Louisiana lawmakers take aim at Blue Cross with bills that would make another deal harder [The Advocate, Baton Rouge, La.]

Mar. 5—Three weeks after broad opposition scuttled the $2.5 billion deal to sell Blue Cross and Blue Shield of Louisiana to Elevance Health, two state lawmakers are proposing new rules that would make it harder for the Baton Rouge-based insurer to sell itself in the future.

State Sen. Patrick McMath, R-Covington, and state Sen. Jeremy Stine, R-Lake Charles, filed separate bills ahead of the upcoming legislative session that would tighten regulations around the reorganization of a nonprofit mutual, or member-owned health insurer like Blue Cross, into a for-profit company that could then be sold.

The proposed legislation does not name Blue Cross specifically. But both bills appear aimed at the 90-year-old nonprofit insurer, which provides health insurance to some 1.9 million people in Louisiana, or about 45% of the state.

The bills target several concerns that were raised earlier this year by doctors, hospitals, some policyholders and state lawmakers over the proposed sale of Blue Cross to Indiana-based Elevance, one of the nation's largest insurers. If passed, the bills would require more transparency and outside financial analysis of any proposed deal and would ensure that Blue Cross members would benefit from a sale.

McMath and Stine, who were among the deal's critics, said that while the bills would create new regulations, they are not trying to tell a private company like Blue Cross how to do business or to prevent it from taking steps to remain competitive in a changing market.

"This is really to create safeguards for the future, so we don't have the same issues with access to information and vote steering that were so disturbing about this deal," said McMath, who led an eight-hour legislative hearing in February that raised those concerns and others.

Blue Cross declined to comment on specifics in the legislation. Company spokesperson Cindy Wakefield said in a prepared statement that the insurer, "Will review and engage on all proposed legislation to ensure that the effect of any legislation is to improve the Louisiana health insurance market for our 1.9 million customers and our thousands of agent and provider partners."

Fair to policyholders

Stine's bill would require that a company involved in any proposed deal submit an independent actuarial analysis to the Commissioner of Insurance to determine whether the deal would be fair to company policyholders. An actuarial analysis of the Blue Cross sale prepared for the state last year raised serious questions about the deal and ultimately led to the company's decision last fall to ask for a delay in presenting the proposal to state regulators.

"I am a businessman and understand the need to have flexibility in running a company," Stine said. "But if it's a mutual company, it is member-owned and has to be fair and equitable to its mutual members, or policyholders."

Stine's bill would also prohibit the directors of an insurance company from receiving financial compensation for a company sale. Blue Cross board members stood to receive $100,000 per year each for up to 10 years if the Elevance deal had been approved.

Finally, Stine's bill would prohibit a company from soliciting proxy votes from its members over a potential sale by phone, a practice Blue Cross officials said they had been using.

McMath's bill contains different restrictions. It would prohibit a company from soliciting proxy ballots over a proposed sale before the Department of Insurance has held public hearings to weigh the pros and cons of such a deal.

"That was crazy to me. How can you issue proxy ballots weeks before a public hearing on something?" McMath said. "That doesn't make any sense."

His bill would also require a company to get the Department of Insurance to approve the wording of any ads or marketing materials touting the benefits of a company sale to ensure they aren't misleading.

The bills will be heard by the Senate Insurance Committee after the legislature convenes next week. Both senators said they are open to combining their measures into a single piece of legislation.

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