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player ready...“From everything we hear, he is going to sign the bill,” Busch said yesterday. “I’d be shocked if he didn’t. This was unanimously approved by every member of the General Assembly.”
Ehrlich, who has said he will decide whether to sign or veto the legislation by tomorrow, has been under mounting pressure from CareFirst, the national Blue Cross organization, and the Delaware and District of Columbia insurance commissioners to reject the reform bill.
In their letter to the governor, Senate President Thomas V. Mike Miller and Busch reminded Ehrlich that two identical CareFirst measures were unanimously passed last month after Insurance Commissioner Steven B. Larsen delivered a scathing report on the company’s management and board.
Larsen accused CareFirst of approving an illegal $119.7 million executive bonus plan tied to a controversial sale of the nonprofit insurer, which provides health coverage to 2 million Maryland residents.
The national Blue Cross and Blue Shield Association warned Ehrlich last week against signing the reform legislation, which would replace nearly half of the CareFirst board and give state regulators the right to control the salaries of the company’s executives and board members.
Blue Cross threatened to cancel CareFirst’s Blue Cross license if the bill became law. CareFirst officials warned that such an action would lead to loss of business and jobs for the 66-year-old company.
Ehrlich wrote to Busch and Miller, seeking their advice on whether to sign.
In their recommendation, the two Democrats criticized last-minute attempts by CareFirst and the national Blue Cross and Blue Shield Association to kill reform efforts after raising few objections during bill hearings and pledging last month to work with lawmakers.
“In our 50 years of collective legislative experience, we are unable to recall a more open and publicly debated consideration of an issue than that which has taken place surrounding the status of CareFirst,” Miller and Busch wrote.
“A veto of this desperately needed reform legislation would reward corporate disregard for the legislative process, the best interest of the public and the unanimous action of their elected representatives in the Maryland General Assembly,” the letter stated.
By all accounts, Ehrlich’s decision will not be easy.
“We’re just trying to evaluate all the potential problems that could come out of this,” said Kenneth H. Masters, the governor’s chief legislative officer. “We’ve had a lot of letters to the governor supporting the legislation, basically saying these are bad guys and they should be punished by signing this bill.
“Nobody is thrilled by the conduct of this company,” Masters said. “But that’s really beside the point. It’s what happens to the subscribers in Maryland if some of these threatened consequences occur.”
In its letter to Ehrlich, the national Blue Cross organization criticized state lawmakers for their attempts to take control of a private company and its affiliates in two other jurisdictions.
Delaware and District of Columbia insurance regulators joined that criticism yesterday.
“There’s a pretty good threat of de-affiliation on the table,” said F.L. Peter Stone, Delaware’s deputy insurance commissioner. “If CareFirst loses its rights to the marks, it would apply to Delaware and D.C., too, and that would make it impossible for us to operate. … We don’t mess around with Maryland government, and we don’t expect Maryland to mess around with Delaware government.”
The battle over CareFirst has been contentious since November 2001, when the nonprofit company announced a deal to convert to for-profit operation and sell itself for $1.3 billion to WellPoint Health Networks Inc., a California insurance giant.
Larsen blocked the deal in March, and lawmakers subsequently passed bills that would force out 10 board members by December and add two nonvoting members named by legislative leaders.
CareFirst said last week that the law could force the company to cut nearly 1,500 jobs, to lose business and to create uncertainty for Mid-Atlantic members
as it lost access to the national Blue Cross service network.
District of Columbia Insurance Commissioner Lawrence H. Mirel accused Maryland yesterday of politicizing CareFirst’s board and usurping power.
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“I think the General Assembly was just overreacting to the [Larsen] report and the report was overreacting,” Mirel said. “Instead of just saying they didn’t support CareFirst’s plan to become for-profit, he excoriated the company for a lot of different things.
“The report had the effect of galvanizing the public opinion and the legislature for doing something punitive against the company,” Mirel said. “But the people who are going to be punished are us. My first choice would not be to de-affiliate, but we’re looking at the possibility.”
In their letter to the governor, Miller and Busch dismissed the possibility that CareFirst would lose the use of the Blue Cross trademark, citing a recent review by the Maryland attorney general’s office.
Attorney General J. Joseph Curran Jr. said last week that the national association cannot legally pull its trademark in response to the legislation because the state does not take control of the CareFirst board. The review sets the stage for a possible legal showdown between the state and the association.
“Certainly, we’re disappointed that our message for protecting the cross and shield were not heard,” said Karen Pointon, CareFirst’s director of communications, advertising and brand management. “We continue to hope that the legislation can be resolved in the best viewpoint of our 3.2 million members and the other citizens throughout our reach.”