It’s now been nearly a year since CareFirst BlueCross BlueShield’s District-based subsidiary, Group Hospitalization and Medical Services, Inc. (GHMSI), failed to file a plan for returning $56 million in excess 2011 surplus to the community, as ordered by the D.C. Insurance Commissioner.
Even though the Commissioner should proceed carefully in responding to this failure, it is now clear what the Commissioner should do–develop a fair and equitable plan to spend the $56 million, and order CareFirst to implement it.
Congressional Action Delayed the Commissioner’s Final Order
On February 29, the D.C. Council Committee on Business, Consumer, and Regulatory Affairs, chaired by Councilmember Vincent Orange, held its annual oversight hearing for the Department of Insurance, Securities, and Banking (DISB). We were pleased to hear the current Commissioner, Stephen Taylor, testify at the hearing that he had been prepared last December to issue a final order bringing the 2011 surplus proceeding to a conclusion.
However, the Commissioner testified that he had been delayed in issuing that final order due to a congressional rider added to an appropriation act last December. This rider prevents the reinvestment of excess surplus based on future surplus reviews, without the express, unanimous agreement of the District, Maryland, and Virginia. The Commissioner testified that he has been studying the effect of this rider on the still pending 2011 surplus review.
The Commissioner’s Authority to Proceed is Clear
We agree with the Commissioner that it’s important to review the rider to get the 2011 surplus review right.
But as we noted in a letter to the Commissioner earlier this week, the rider expressly allows the Commissioner to complete the 2011 review. In fact, Congresswoman Eleanor Holmes Norton said that the amendment “allow[s] D.C. to enforce . . . the D.C. Insurance Commissioner’s order that GHMSI reinvest $56 million from its 2011 surplus.” And if the Commissioner believes the law is not clear, we and others suggested that the Council adopt emergency legislation clarifying his authority to go forward. Either way, it is time to bring this proceeding to an end.
A “No Brainer”: The Commissioner Should Order CareFirst to Reinvest the $56 Million
The delay in bringing the proceeding to a close has undermined the Council’s intent to hold the corporation accountable under the governing law; it has flouted the DISB’s own order regarding GHMSI’s excess surplus; it has threatened the District’s autonomy with respect to excess surplus attributable to the District; and it has left $56 million on the table that should be returned to the community. Meanwhile, during the delay GHMSI’s surplus has continued to increase, and now stands at $930 million.
In light of all this, we agree with what Councilmember Orange said at the recent oversight hearing–it’s a “no brainer” that the Commissioner should at last make sure that GHMSI returns the $56 million in excess surplus to the community. We urge the Commissioner to do that as soon as possible.