Jim Beam column: Blue Cross sale back in news

Published 7:24 am Wednesday, December 6, 2023

Negotiations for the controversial sale of Blue Cross and Blue Shield of Louisiana to Elevance Health, a national company, is being opposed by a Metairie attorney who is using a new approach. Tim Kinney doesn’t name either company in his lawsuit but is taking on a planned foundation that would be created if the sale is eventually approved.

The sale is on hold but both companies have said they plan to move forward with it in 2024.

Accelerate Louisiana Initiative is the name of the foundation that would be funded with some $3.5 billion in proceeds from the sale. Kinney in his suit says that money belongs to the policyholders who have individually paid thousands of dollars in premiums to Blue Cross over the years, according to a news report in The Advocate.

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The foundation was created in late-2022 by four members of the Blue Cross board of directors with a mission to “work to improve the health and lives of the people of Louisiana.” The newspaper said at $3.5 billion, the foundation would dwarf other charitable and social welfare foundations in the state.

Blue Cross tabled its request for regulatory approval of the sale after increased scrutiny from policyholders, doctors, hospitals, state legislators and Republican Gov.-elect Jeff Landry. A committee has been formed by Landry to advise him on the sale, but The Advocate said his office declined to comment on his committee or the lawsuit.

Kinney said it is important to file suit now before a new plan to sell the company is filed with the Louisiana Department of Insurance. The department and two-thirds of Blue Cross policyholders, must approve reorganizing and selling the company before the deal is finalized.

“It’s important to stop Accelerate from being part of a plan that they have no business being part of,” Kinney said.

Blue Cross announced its plans to sell to Elevance early this year. It argued that a large national insurer with the latest tools and technology could offer better coverage and lower prices to some 1.9 million Louisiana residents that carry some form of Blue Cross insurance.

The newspaper said the deal called for giving more than 90% of the sale proceeds to the foundation and distributing the rest ($300 million) to the company’s 92,000 policyholders, who would receive less than $3,300 each.

Blue Cross customers who aren’t policyholders — employees on a company-sponsored insurance plan, for instance — wouldn’t be entitled to a piece of the payout.

Like Kinney, I am one of those policyholders. However, I am against the sale and don’t care for what looks like a bribe for a favorable vote. State Sen. Jeremy Stine, R-Lake Charles, and a member of the Senate Insurance Committee, said during a hearing on the sale the $3,300 for a “yes” vote might keep recipients from looking at the big picture.

Stine said policyholders were also concerned about a plan to pay Blue Cross board members $100,000 per year as advisers over a 10-year period.

All too often sales like this one end up with reduced services for policyholders because of staff reductions caused by budget cuts. And annual premium increases usually follow.

Woody Jenkins, editor of the Central City News and a former state legislator, said the sale deserved a no vote.

“Keep Blue Cross a Louisiana company answerable to the policyholders,” Jenkins said. “Keep the company strong and keep it here! That’s the best way to make sure our health insurance is reliable and affordable.”

The foundation is the main concern of policyholders and health care providers who want to know why it should be getting the lion’s share of sale proceeds and why it would be controlled by four Blue Cross board members.

The newspaper said they also raised concerns about whether selling a local nonprofit insurer to a large, publicly traded company was in the best interest of a state that has some of the poorest residents with the worst health outcomes in the country.

Kinney’s suit cites two expert reports commissioned earlier this year by the state to evaluate the deals that question its fairness. He filed his suit individually but is seeking to certify it as class action on behalf of the 92,000 Blue Cross policyholders.

It will be interesting to see if the proposed sale might have changed much since the two companies announced they would be bringing it back again next year. However, even if things have changed, it’s obvious many of the 1.9 million with some form of Blue Cross insurance are against the sale.