As state officials weigh Blue Cross sale, a central question: Will patients benefit?

Since the announcement in January that one of the country's largest insurance companies planned to acquire Blue Cross and Blue Shield of Louisiana, officials at the Baton Rouge-based health insurance provider have touted the deal as a way to bring new health technologies and expanded services to its 1.9 million customers.

The $2.5 billion sale to Indianapolis-based Elevance Health, formerly known as Anthem, was cheered by many community leaders who said Blue Cross chose a strong partner amid a changing U.S. insurance market and would improve the lives of Louisianans with its planned multibillion-dollar foundation.

This week, Blue Cross officials may face a tougher audience.

Ahead of public hearings called by a state legislative committee and the Department of Insurance, which must approve the deal, critics, including some insurance brokers, policyholders and the left-leaning Louisiana Budget Project, have questioned how the deal will affect health care costs and access to physicians for state residents.

They've raised concerns about how a for-profit company worth $110 billion would better serve a poor state than the nonprofit Blue Cross, and why it would want to.

And in interviews and public comments submitted to regulators, some have also questioned how Elevance has operated in the 14 states where it currently sells Blue Cross insurance.

"We have reviewed the proposed plan and believe it falls short," said Jan Moller, executive director of the Louisiana Budget Project, in a letter opposing the deal.

Still, three dozen public comments, submitted to Louisiana Insurance Commissioner Jim Donelon, were split roughly two to one in favor of the acquisition, with Tulane University President Michael Fitts, the Louisiana Association of United Ways, the Greater New Orleans Foundation and the Baton Rouge Area Foundation, among others, issuing statements or public comments in support.

They largely echo recent comments from Blue Cross board member Tim Barfield, who will lead the board of the proposed foundation and sees the deal making a big difference for one of the worst-performing U.S. states when it comes to its residents' health.

"Our mission is to improve the health and lives of the people of Louisiana," Barfield said. "It's a very broad mission and we do not have a lot of preconceived notions about what we are going to work on, but it has the potential to be very impactful."

A public process

The public debate will begin Wednesday, when the Senate Insurance Committee will hold a hearing called by Sen. Kirk Talbot, R-Metairie. On Aug. 21 and 22, Donelon will hold two days of hearings on reorganizing the nonprofit company to a for-profit entity. He has 30 days to make a decision.

Separately, two-thirds of Blue Cross policyholders need to approve the reorganization of the company. Their votes are due Sept. 1.

If policyholders and Donelon both approve the restructuring, Donelon then holds a second round of public hearings on the merits of the sale of the company.

"They're on two separate tracks and we're not going to be rushed to make a decision just because the company wants us to," said Dave Caldwell, Donelon's executive counsel.

Talbot, who has been hearing from constituents who fear sharp increases in their premiums and losing access to their doctors, said he wants more assurances from company officials.

"We're going from a nonprofit to a for-profit company and rates are going up every year as it is," said Talbot. "That scares the hell out of me."

Changing market dynamics

Blue Cross and Blue Shield of Louisiana is one of 34 "Blues" around the country. The insurance firms are affiliated but operate independently, some as for-profit companies and others as nonprofits.

The largest network is run by Elevance, which owns and operates 14 Blue Cross affiliates around the country.

In recent years, large health insurance companies have attempted to consolidate in a move to weather rising costs and gain negotiating leverage with drug companies, hospital groups and other providers.

Blue Cross CEO Steve Udvarhelyi has said in recent interviews that higher costs are weighing on independent insurers. At the same time, a growing number of large employers have begun offering self-funded health plans instead of turning to insurance firms, shrinking their market share.

In Louisiana, Udvarhelyi said it made sense to sell to a larger organization with more resources.

"Our core markets are shrinking and that is not a pathway to success," Udvarhelyi said. "We looked around the said, 'How can we remain strong and competitive?' This the best way."

Pros and cons

Blue Cross officials have spent months building support for a sale. As a national company with 119 million customers, Elevance, they argue, is more efficient, can negotiate for cheaper prescription drugs and can offer more cost-effective technologies — like telehealth visits and online benefits administration — than can Blue Cross.

Udvarhelyi and other Blue Cross officials have said nothing will change under the deal except for the better.

On the other side are some policyholders, insurance brokers and advocacy groups.

Michael Johnson, a former policy director for Blue Shield of California turned whistleblower — and an advocate for greater transparency in nonprofit health care organizations — is against the deal. He pointed to a 2019 study in the American Economic Journal by a Harvard University Business School professor, who studied 11 nonprofit Blue Cross insurers that were converted to for-profit insurers over a 10-year period in the mid-2000s, including several that were purchased by Anthem.

The study found that prices were 13% higher on average than they would have otherwise been in markets where Blue Cross had converted from being a nonprofit to a for-profit. Not only did the Blues in those markets raise rates after converting, but their competitors did, too, the authors said.

Moller of the Louisiana Budget Project also referenced the study.

"Building on that research, the Commissioner should commission an independent analysis to determine the risk of higher costs to policyholders," he wrote.

Some brokers who sell health insurance plans to small businesses are also worried. They say Blue Cross' underwriting policies have been favorable to their clients, and that the company's rate-renewal structure is widely regarded among brokers as treating customers fairly, even when their employees face unforeseen, and expensive, health events.

"I know small companies insured by large for-profits and they'll jack their premiums up 50 or 60% in one year," said independent broker Tom Besselman.

Udvarhelyi said he understands those fears but argued they're unfounded, adding that "rates are more likely to increase without this transaction than with it."

Elevance Executive Vice President Morgan Kendrick said the company is not going to "raise rates to where they're uncompetitive in the business. Market dynamics will control rates."

He points to the other states where Elevance does business and notes that it continues to grow in those markets.

Legal issues

Elevance has faced recent legal issues in some other states where it operates. Last year, Georgia's Department of Insurance levied its largest fine ever — $5 million — against Elevance for inaccurately listing doctors and hospitals as being in the company's provider network when they were not. Patients often choose insurance plans based on whether their doctors are in the network.

Elevance said the mistake was due to a database problem that it has since addressed. A class action suit filed against the company over the issue alleged the omission was a pattern of conduct that amounted to negligence, fraud and breach of contract. Elevance has denied the claims and Kendrick, who is based in the company's Georgia office, dismissed the fine as something that happened several years ago and was resolved.

Elevance has also had legal trouble over the past two years in at least three other states, where unions and companies have sued it for withholding claims data.

Barfield said the Blue Cross board looked into some of the Elevance legal issues and "didn't see anything out of the ordinary that companies like ours haven't experienced."

Access to physicians

Meanwhile, maintaining Blue Cross' comprehensive physician network is a key question for many health care providers.

Blue Cross includes nearly 100% of Louisiana physicians and 90% of hospitals in its network, and any changes to that reach could draw the ire of policyholders who want to maintain access to their current doctors.

That's prompted the provider community to look carefully at the deal. In a letter to Donelon that takes no position on the sale, Ochsner Health CEO Pete November said he wanted to learn more about Elevance's initiatives and also made clear that he wants to continue the same kind of working relationship Ochsner has had with Blue Cross.

"This will include the continuation of annual discussions and collaboration regarding provider cost increases and other financial pressures," he said.

During the upcoming meetings, Blue Cross will have a chance to convince regulators, health care leaders and the public of the deal's merits.

Caldwell said Donelon's office appreciates what's at stake.

"We have a lot to look into," he said. "The commissioner has absolutely not made up his mind."