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An insurance merger is back from the dead—but who benefits?

Elevance Health’s $2.5 billion acquisition of Blue Cross and Blue Shield of Louisiana has been resurrected from the grave. Here’s why consumers should be worried.

It’s a new year, and one with big opportunities for the powers that be at Elevance Health.

As of mid-December, the health insurance giant’s $2.5 billion acquisition of Blue Cross and Blue Shield of Louisiana (BCBSLA) is back on.

While Elevance first announced the acquisition last January, the deal was suspended in September. Regulators in Louisiana were worried that the merger would reduce competition and thus inflate healthcare prices in the state.

Yet, a year after Elevance first announced the acquisition, BCBSLA filed a new application with Louisiana’s insurance department to structure itself into a for-profit agency, according to a recent article in Healthcare Dive. If the application is approved, it would allow the merger to officially take place. The deal is expected to close in the first quarter of 2024.

So, has anything changed to reassure regulators that the deal won’t harm insurance competition or raise prices in the state? As far as we can tell, no.

It isn’t that consolidation is inherently negative. There are many times when the scale of two organizations means better services for consumers. But when it comes to insurance, competition is paramount – without it, payors essentially have free rein to undercut hospitals in their healthcare coverage, making it harder for patients to get the care they need.

It all goes back to industry control. Elevance currently operates Blue Cross Blue Shield (BCBS) plans in 14 states, and BCBSLA is the largest insurer in Louisiana with 1.9 million members. If merged, the two insurers would become an even bigger enterprise. And the bigger the insurance conglomerate, the more power and control it typically has over premium prices, network access, and provider reimbursements.

The deal would require BCBSLA to become a for-profit insurer and fold its members into Elevance’s affiliated Anthem BCBS brands. It’s a trend we’ve been seeing since the 1990s, when numerous nonprofit Blue Cross and Blue Shield plans converted to for-profit plans, according to Healthcare Dive. BCBSLA argues that the structuring of becoming a for-profit company would not squash competition. In fact, Elevance and BCBSLA have pledged that members won’t see a change in the cost of premiums.

But the problem with for-profit plans is that they are more likely to exercise market control. Further, according to a National Bureau of Economic Research paper, for-profits “value enrollees only to the extent they are profitable.” This means there is greater incentive to restrict access to care, as it would harm the payor’s profitability.

So, we ask, despite what Elevance and BCBSLA say, is restructuring into a for-profit company a change that is in the best interest of the consumer?

We think not.

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