[Congressional Record Volume 143, Number 160 (Thursday, November 13, 1997)]
[House]
[Pages H10868-H10870]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AMENDING FEDERAL CHARTER FOR GROUP HOSPITALIZATION AND MEDICAL
SERVICES, INC.
Mr. DAVIS of Virginia. Madam Speaker, I move to suspend the rules and
pass the bill (H.R. 3025) to amend the Federal charter for Group
Hospitalization and Medical Services, Inc., and for other purposes.
The Clerk read as follows:
H.R. 3025
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. CHARTER FOR GROUP HOSPITALIZATION AND MEDICAL
SERVICES, INC.
The Act entitled ``An Act providing for the incorporation
of certain persons as Group Hospitalization and Medical
Services, Inc.'', approved August 11, 1939 (53 Stat. 1412),
is amended--
(1) by inserting after section 9 the following new section:
``Sec. 10. The corporation may have 1 class of members,
consisting of at least 1 member and not more than 30 members,
as determined appropriate by the board of trustees. The
bylaws for the corporation shall prescribe the designation of
such class as well as the rights, privileges and
qualifications of such class, which may include, but shall
not be limited to--
``(1) the manner of election, appointment or removal of a
member of the corporation;
``(2) matters on which a member of the corporation has the
right to vote; and
``(3) meeting, notice, quorum, voting and proxy
requirements and procedures.
If a member of the corporation is a corporation, such member
shall be a nonprofit corporation.'';
(2) by redesignating section 10 as section 11; and
(3) by adding at the end of section 11 (as so redesignated)
the following: ``The corporation may not be dissolved without
approval by Congress.''.
The SPEAKER pro tempore (Mrs. Emerson). Pursuant to the rule, the
gentleman from Virginia, Mr. Davis and the gentlewoman from the
District of Columbia, Ms. Eleanor Holmes Norton, will each control 20
minutes.
The Chair recognizes the gentleman from Virginia [Mr. Davis].
Mr. DAVIS of Virginia. Madam Speaker, I yield myself such time as I
may consume.
(Mr. DAVIS of Virginia asked and was given permission to revise and
extend his remarks.)
Mr. DAVIS of Virginia. Madam Speaker, this bill amends the Federal
Charter of GHSMI, the Blue Cross/Blue Shield Plan of the National
Capital Area. This bill is necessary in order to enable a letter of
intent between the parties to combine to be subject to regulatory
approval in Maryland and the District of Columbia.
GHMSI will continue to be subject to the District's Nonprofit
Corporation Act and is under the jurisdiction of the insurance
superintendent. GHMSI will continue to be bound by its existing
certificates of authority and licenses and will continue to be bound by
applicable laws and regulations.
H.R. 497, which passed this House in February, would have repealed
the Federal charter. This bill reflects concerns which were
subsequently raised. All other Blue Cross plans in the country are
State-chartered corporations operating under State regulatory
oversight. Due to a 1939 pre-Home Rule statute,
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GHMSI alone needs congressional approval to change its corporate
structure.
Madam Speaker, I reserve the balance of my time.
Ms. NORTON. Madam Speaker, I yield myself such time as I may consume.
(Ms. NORTON asked and was given permission to revise and extend her
remarks.)
Ms. NORTON. Madam Speaker, I rise in support of H.R. 3025, a bill
which simply adds a new section to the Federal charter of Group
Hospitalization and Medical Services, Inc., the organization licensed
to operate as Blue Cross and Blue Shield of the National Capital Area,
to permit it to enter into a business combination with Blue Cross and
Blue Shield of Maryland.
This new arrangement is designed to improve both companies' service
delivery and to reduce their operating costs. By combining operations,
the two hospital plans will be able to offer their enrollees a larger
provider network offering greater portability and broader product
options. In addition, economies of scale should lead to more affordable
premiums.
Should the combination go forward, a new nonprofit holding company
would be established, and the two Blue Cross plans would become its
subsidiaries. H.R. 3025 would give D.C. Blue the requisite legal and
corporate authority to have one class of members whose rights and
privileges would be set out in the plan's bylaws. Only one member will
be authorized, which would be the holding company.
I wish to emphasize that H.R. 3025 does not create or mandate the
plans' combination. That arrangement would first have to be approved by
the District of Columbia and Maryland insurance commissioners before
taking effect.
Madam Speaker, I can support H.R. 3025 because of ironclad
safeguards. No conversion of tax-exempt assets will be allowed under
the language of this bill. As I speak, the District and Maryland both
have been holding hearings on this affiliation. There have been 4 days
of hearings by the D.C. insurance commissioner.
There are three safeguards that are most important to my support.
One, for a substantial change to occur, there must be an 80 percent
vote. This assures that the District of Columbia will not be
overwhelmed by the larger Maryland company. This House is aware that in
the District we are jealous in guarding our jurisdictional rights. The
80 percent vote is very appropriate in that regard.
