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May 16, 2005
District Issues Report on GHMSI Charitable Obligation
(Washington, DC) - Although the District's Blue Cross/Blue Shield Plan (GHMSI) owes its primary legal obligation to its policyholders, it could and should do more to support public health in the Washington area it serves, according to a report* issued today by the District's Department of Insurance, Securities and Banking (DISB).
The Department held a hearing on March 24 looking into allegations that GHMSI, which is part of the CareFirst holding company, is failing to live up to its responsibility as a non-profit charitable health insurance plan. The charges were made in a report released in December of 2004 by the DC Appleseed Center, a non-profit advocacy organization located in the District of Columbia. The Appleseed report said that GHMSI had a legal obligation to act as a charitable organization and should be providing far more funding for community organizations than it has. The March hearing, presided over by Commissioner Lawrence H. Mirel, head of the Department of Insurance, Securities and Banking, heard testimony from GHMSI, Appleseed and more than 30 public witnesses.
In its final report on the hearing, the Department agrees that GHMSI is a charitable organization, as stated in its Congressional charter issued in 1939, but finds that its primary charitable mission is to provide health insurance on a non-profit basis to its policyholders. Nevertheless, according to the report, GHMSI has authority and responsibility in its charter to support the public health of communities in its service area, which includes the District of Columbia, Prince George's and Montgomery Counties in Maryland, and portions of northern Virginia.
"The Department finds that although GHMSI may meet its legal obligation to engage in charitable activity solely through the provision of health insurance in its service area, GHMSI has an additional responsibility - separate and apart from the bare legal obligation set forth in its charter - to engage in charitable activities in the District of Columbia which advance the public health. The Department believes that it is possible for GHMSI to make these additional charitable contributions while maintaining a financially strong health insurance program for its subscribers, but declines to determine the amount or kinds of additional community contributions GHMSI should make." The report says that determining the amount and beneficiaries of contributions to the community is the responsibility of GHMSI's board of trustees.
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