As you probably know, last Friday, Congress passed its omnibus appropriations act to fund the federal government and the District government for the rest of the fiscal year. And you may have read in the Washington Post and the Washington Business Journal that the act included a provision that will govern future reviews of the surplus of CareFirst BlueCross Blue Shield–the largest health insurance company in the National Capital area.
Here is why this provision matters to nearly everyone living in the area.
Last December, the District’s Insurance Commissioner determined after a lengthy proceeding that the District-based portion of CareFirst had accumulated excess surplus of $268 million by the end of 2011, and that $56 million of this excess should be spent down to reduce health insurance premiums of District subscribers and/or to address healthcare needs in the District. So far, CareFirst has refused to comply with the Commissioner’s order. Its refusal was based in part on its claim that the Insurance Commissioner’s decision is in conflict with surplus determinations made by the Insurance Commissioners in Maryland and Virginia.
Congress’s action in the omnibus act last Friday makes clear that the company’s failure to spend down the $56 million can no longer be justified. While the act provides that for future reviews of CareFirst’s surplus, the three jurisdictions must jointly determine the amount of excess surplus and how it should be spent down, the act makes clear that this change in procedure does not apply to the pending proceeding–which addresses only the excess surplus built up by the company by the end of 2011. In that proceeding, the District’s determination that the company had excess surplus of $268 million at the end of 2011 and that $56 million of this must be spent down in the District is binding on the company.