NEWS RELEASE
Office of Maryland Attorney General J. Joseph Curran, Jr.


December 3, 2001 Media Inquiries: Sean Caine 410-576-6357

ATTORNEY GENERAL TAKES ISSUE WITH CONVERSION, URGES MARYLANDERS TO READ ABELL FOUNDATION REPORT

Attorney General J. Joseph Curran, Jr., announced today that he strongly urges all Marylanders to read the newly released Abell Foundation study entitled, Blue Cross Conversion: Policy Considerations Arising From A Sale of the Maryland Plan. The report examines the history of the Maryland Blue Cross/Blue Shield company, now known as CareFirst, details the current functioning of the non-profit health insurer and identifies the issues raised by a conversion of the non-profit insurer to for-profit status.

"This report questions the motives behind CareFirst’s decision to convert to for-profit status and sell to an out-of-state, national company and concludes that there are ‘no economic or business reasons why Blue Cross of Maryland should be sold,’ " said Attorney General Curran, who explained in a recent letter to Senate President Mike Miller and Speaker of the House Casper Taylor, that the issue is not simply whether to allow the conversion and sale but whether CareFirst should be made to alter its conduct to conform with that expected of a non-profit entity.

The report criticizes CareFirst for changing significantly the purpose and focus of the non-profit health insurer. While once the "insurer of last resort" for Marylanders, CareFirst no longer serves in that capacity and has taken action to eliminate coverage of the under-insured segments of the population. "CareFirst now insures the high-risk, under-insured population only through its expensive Open Enrollment product, offered just twice a year," said Curran. "And State subsidies of this program result in net earnings for the company so CareFirst is making money by participating." The report also notes that CareFirst carries significant reserves, well above industry standards. The Attorney General has been monitoring CareFirst’s conduct and will continue to closely examine their operations in light of the announced conversion and sale.

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