Proposed CareFirst Sale Prompts Debate Among Washington, D.C., Consumer Advocates Over Benefit for Low-Income Residents

The proposed sale of not-for-profit CareFirst BlueCross BlueShield -- which has 1.2 members in the Washington, D.C., area -- to for-profit WellPoint Health Networks has "touched off a bitter dispute" in recent weeks among consumer advocacy groups over whether the sale would benefit low-income area residents, the Washington Post reports (Goldstein, Washington Post, 10/24). California-based WellPoint last November agreed to acquire CareFirst, the largest not-for-profit health insurer in the Washington, D.C., area. Under the agreement, WellPoint would pay CareFirst $1.3 billion in cash and stock, and CareFirst would make a payment to Delaware, Maryland and Washington, D.C., to ensure that the sale "benefits the public interest" (Kaiser Daily Health Policy Report, 11/26/01). Industry analysts predict that competition could force WellPoint to pay as much as $2 billion for CareFirst. Although the agreement has not received support from many consumer advocates, who maintain that CareFirst should remain a not-for-profit health insurer, several not-for-profit groups in Washington, D.C., said the "windfall" from the sale "would be a godsend" for the city's low-income residents. The sale of CareFirst for $2 billion could provide Washington, D.C., with a one-time payment of $800 million, which the city could use to establish a foundation and provide grants of $40 million each year to public health groups, the Post reports. Rolando Andrewn, executive director of the Washington, D.C., chapter of the American Lung Association, said, "We need some funds to address tobacco control, the asthma epidemic and clean air issues in the District. I have no idea how much money I could get out of it, be we certainly hope we could get at least a couple million dollars." Rev. Anthony Evans, president of the D.C. Black Church Initiative, which administers health education programs for low-income city residents, added, "This is a golden opportunity for this community."

Not 'Adequate Compensation'?
However, according to opponents of the CareFirst sale, the payment that the city could receive would not provide "adequate compensation for the sale's disruptive effect on the region's health care system." They said that the sale would increase health insurance premiums, which would force thousands of individuals to drop their coverage and "stretch" the city's ability to provide charity care. Sharon Baskerville, executive director of the D.C. Primary Care Association, said, "There are some misguided folks who think this is going to be a good thing, and it's really a crock. What the District stands to gain is a drop in the bucket" (Washington Post, 10/24).