HJNO Jan/Feb 2024

10 JAN / FEB 2024 I  HEALTHCARE JOURNAL OF NEW ORLEANS   The proposed sale of at 100-year-old, member owned Blue Cross system in Loui- siana is bad for the members and bad for the state. The basic plan is to sell this insti- tution, which is owned and managed by its members and serves almost 80% of the health insureds in Louisiana, to a for-profit insurer, Elevance, formerly Anthem. This stock company will raise rates to recoup its investment of $2.5 billion dollars. Over- night, the members will lose control of the management of their health insurance and costs. They will be forced to cede control to Elevance. What is almost as harmful to the members is that the proceeds will not be shared with them. Instead, the board of the old member-run institution has created a “foundation”to bank the proceeds and use as they see fit. This is a double-whammy bad idea. History of Blue Cross and Blue Shield of Louisiana In 1927, a group of doctors in Louisi- ana banded together to start a self-regu- lated, nonprofit entity to provide health- care insurance for the citizens of the state. One of the key reasons for its formation was that it did not have to make a profit to distribute to shareholders. Sure, it had to make enough revenue to cover expenses, but “just enough.”The financial base of this model was not driven to make the most that it could, but to be financially sound for the benefit of its membership and policy hold- ers. The board was elected by its members and was supposed to act only in the best interests of its members — not to distrib- ute profit, but to provide the best and most reasonably priced health insurance. It was also designed to fairly reimburse provid- ers. The model worked exactly as designed. Its finances are in great shape, and its fiscal projections through 2024 are solid. Mem- bers, policy holders, and providers are all satisfied. As they say, “if it ain’t broke, don’t fix it.” The Plan However, in late 2022, the Board of BCB- SLA decided to demutualize the member- owned entity. The process of demutualiza- tion is when an entity ceases to be governed by its membership, as opposed to a stock company that is governed by its sharehold- ers. The overwhelming majority of BCBSLA members are unsure regarding the need for the breakup of their company. It cer- tainly was not a decision based on finan- cial soundness. The CEO of Blue Cross and Blue Shield of Louisiana, Steven Udvarhelyi, MD, testified to a Joint Louisiana Legisla- tive Committee on Aug. 16, 2023, that the system was financially sound for “at least the next six years.” The insureds and pro- viders were also satisfied with the current system. So, out of this sound operation, the board concocted a plan to sell all the members’ assets to Elevance and break up the member-owned mutual insurance com- pany without really explaining the reasons. There were statements such as, “Elevance can better manage your diabetes care.”This has alarmed the many informed policy holders since the last entity that they want “managing” their healthcare is Elevance. This also alarmed the Louisiana State Medi- cal Society and the Louisiana Hospital Asso- ciation, who filed opposition to the plan, and have raised serious questions to the plan respectively. There were statements about “digital access.”This ignored any mention of complaints about the current BCBSLA ser- vice from either policy holders or providers and failed to state any inadequacies or com- plaints about the digital services currently provided by BCBSLA. It also ignored the question whether such issues should have been previously addressed if they were real. And, it ultimately ignored the fundamental question, “Should this 100-year-old com- pany be dismantled and sold in order to upgrade its digital function?” BCBSLAprovides health insurance to 1.9 million people in our state with a total popu- lation of 4.6 million — about 80% of the fully insured market and 55% of the self-insured market. BCBSLA employs more than 3300 employees in its Baton Rouge office alone. What happens in this demutualization will have an enormous impact on Louisiana. But there are also important questions about By Henry W. Kinney, Esq. Founding Partner Kinney & Ellinghausen NO GOOD REASON AGAINST