Elevance-Blue Cross deal to help set up $3 billion foundation; some will receive checks

The proposed sale of Blue Cross and Blue Shield of Louisiana to Elevance Health will lead to the establishment of a $3 billion private foundation, aimed at addressing health inequalities across Louisiana, and payment checks being issued to certain policyholders.

The Accelerate Louisiana Initiative will be one of the largest private foundations of its kind in the country, Blue Cross officials said Wednesday.

Tim Barfield, interim chairman and president of Accelerate Louisiana, said the foundation will address big issues and seek to make a big impact. The expectation is the foundation will make grants to local and national organizations to improve the lives and health of Louisiana residents.

"We don't know how many initiatives we will work on, but it will not be hundreds and hundreds," he said. "It will be a small set of specific, focused initiatives."

Accelerate Louisiana will dwarf the size of some well-known local foundations. The LSU Foundation, which supports the university, had $667 million in total assets at the end of 2019, according to IRS data. The Baton Rouge Area Foundation came in at $293 million, according to information on its website. Blue Cross of Louisiana's foundation was valued at about $50 million in 2019, according to IRS data. There are plans to establish a New Orleans foundation with the proceeds from the sale of the New Orleans Saints and the New Orleans Pelicans after owner Gayle Benson dies; Forbes estimates the current value of the teams is a combined $5.18 billion.

Dr. Steven Udvarhelyi, president and CEO of Blue Cross, said a foundation the size of Accelerate Louisiana can bring in other stakeholders to collaborate on issues.

"We can bring as much good work as we can to bear on the problems," he said.

Plans are to conduct a needs assessment to determine what issues the foundation should focus on. "We want to invest where we know we can make a difference," Udvarhelyi said.

Blue Cross announced last month it was joining Elevance Health, formerly known as Anthem, in an acquisition set to close later this year.

Because Blue Cross is a member-owned non-profit organization, the money Elevance is paying in the deal will be used to set up Accelerate Louisiana.

In addition to the foundation, eligible Blue Cross policyholders will receive a payment once the deal closes. To be eligible for the payment, a customer must have held a policy on Jan. 23, the date the Elevance-Blue Cross deal was announced, and the day the deal closes.

Another source for Accelerate Louisiana could be the $2.3 billion surplus the two companies that make up Blue Cross have on hand.

Louisiana Health Service and Indemnity Co. has a surplus of over $1.8 billion, according to the Louisiana Department of Insurance, while HMO Louisiana has a $516.9 million surplus.

Blue Cross officials said it hasn't been determined exactly yet how money from the sale and from the surplus will be allocated in setting up the foundation or issuing payments.

While 1.9 million people in Louisiana are covered by Blue Cross, not all of them will be eligible for payments. For example, a business may have a policy with the company and be eligible, but the employees covered under the policy might not be.

Because the transaction is set to close later this year, it is not known how many policyholders will be eligible for payments.

Blue Cross officials said the exact amount to be divided among policyholders will be determined when the deal is finalized.

Louisiana will be the 15th state-run Blue Cross plan to join Elevance, which changed its name from Anthem Inc. last year as it aimed to rebrand itself as a company with broader health interests.

Blue Cross and Blue Shield of Louisiana has always been a "strong supporter" of the region's health care industry and the Baton Rouge Health Care District, particularly through its charitable foundation, said Steven Ceulemans, the district's executive director.

Ceulemans said the new Accelerate Louisiana Initiative would be an extension of that existing foundation.

"Funding opportunities and partnering opportunities on a larger scale toward the betterment of Louisiana is something that we're very, very excited about," he said.

Ceulemans said south Louisiana health care institutions have already been working together on initiatives through the Gulf Coast Health Sciences Corridor, a regional health care collaborative led by the Baton Rouge Health District and BioDistrict New Orleans. The collaborative narrowly missed out on a $50 million Build Back Better grant last year but still won a $500,000 award.

The corridor's initiatives could also benefit from the new foundation, Ceulemans said.

"We have a portfolio of projects that we're interested in advancing," he said. "Certainly, that's a platform that we're interested in continuing to advance for which the new foundation could be a good partner."

It's no secret Louisiana residents are dealing with a wide variety of health conditions. Ceulemans said no one condition needs to be prioritized by the new foundation, though he mentioned that obesity and cancer likely would be high on the list.

A foundation of that size could help to further strengthen Baton Rouge's interconnected health care ecosystem, Ceulemans said. For example, Pennington Biomedical Research Center has been researching obesity for decades, and any opportunities to boost that research would be beneficial.

"The resources to continue to turn that knowledge into tactics, into initiatives, it can help our patients," Ceulemans said. "Any opportunity to give our community and all of the stakeholders the tools to lead successful lives, whether it's through better workforce training to better health education to deepening and widening research opportunities, it is something that we applaud."

Stephen Waguespack, president and CEO of the Louisiana Association of Business and Industry, said while the details of the foundation aren't known, it could have major benefits.

"We know that we've got to get better on some of those statistics when it comes to diabetes, smoking rates, blood pressure, the research we're doing on obesity," he said. "There are a lot of needs we have in this area. If we can bring additional capital to move the needle on some of those, it could be a big win for this region."