Secondly, no conversion can take place without review and approval by
the respective insurance commissioners. They, of course, would have
every reason not to want to see the tax-exempt assets squandered, and
therefore to guard against that on their own accord.
Third and perhaps most important, any conversion could have to come
before this body before it could be approved.
Madam Speaker, I support this bill with these safeguards, because I
want this corporation to live. I am not sure that it will do so without
this combination. As recently as 1993, Blue Cross of Washington was
almost out of business. The competitive landscape does not make it easy
for a health care provider to remain in business.
What Blue Cross/Blue Shield is up against in this jurisdiction, for
example, are combinations between Humana and Kaiser, Aetna's
acquisition of U.S. Health, and to name just one more, United Health
Care has bought Chesapeake Health Plan. In the face of these
combinations, there is every reason for Blue Cross, which has had very
severe problems, to want to consolidate to get efficiencies of scale,
such as one computer center, as it begins to rebuild its computer
operation, for example.
Ironically, the best shot at keeping this a nonprofit company is to
allow this combination. That is why I can support it. The D.C. ``Blue''
can make no change in its nature, purpose, or structure without the
Congress taking further action on its charter, and, again, I emphasize
that.
I want to say how much I appreciate the concern of other Members who
have had experiences with such combinations that have not been at all
productive. Their experience and their advice have been instructive and
helpful.
Congressional action on this legislation must be taken before
adjournment for the year, because the agreement between the plans to
pursue the combination expires at the end of next month.
Madam Speaker, I strongly support H.R. 3025 because I believe that
the proposed combination between the District and Maryland Blue Cross
plans will benefit the people I represent. I am pleased to point out
that the bill also enjoys the support of other Members in this region
whose constituents will be benefited as well. All of us are confident
that our local regulators will ensure that the public interest is well
protected, should they approve this combination. I ask that Members
give H.R. 3025 their support.
Madam Speaker, I yield 2 minutes to the gentleman from Maryland [Mr.
Cardin].
Mr. CARDIN. Madam Speaker, let me thank my friend, the gentlewoman
from the District of Columbia, for yielding me this time, and join the
gentlewoman from the District of Columbia [Ms. Norton] and the
gentleman from Virginia [Mr. Davis] in support of H.R. 3025. I think it
is important to point out that this bill will not repeal the Federal
charter for the D.C. Blue Cross/Blue Shield plan. It amends the
charter. It makes it possible for the merger to take place. It does not
mandate anything to occur.
The bill makes it clear that the benevolent and charitable status of
the D.C. Blue Cross plan remains in place. As the gentlewoman from the
District of Columbia [Ms. Norton] has pointed out, by passing this
bill, we ensure that the D.C. Blue Cross plan will remain a benevolent
and charitable organization.
The bill allows the local regulators, and that is where the venue
should be, to debate the issues of the merger. As to whether it should
take place and what conditions it should be ordered to comply with, it
is the local regulators who should make that judgment, not the Congress
of the United States.
This bill makes it clear that the merger can move forward, but it is
subject to the normal regulatory process. I think H.R. 3025 is the
appropriate action for us to take. I applaud my colleagues for bringing
it to the floor. I hope we can act on it today so it can be enacted
before Congress adjourns for the year.
Mr. CUMMINGS. Mr. Speaker, the proposal that we are considering today
will help bring improved services and benefits to the many Blue Cross/
Blue Shield subscribers in my district in Baltimore and to many of the
constituents of representatives from suburban Maryland, Northern
Virginia, and Washington, D.C.
I commend the gentleman from Virginia and the gentle lady from the
District of Columbia for their leadership in this area.
A merger between the National Capital Area Blue Cross/Blue Shield and
Maryland Blue Cross/Blue Shield will create a 3 billion-a-year
nonprofit company--providing health care coverage to 25 percent of the
8 million residents of Maryland, the District, and the Northern
Virginia suburbs and employ 5,000 people.
Just as importantly, my constituents in Baltimore that are enrolled
in the Blue Cross/Blue Shield plan will receive tangible results from
the merger. It will increase competition, which will result in better
service, more options and access to a larger number of doctors,
hospitals and pharmacies at a lower cost for its customers.
The passage of this bill is essential to giving my constituents in
Baltimore, and the constituents of the members of Maryland, Virginia,
and Washington, D.C. the type of comprehensive, quality health care
they deserve.
I am glad to know that we in Congress are doing all that we can to
give health care providers greater flexibility to meet our constituents
health care needs.
Again, I congratulate the gentleman from Virginia [Mr. Davis] for
introducing this meaningful legislation and for working with the
minority in such a bipartisan fashion.
Mr. CARDIN. Madam Speaker, I have no further requests for time, and I
yield back the balance of my time.
Mr. DAVIS of Virginia. Madam Speaker, I have no further requests for
time, and I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Virginia [Mr. Davis] that the House suspend the rules
and pass the bill, H.R. 3025.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
[[Page H10870]]
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