A Real Chance for a CareFirst Settlement

Throughout our longstanding effort to hold CareFirst BlueCross BlueShield accountable to its nonprofit mission, we’ve always hoped for a settlement that would avoid further litigation and protect the public interest. Now, because of an order this week from the D.C. Insurance Commissioner, a settlement finally is within reach.

The Commissioner of the D.C. Department of Insurance, Securities, and Banking on Monday announced that he would convene a meeting this month with CareFirst and DC Appleseed to reach a “Final Consent Order” on how the company will fulfill its community health reinvestment obligation. The Commissioner has given DC Appleseed and CareFirst until August 2 to reach a settlement.

This is an opportunity to ensure that the company makes a substantial investment in the community from its nearly $1 billion surplus. The Commissioner has already found this surplus to be excessive by $268 million. But even though its D.C. business is by far the most profitable part of the company, the Commissioner determined that only 21% of the excess surplus should be spent in the District. We think that the total excess surplus is at least $500 million and that 60% of the excess is owed to the District–meaning that the amount we think is owed to the District is approximately $300 million.

So far, CareFirst has offered to spend $7.5 million a year for 10 years, for a total of $75 million. We don’t think this amount is consistent with D.C. law or the public interest. First of all, this is only a quarter of what we think is owed. And second, there is no indication that the offer of $7.5 million per year is anything more than the amount the company was already required to spend from its annual operating revenue in charitable giving. In other words, this may not be a proposal to reinvest the excess surplus at all. This suggests to us that a number between their $75 million and our $300 million is the place to begin settlement negotiations.

We applaud the Commissioner for convening a meeting to settle this longstanding litigation. We are optimistic that an agreement can be reached that is fair both to the public and the company and that promotes health in the National Capital area.



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