ANNAPOLIS – Ernie Crofoot’s wife retired at 60 and instead of enjoying her newfound free time, she had to deal with a grim reality – with her retirement came the loss of her benefits, and, most important, the loss of her health coverage.
The Crofoots turned to CareFirst BlueCross BlueShield’s open enrollment plan.
“We tried to sign up, but we couldn’t afford it. We expected higher rates, but these rates were very, very high,” said Ernie Crofoot.
The goal of CareFirst, until recently, was to provide inexpensive health care, Crofoot said.
Reform of the health insurer now seems very likely, particularly after Maryland Insurance Commissioner Steven B. Larsen last week rejected the company’s bid to convert to a for-profit company and be sold to California insurer WellPoint Health Networks.
Senate and House lawmakers are not wasting any time. They will meet Monday in a joint briefing with Larsen to review CareFirst’s status and begin steps toward any possible restructuring.
Lawmakers hope to fine-tune legislation already proposed on how CareFirst will act as a nonprofit, said Sen. Thomas Middleton, D-Charles, chairman of the Senate Finance Committee.
“We hope to move this along as thoroughly and expeditiously as possible,” Middleton said.
The General Assembly is facing a huge task. There are 600,000 Marylanders who have no health insurance and an additional 800,000 who are underinsured. In addition, 200,000 seniors lack prescription drug benefits.
“The board (of CareFirst) needs to be reconstituted and the company sent back to its original mission – providing affordable health care to Marylanders,” said Delegate John Donoghue, D-Washington, a member of the House Health and Government Operations Committee.
“The real challenge now is how to fix the problem, the company definitely needs tweaking,” added Delegate Michael Smigiel, R-Cecil, also a member of the committee.
House Speaker Michael Busch, D-Anne Arundel, would not give specifics as to what the next step will be regarding CareFirst, but did say, “Appropriate legislative actions will be taken.”
Crofoot looks forward to the restoration of the company. CareFirst has been acting like a for-profit company for a long time, he said.
The open enrollment plan the Crofoots attempted to sign up with was established by the state and required health insurers to offer health coverage twice a year to individuals regardless of past medical history. In return, the state would give the insurer a 4 percent discount on hospital rates.
The program had the potential to save health insurers $40 million to $50 million a year, but the premiums proved to be very high and thus not affordable for many people.
“They used to be more available to seniors, now that’s lost, they have no more vision, their vision is to make money,” said Crofoot, also the former president of United Seniors of Maryland.
Lawmakers and Larsen took note of the company’s profit motive. The General Assembly banned the $119 million in bonuses CareFirst’s top executives would have received from the sale of the company. And, in his decision, Larsen referred to that extra compensation as “forced on bidders” and “ransom” to purchase the company.
“The commissioner’s decision was a milestone, the next step is to have legislation authorizing the formation of a new BlueCross BlueShield,” Crofoot said.
Critics of CareFirst have also accused the board of grooming the company to go for-profit and be sold, and cite the fact that the company dropped the Medicare and Medicaid programs.
A for-profit company’s management has one primary goal, to make profits, therefore, “you cut your unprofitable clients out,” said Jane Hellawell who represents the League of Women Voters.
Establishing Medicare and Medicaid as part of CareFirst again will “absolutely” be on the legislative agenda, said Smigiel.
Discontent with the insurer’s business practice changes has increased for years, said Glenn Schneider, deputy director of Maryland Citizens’ Health Initiative.
“The commissioner answered our hopes by rejecting this proposal,” Schneider said. “Now it’s time for lawmakers to make it permanent.”