Dive Brief:
- Elevance’s $2.5 billion acquisition of Blue Cross Blue Shield of Louisiana is back on. On Thursday, BCBSLA filed a new application with Louisiana’s insurance department to reorganize into a for-profit agency, which — if approved by state regulators and policyholders — would clear the way for the merger.
- Elevance announced the acquisition in January, but it was suspended in September after Louisiana regulators aired concerns the merger would reduce competition and raise healthcare costs in the state.
- Elevance and BCBSLA think the new reorganization plan will ameliorate those concerns, and expect the deal to close in the first quarter of 2024.
Dive Insight:
The merger would marry Indianapolis-based Elevance, which currently operates BCBS plans in 14 states, and BCBSLA, the largest insurer in Louisiana with 1.9 million members. Through the deal, Elevance is angling to expand its existing Louisiana business, called Healthy Blue. Healthy Blue is a joint venture formed in 2017 with BCBSLA that primarily serves Medicaid and dual-eligible individuals.
The deal would require BCBSLA to become a for-profit insurer and fold its members into Elevance’s affiliated Anthem BCBS brands. Elevance and BCBSLA originally expected the merger to close before the end of 2023, but have hit snags receiving the green light, particularly from Louisiana’s attorney general and other state regulators.
Regulators and policyholders have said they’re worried the deal could have anticompetitive effects, raising premiums in Louisiana. 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.
BCBSLA’s new reorganization is meant to assuage those concerns, including by changing the structure of that nonprofit, called the Accelerate Louisiana Initiative. Accelerate Louisiana, which is set to receive the lion’s share of the proceeds from the deal — 91% —, will now be incorporated in Louisiana. The new proposal also has a narrower mission for Accelerate Louisiana to “improve the health and lives” of state residents than in BCBSLA’s original proposal.
Accelerate Louisiana would also be organized as a trust that’s prohibited from engaging in political activity, as opposed to a social welfare foundation.
In addition, Louisiana’s governor will be able to appoint a member to Accelerate Louisiana’s board. The board would also grow to include a non-voting member appointed by the state’s insurance commissioner to observe its activities.
However, key elements of the plan remain the same, including the sale price and how much of the proceeds would go to BCBSLA policyholders.
Members won’t see a change in premiums or providers that are in network as a result of the merger, Elevance and BCBSLA have pledged. BCBSLA says the merger will grant it more financial resources and flexibility to operate and expand in Louisiana, and should result in better member experience and benefits.
“We have taken the time to listen to our stakeholders to bring a transparent, seamless transaction before the Louisiana Department of Insurance and our policyholders,” an Elevance spokesperson said in a statement.
Louisiana’s insurance commissioner and two-thirds of BCBSLA policyholders are required to approve the deal for it to go through.
A number of Blue Cross and Blue Shield plans converted from nonprofit entities to for-profit plans in the 1990s. Yet, conversions have become trickier in recent years as state regulators become more concerned about their potential to raise premiums, shrink networks and lower provider reimbursement.
