Dive Brief:
- Blue Cross Blue Shield of Louisiana has scrapped its planned sale to Elevance Health. It’s the latest setback for the $2.5 billion deal, though the insurers signaled they’re still open to pursuing a transaction.
- BCBSLA and Elevance proposed the sale in January 2023 before backing off the deal in September after facing criticism from state regulators. The payers then attempted to resurrect the transaction in December.
- Yet “it is clear that our stakeholders need more time and information to understand the benefits of the changes we have proposed. This is why we have decided to again pause the process in our proposed transaction with Elevance Health,” BCBSLA said in a statement this week.
Dive Insight:
The transaction would have married Indianapolis-based Elevance, which currently operates BCBS plans in 14 states, and BCBSLA, the largest insurer in Louisiana with 1.9 million members.
BCBSLA has said the merger would grant it more financial resources and flexibility to operate and expand in Louisiana, and should result in better member experience and benefits. Meanwhile, Elevance is angling to expand its existing Louisiana business, Healthy Blue, which is a joint venture formed in 2017 with BCBSLA.
However, the sale — which would require BCBSLA to reorganize as a for-profit entity — hasn’t received a warm welcome in Louisiana. Regulators and policyholders have said they’re worried the deal could have anticompetitive effects, raising premiums. In addition, the state has questioned how proceeds from the sale will be split between policyholders and how the nonprofit foundation created by the purchase will operate.
In December, BCBSLA proposed a new reorganization plan meant to assuage those concerns, including more oversight from the state. However, the insurer has been unsuccessful in getting the stakeholder buy-in necessary for the deal’s completion.
“There are serious questions that require answers to provide protections and safeguards for Louisiana ratepayers and providers. The withdrawal of the application forecloses further consideration of this matter,” Louisiana Insurance Commissioner Tim Temple said in a Wednesday statement.
Louisiana’s insurance commissioner and two-thirds of BCBSLA policyholders are required to approve the deal for it to go through.
BCBSLA notified the Louisiana Department of Insurance it would be withdrawing its reorganization filing on Tuesday, and canceled an upcoming vote among policyholders scheduled for later this month.
The withdrawal came days before the LDI planned to hold public hearings to discuss the deal.
“I currently have no information regarding Blue Cross’ intentions moving forward,” John Ford, LDI’s commissioner of public affairs, said in a statement Wednesday
However, BCBSLA has not dropped its plans to sell entirely, while Elevance is still open to a merger.
"We continue to believe we need a strong partner to help position us for a vibrant future, and to help us make healthcare more affordable and to help us do more to improve the health of members and policyholders,” BCBSLA said in its statement.
Elevance is “supportive” of BCBSLA’s decision to withdraw the reorganization plan, according to a statement shared with Healthcare Dive.
“We remain committed to this partnership and will work with BCBSLA on next steps in bringing that to reality,” Elevance said.
