The clock is ticking for CareFirst to come up with a better way to expand coverage in the District of Columbia before legislators enact one for the health insurer.

Either outcome is being carefully watched in Virginia and Maryland, two states where CareFirst offers coverage, with Maryland legislators already enacting a bill to protect premiums generated from its policyholders.

The D.C. Council voted to pass emergency legislation April 7, suspending the open enrollment provision of its Medical Insurance Empowerment Act until July 10. That provision requires the Owings Mills, Md.-based insurer to expand coverage to a minimum of 2,500 District residents. The act, passed last December, officially became law in March.

Muriel Bowser

“This is not a freebie to CareFirst,” said Spencer Maguire, legislative director for Councilmember Muriel Bowser, the emergency legislation’s author. “If they can’t put something together that works for them and the public, the provision goes into law.”

Maguire said the insurer came to the council and asked to work together towards a workable District model in the current economy outside of the law’s provision.

Michael Sullivan, a CareFirst spokesman, told IFAwebnews.com, that the insurer could lose $22 million in 2009 and $160 million over the next five years if the District legislation goes into effect as currently written.

CareFirst has $1.27 billion in reserve, with about $753 million with GHMSI, which covers 1.2 million policyholders, including 150,000 in the District, 700,000 in Maryland and 300,000 in Northern Virginia.

Avoiding a ‘jurisdictional war’

Jeff Valentine, corporate spokesman for CareFirst, said the insurer is “continuing to work with the council to identify a mutually acceptable solution to our concerns regarding the open enrollment provisions in the bill.”

Thomas "Mac" Middleton

As that develops, both the Maryland House and Senate have passed legislation to prohibit CareFirst from using any Maryland-generated funds for programs in other areas, such as the District. The legislation, proposed by Sen. Thomas “Mac” Middleton (D-Charles), allows Maryland Insurance Commissioner Ralph S. Tyler to hold a hearing to review the impact on surplus, premium rates for Maryland policies and solvency as a result of the District’s actions.

“I’m hopeful that this legislation will not be necessary as the District and CareFirst are in discussions regarding a possible postponement of an open enrollment program,” Tyler said.

Maguire said the Council is following the actions of both Virginia and Maryland regarding their legislation, and is hopeful for an outcome that satisfies everyone.

“Ultimately, if [Maryland] acts to limit premiums, that is a sticky situation,” he said. “None of us wants to get into that and no one wants a jurisdictional war over this.”

This story originally appeared in the May 2009 print edition of Insurance & Financial Advisor.