ROBERT L. EHRLICH, JR., Governor                             Ch. 356

Preamble

WHEREAS, Maryland's Blue Cross Plan was created by statute in 1937 as a
charitable and benevolent organization for the benefit and common good of the
community as a whole; and

WHEREAS, Maryland's Blue Cross and Blue Shield Plans were consolidated
into a single nonprofit corporation in 1985 to create Blue Cross and Blue Shield of
Maryland, Inc.; and

WHEREAS, Blue Cross and Blue Shield of Maryland, Inc., merged with Group
Hospitalization and Medical Services, Inc., in 1997, and CareFirst, Inc., was formed
as a holding company; and

WHEREAS, In 2000, CareFirst, Inc., entered into an affiliation with BlueCross
BlueShield Delaware; and

WHEREAS, CareFirst, Inc., is Maryland's Blue Cross Blue Shield Plan; and

WHEREAS, CareFirst, as a nonprofit corporation, is a community asset; and

WHEREAS, The mission of CareFirst is to provide affordable and accessible
health insurance to Maryland citizens; and

WHEREAS, There is a national crisis of health insurance affordability and
accessibility; and

WHEREAS, CareFirst is the State's largest health insurer; and

WHEREAS, CareFirst has enjoyed significant taxpayer and State-funded
exemptions and subsidies to assist in its mission; and

WHEREAS, In recent years, CareFirst has exited from several segments of the
Maryland health insurance market, including the withdrawal from the
Medicare+Choice program and the withdrawal of its subsidiary HMOs, FreeState and
Delmarva, from insurance markets in Maryland, resulting in over 6,000 individuals
losing their health insurance; and

WHEREAS, Citing a need for increased access to capital, on January 11, 2002,
CareFirst filed an application with the Maryland Insurance Commissioner to convert
to a for-profit company and to be acquired by a California-based health insurer for
$1.3 billion; and

WHEREAS, In 2002, the profits of CareFirst rose 13% to $104 million, its
revenue was $6.7 billion, and the number of its members increased to 3.24 million; and

WHEREAS, On March 5, 2003, after extensive review, the Maryland Insurance
Commissioner found that the proposed sale and conversion of CareFirst is not in the
public interest; and

WHEREAS, The Insurance Commissioner found that the management and
Board of Directors of CareFirst did not view their nonprofit mission as restraining or
guiding their business activities; and

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