Louisiana insurance regulators set date for hearing on Blue Cross sale to Elevance

The hearing will start Feb. 14, the day after Mardi Gras, and take place over two days. It will be conducted by an administrator from incoming Insurance Commissioner Tim Temple's office, and will seek to determine whether reorganizing the nonprofit mutual indemnity company into a for-profit entity that could then be sold to the publicly traded Elevance is in the best interest of Blue Cross customers and, more broadly, the health insurance landscape in Louisiana.

Two-thirds of Blue Cross' 92,000 members as well as the Commissioner of Insurance must approve the deal before it can go forward.

Members of Blue Cross are policyholders with voting rights in the company and certain types of health plans. They make make up less than five percent of the roughly 1.9 million people in Louisiana with some form of Blue Cross health insurance.

Blue Cross officials have argued that the proposed $2.5 billion sale to Elevance Health will give the company access to the latest digital tools and online platforms that can help patients manage their care and chronic conditions, theoretically driving down costs and making the insurance company more competitive.

Opponents have argued that selling a local nonprofit with a mission to serve the people of Louisiana to a publicly traded for-profit company will inevitably increase costs and limit access to doctors and hospitals in a poor state with the nation's worst health outcomes.

Some critics have also taken aim at the proposal to return less than 9% of the sale proceeds to the voting members, who would receive about $3,000 each, and put the rest in a nonprofit foundation, Accelerate Louisiana, which would be focused on Louisiana poverty and health outcomes. The foundation, which would also receive surplus Blue Cross funds, would be worth $3 billion and be controlled by a small group of former Blue Cross board members.

A new proposal

Blue Cross filed its plans with state regulators earlier this month after shelving a similar proposal in late September amid concern and opposition from doctors and hospitals, state lawmakers, good government groups and some policyholders.

Many of the major elements of the proposed acquisition are largely unchanged from the original proposal announced nearly one year ago. The sale price remains the same, as does the percentage of the sale's proceeds that will go to Blue Cross' members.

But the new deal includes changes to the nonprofit foundation that will be formed as part of the transaction. The Accelerate Louisiana Initiative will now have an expanded board of directors that includes an appointee of Gov.-elect Jeff Landry. It will also include a nonvoting "observer" appointed by newly elected Insurance Commissioner Tim Temple.

Steve Procopio, president and CEO of the Public Affairs Research Council, said his group is questioning the rationale for a board seat for the governor.

"There are a lot of important arguments being raised with respect to this deal, but we're concerned about the good government aspects of this," said Procopio. "Why does the governor get a seat on a private foundation board?"

While the hearing in February will cover various aspects of the proposed deal, good government groups have said that the focus should be on whether selling Blue Cross to Elevance will provide better, more affordable health insurance to Blue Cross customers. So far, that subject that has gotten less attention in public debates over the way the deal was structured and who will be controlling the proceeds from the sale.

Earlier this fall, Gov.-elect Jeff Landry, then the state's attorney general and frontrunner for governor, asked the company to put the deal on hold so his office, which regulates consumer protection issues, could investigate whether selling to a for-profit company would harm the competitive landscape.

He declined to comment on the revised plan earlier this month but said the investigation was ongoing. No findings of the probe have been released.

Meanwhile, a judge in Baton Rouge state court has set a hearing for Jan. 9 on challenges to a lawsuit filed earlier this month seeking to block the sale.

The suit was filed by attorney and Blue Cross policyholder Tut Kinney against Accelerate Louisiana, arguing the nonprofit has no rights to the $3 billion in sale proceeds and Blue Cross surplus funds.

Accelerate Louisiana has argued that the suit is meritless and that Kinney does not have standing to sue.