Here's how Jeff Landry sees the $2.5 billion sale of Blue Cross Louisiana to Elevance

In a speech to almost 200 Louisiana hospital executives last week, Gov. Jeff Landry touted the potential benefits of the controversial $2.5 billion sale of Blue Cross and Blue Shield of Louisiana to one of the country's largest insurers, Elevance Health of Indianapolis.

He told the Louisiana Hospital Association he isn't pushing for the sale, which will go before state regulators later this month. The governor does not have legal authority over the deal, which is subject only to Insurance Commissioner Tim Temple and Blue Cross policyholders.

Still, Landry's comments echoed arguments used by Blue Cross executives over the past year to justify why the Baton Rouge-based nonprofit — which has more than 60 percent of the commercially insured customers in the state — should sell to a much larger, for-profit company.

Pointing out that health care is rapidly changing and ever more expensive, Landry suggested it makes more sense to be proactive than to wait, an argument Blue Cross has made.

"If we know the world is going to look different in five years, the question is whether we want to ride the wind and hope that where we land is productive for us or whether we want to try to control our destiny," the governor said, according to a video of the 25-minute speech on Tuesday to the association's annual mid-winter symposium in Baton Rouge.

Landry's remarks come as supporters and opponents of the sale are waging an intensifying battle to sway Temple and Blue Cross policyholders. Legislators have set a hearing Monday to get more details, and key Insurance Department hearings on the deal are scheduled to begin Ash Wednesday.

Though Landry did not officially take a position on the sale in his speech, the tone of his remarks could make it harder for lawmakers and hospitals to speak out against the sale and could ease the way for the deal to get final approval.

Leaving Louisiana

Blue Cross' Louisiana unit was one of the national network's most profitable in 2023.

But in their rationale for selling, Blue Cross executives have said they are losing market share in their most profitable service lines – the commercially insured plans offered by employers – and that a larger company with tools, technology and pharmacy benefit plans could offer better service more efficiently.

Critics have questioned the structure of the deal and worry that a large, publicly traded company such as Elevance will be more concerned about pleasing Wall Street than taking care of customers in a state with one of the country's poorest populations and worst health outcomes.

Landry suggested one reason Blue Cross is losing commercially insured patients is that wealthier people are leaving Louisiana, while those dependent on public assistance are staying, adding to soaring health care costs.

"Every time those people leave the state, they put pressure on the health care industry, and the [fewer] payers we have, the higher the rates have to go," he said.

He said a company such as Elevance, which can operate across state lines and administers self-funded insurance plans for large corporations, would be a boon for Louisiana's business climate and could attract more insurers and employers to the state.

"Large companies look for policies that transcend state lines," Landry said. "That is why you see Exxon and bigger companies use bigger players and they can send their workers to other states and the policies work in those other states."

He also hinted at the concerns of doctors and hospitals, who are worried that Elevance will cut reimbursement rates to them in order to satisfy its shareholders. The state's largest physician group, the Louisiana State Medical Society, recently came out strongly against the Blue Cross deal. The Louisiana Hospital Association has yet to take a position.

Conditional sale

Landry told the association that Temple has a third option besides approval or denial of the deal: Approve it with conditions, imposing terms that could make the deal more favorable to the state. Landry said his new health secretary, Ralph Abraham, a physician and former member of Congress, is putting together a "small listening task force" to gather feedback from health care providers.

"We want y'all to go out and list out three things that you think need to be conditions so we can share them with the insurance commissioner and see what we can get in there if the policyholders approve the deal," Landry told hospital executives.

It is not exactly clear what if anything Temple could do about how Elevance treats providers. State law gives the insurance commissioner the authority to "make any modifications to the plan of reorganization the commissioner finds necessary for the action of the policyholders and members." That means Temple could change the terms of the plan reorganizing Blue Cross from a nonprofit to a for-profit entity so that it could be purchased by Elevance, which could affect how much money Blue Cross policyholders receive from sale proceeds.

But state law does not allow the commissioner to cap insurance premiums or set reimbursement rates for doctors and hospitals. It also does not allow the commissioner to require that certain doctors and hospitals be included in a network. Louisiana could try to impose such conditions, but such a move would likely be challenged in court, lawyers familiar with the statutes said.

A spokesperson for the Insurance Department said it previously approved an insurance company sale with conditions, but that the deal was many years ago and the company was not a health insurer.

A welfare trope

Landry's strongest comments in favor of the Blue Cross sale centered on the nonprofit foundation, Accelerate Louisiana Initiative, that will funded with the bulk of sale proceeds and surplus Blue Cross reserves, for a total of more than $3 billion.

The foundation will seek to operate as a nonprofit public-private trust, a designation that will require a change of state law. It is to have four focus areas, all centered on poverty and health outcomes. Landry praised the first pillar, which supposedly would move people from dependence to independence.

"In other words, we're going to be able to have an organization that is going to work towards trying to move those people off of Medicaid," the Republican governor said.

That federal government-sponsored health insurance program for poor people was dramatically expanded under Landry's predecessor, Democrat John Bel Edwards. Almost half the state's population is now on Medicaid, most of which is paid for by the federal government.

Landry said Accelerate money will also be used to help get the state's "safety net programs" working in sync. He used the example of a hypothetical patient with Type II diabetes, a chronic health condition that leads to other health problems. Landry said the patient might receive a "shiny brochure" from her doctor telling her to eat healthy and lose weight to help her condition.

"Then, she puts it in her purse, goes to Piggly Wiggly and goes down the aisle to the soda, chips, cookies, and then she goes to the cash register with her Louisiana Purchase card," said Landry, using an old trope that criticizes welfare recipients. "How about if we had an organization that helps the government start to integrate the food stamp program with the Department of Health, so instead of getting a fancy brochure we could give her $100" if she engages in healthy lifestyle choices," he said.

"When else are we going to get that opportunity again?" he said. "Those are the things we will do."

Landry's office declined to comment on his remarks to the Louisiana Health Association. So, too, did Blue Cross.