Jim Beam column:Blue Cross sale still unpopular

Published 6:27 am Wednesday, December 20, 2023

Some changes have been made to the plan to sell Blue Cross and Blue Shield of Louisiana to Elevance Health of Indianapolis. Officials with both companies say they are optimistic the sale will be finalized during the first quarter of 2024.

The plan has been approved by the Blue Cross board of directors, but still faces two hurdles. It must be approved by two-thirds of its 92,000 Blue Cross individual policyholders and by Tim Temple, the state commissioner of insurance.

Blue Cross filed a new application last week with the Louisiana Department of Insurance to reorganize into a for-profit company that could be purchased by Elevance.

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The Advocate reported that the $2.5 billion sale price remains the same, along with the percentage of the sale’s proceeds that will go to the 92,000 official policyholders. Under the terms of the deal, policyholders will split some $276 million, receiving approximately $3,000 each.

Blue Cross officials said they were confident they had the necessary two-thirds of policyholders on board.

A major concern of critics was creation of a nonprofit foundation called Accelerate Louisiana Initiative that will receive 91% of the sale’s proceeds. Blue Cross expects the foundation to be worth $3.5 billion after it includes surplus funds currently under the company’s control.

No mention was made in the changes about seven Blue Cross board members continuing to serve on an advisory board to Elevance who would be paid $105,000 a year each for at least a decade, or about $1 million each.

Among opponents of the sale have been some doctors and hospitals, state legislators and Republican Attorney General and Gov.-elect Jeff Landry. The foundation will now have an expanded board of directors that includes an appointee of Landry and a nonvoting observer appointed by Temple.

Because of the attorney general’s investigation of the sale, The Advocate said Landry declined to comment Friday on the new plan and the appointment he would now have on the board once he takes office.

Blue Cross officials said they didn’t offer the incoming governor a seat on the board to win his approval, but to address concerns the board needed some state government oversight. Some opponents of the sale are certainly going to take issue with that statement.

Dr. Steve Udvarhelyi, Blue Cross CEO, said, “We did share with him (Temple) our plans, but we have not been presumptive about what decision he is going to make one way or the other. If you talk to him, he will say he will do his job to look at this transaction objectively.”

The newspaper said among the groups questioning the sale are the powerful Louisiana Hospital Association (LHA) and the Louisiana State Medical Society. The LHA declined to comment on the revised sale plan and the medical society couldn’t be reached last week.

Those organizations have some of the same concerns of many others — rising health care costs and the potential impact on patient care. Blue Cross officials have promoted the sale as a way to bring lower health care costs and the latest in tools and technology to its 1.9 million customers.

Morgan Kendrick, Elevance executive vice president, said he plans to meet with the two opposing organizations in the days ahead and has gotten positive feedback from the rural health community and other providers so far.

Before the deal can be finalized, the Department of Insurance will set a date for a public hearing on the reorganization of the company. The two-day hearing will likely be scheduled in February, The Advocate said. Following that hearing, Blue Cross will hold a public meeting and a proxy vote. If the policyholders approve, the insurance commissioner will then issue an opinion on the reorganization plan.

The newspaper said it isn’t clear whether the department would hold a second round of hearings to hash out the sale plan. Though legislators don’t get a vote, several said their phones have been blowing up with calls from lobbyists and constituents on both sides of the issue.

The Advocate said some critics said the new proposal hasn’t changed their position on the sale. Jan Moeller, executive director of the Louisiana Budget Project, who  advocates for low-income Louisianans, said the new arrangement raises as many concerns as before.

I am one of those 92,000 individual policyholders who hasn’t been convinced these changes are as big a deal for policyholders as officials from both companies are saying. All too often, sales like this one end up with reduced services at the purchased company because of budget cuts and premium increases come next.

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