$2.7B sale of major Louisiana health insurer to Elevance is off table
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A major Louisiana health insurer’s plan to reorganize and sell itself to Indianapolis-based insurance giant Elevance Health for $2.7 billion was shelved hours ahead of a scheduled public hearing Wednesday in Baton Rouge, where critics of the sale have voiced various concerns over the proposal.
Proponents of the plan had said that under Elevance there would be improved services and technology for 1.9 million Louisiana customers.
But critics raised an array of concerns over how the plan was being promoted, which policyholders would be able to vote and the role of a new foundation that, according to a legislative report, would receive more than $3 billion as part of the plan.
State officials said Blue Cross Blue Shield of Louisiana withdrew its plan late Tuesday—the second time the plan has been shelved since it was proposed last year. The insurer issued a statement Wednesday saying “it is clear that our stakeholders need more time and information to understand the benefits of the changes we have proposed.”
Among a list of concerns in a report from two state Senate committees were the lack of complete data on fines Elevance has faced in other states, Elevance’s involvement in “significant litigation” in other states and high rates of claim denials by Elevance.
The new foundation to be created as part of the deal—the Accelerate Louisiana Initiative—also came in for criticism from the legislative committee and a non-partisan watchdog group. The stated purpose of the foundation, which would include some of the current Blue Cross Blue Shield of Louisiana board members, is “to improve the health and lives of the people of the State of Louisiana.”
The joint Senate committee report said Blue Cross Blue Shield, with an estimated current value of $3.4 billion, was proposing to contribute $667 million to the foundation before the sale, then $2.4 billion from the sale to fund the foundation. Senate Health and Welfare Chairman Patrick McMath called the foundation “a $3.1 billion vacuum of vague intentions.”
The Public Affairs Research Council of Louisiana also raised questions about the governor having a appointee on the foundation’s board.
“This appointment would inappropriately give the governor influence over the distribution of investment proceeds from $3 billion in assets,” the council said in a statement Wednesday, released as word was spreading that the plan was being shelved. “Such an expansion of the power of the governor’s office, which is already too powerful, would come with none of the normal checks and balances that exist within state government.”
Gov. Jeff Landry issued a statement Wednesday acknowledging the withdrawal of the proposed sale.
“From the beginning, we recognized that any transaction such as this would be disruptive to the healthcare landscape of the State,” Landry’s release said. “We appreciated the cooperation we received from both parties, our Commissioner of Insurance, and the legislature in both asking the tough questions, looking for solutions, and providing the answers so that the policyholders could make an informed decision and the State would be prepared if such a transaction occurred.”
Elevance indicated in a statement that it still hoped to pursue a deal.
“We are supportive of BCBSLA’s decision to withdraw their plan of reorganization,” a company statement said. “We will continue to meaningfully engage community members who are truly interested in better health outcomes and more affordable healthcare. We remain committed to this partnership and will work with BCBSLA on next steps in bringing that to reality.”