov. 2. The D.C. government’s Web site explains how to do that.

It’s time to hold CareFirst accountable to its mission of making health-care coverage as affordable as possible to as many people as possible.

The writer is executive director of D.C. Appleseed.

By washingtonpost.com editors  | October 21, 2009; 12:06 PM ET
Categories:  D.C., health care, public health  
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Comments

It would be really nice if the Washington Post could give the public a link to the website at which we could weigh in with the DC government. Thank you!

Posted by: jwholey | October 22, 2009 5:32 AM | Report abuse

Once again, we must refute inaccurate information disseminated by DC Appleseed as part of its misguided attempts to redirect literally hundreds of millions dollars of premiums paid by CareFirst members, money that CareFirst has set aside to pay the health claims of its 1 million members in the greater Washington area.

DC Appleseed continues to wrongly contend that CareFirst’s National Capital Area affiliate holds “excessive” reserves. That is not the case.

In an era which has seen the collapse of financial institutions and insurance giants once thought invincible, it's irresponsible to suggest a health insurer’s reserves are excessive.

CareFirst’s reserves fall on the lower end of the range recommended by respected, international actuarial consultants engaged to advise CareFirst’s Board.

Cutting through the arcane minutia of actuarial science, our reserves are equal to about $740 per insured member – less than a quarter of the cost of a day’s stay at a local hospital. A raid on CareFirst's reserves, as envisioned by DC Appleseed, could have potentially damaging and lasting consequences on our members, the community and the company.

But readers don't have to take our word for it. Others have opined about the wrong-headedness of DC Appleseed's position.

The Post editorialized against a grab of CareFirst reserves just over a year ago (http://www.washingtonpost.com/wp-dyn/content/article/2008/10/17/AR2008101702937.html), and The Baltimore Sun weighed in just a month ago (http://www.baltimoresun.com/business/bal-bz.hancock16sep16,0,916385.column).

Smith does get one thing right: that there is a thorough and comprehensive review underway by regulators in the District and in Maryland. For the sake of our 3.4 million members, it is essential that their interests are firmly protected no matter what the outcome.

Kevin Patrick Kane, spokesman
CareFirst BlueCross BlueShield

Posted by: 4KONG | October 22, 2009 11:05 AM | Report abuse

CareFirst is a disgrace.
Their range of products is extremely limited, and inclusion in the HSA program is difficult if you or any member of your family had any health problems at all within 5 years before applying.
This forces subscribers whose COBRA has expired, or those newly relocated to the DC Metro area, into the more expensive Open Enrollment Plans which cost at least twice as much for lower benefits which are not tax-advantaged.
The list of participating doctors is limited so participants are forced to pay out of pocket and never reach the deductible limits. The mail-order pharmacy is more expensive than buying drugs at Costco without insurance, or is quickly exhausted under the limited drug plan should you choose to use it.
It amounts to extemely expensive catastrophic care insurance, but who can afford not to be covered?

Their reserve is the least of their faults and problems.
The only thing that saves them is that government health care would be far, far worse and more expensive.
We're basically screwed and neither Obama not Congress gives a damn. They don't even know what the problems are.

Posted by: parkbench | October 22, 2009 7:47 PM | Report abuse

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