NEW ORLEANS — For a second time, Blue Cross and Blue Shield of Louisiana has called off plans for a $2.5 billion sale to Indiana-based, for-profit insurer Elevance Health.
The nonprofit health insurance provider announced the news hours before regulatory hearings were scheduled to begin in Baton Rouge.
“Late yesterday evening, Blue Cross notified the Louisiana Department of Insurance that it has chosen to withdraw its plan of reorganization,” said John Ford, LDI deputy commissioner of public affairs. “The hearing scheduled for today and tomorrow is therefore canceled, and I currently have no information regarding Blue Cross’ intentions moving forward.”
“We are supportive of BCBSLA’s decision to withdraw their plan of reorganization,” said a spokesperson for Elevance Health after the Blue Cross announcement. “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.”
The deal was first announced in early 2023. After a barrage of criticism from doctors, hospitals, lawmakers and policyholders, the plan was put on hold a few months later, then revived at year’s end.
Blue Cross, which insures nearly 2 million people in the state, has argued that selling to a bigger company — with its own doctors’ practices, telehealth platforms and pharmacy benefits manager — would keep it competitive in a changing industry. But critics cried foul, citing the potential for rising premiums for policyholders and shrinking reimbursements for caregivers, among other concerns.
There are also questions about how the deal is structured, especially the creation of a $3 billion foundation that would result from the sale.
“Since we announced our intent to be acquired by Elevance Health last year, it has become abundantly clear that the work we do each day is not only appreciated by our members, providers, group leaders and broker partners, it is highly valued,” said Cindy Wakefield, vice president of strategic communications for Blue Cross and Blue Shield of Louisiana.
“We continue to hear from our stakeholders that they want Blue Cross and Blue Shield of Louisiana to remain their trusted partner in their healthcare journey, and we pursued this transaction to help us do exactly that — by changing for the better. However, it is clear that our stakeholders need more time and information to understand the benefits of the changes we have proposed. This is why we have decided to again pause the process in our proposed transaction with Elevance Health.
“We know that change is hard, even when change is made for the right reasons. We continue to need a strong partner to help position us for a vibrant future, and to help us make healthcare more affordable and to help us do more to improve the health of members and policyholders. However, more time is needed to make this bold step.”
University of New Orleans economics and finance professor W. J. (Dub) Lane, a healthcare industry expert, said critics of the deal simply don’t like the idea of an out-of-town, for-profit company taking over the state’s nonprofit health insurance provider. But, he said, there are changes taking place in the industry that explain Blue Cross execs’ desire to make the change.
“Since Blue Cross is the ‘big dog’ in the state of Louisiana, people do not realize that on the national scale they are tiny and all the other health insurance companies doing business in the state are much, much bigger, which gives them access to better technology, better economies of scale and a better ability to deal with the changing healthcare environment,” said Lane. “We are moving to what is called ‘population health,’ which pays differently than the current standard and has different risks involved.”
