The “strategic affiliation” of two health insurers that operate Blue Cross and Blue Shield plans in five states makes it more difficult for Anthem to expand using the valuable Blues brand in new markets.
Cambia Health Solutions and Blue Cross and Blue Shield of North Carolina (Blue Cross NC) said this week the are forming a “strategic affiliation” that merges operations and management of two companies operating Blues plans on the East and West coasts.
That makes it less likely the larger Cambia wants to sell to the publicly-traded, investor-owned Anthem, which is the nation’s second largest health insurer and operates Blues plans in 14 states. Anthem had no comment about the Cambia-Blue Cross NC deal, but Anthem executives said earlier this month they are focused on growing and adding on to the business that they have.
It’s tough for Anthem to buy other Blues plans for a variety of reasons, making the health insurer “landlocked” as its rivals have been known to say when it comes to certain marketing.
Rules of the Blue Cross Blue Shield Association prevent Anthem from using the well-recognized Blue Cross and Blue Shield brand in regions where Anthem doesn’t have the Blue Cross license or own a Blues plan. The Blue Cross Blue Shield Association (BCBSA) is a trade group and lobby for 36 “locally operated” Blue Cross and Blue Shield companies, which are able to market their Blue brand via licenses with the association.
In states where Anthem doesn’t have the Blue Cross license, it operates under the Amerigroup brand in states where it’s predominantly known for its Medicare health benefits and Medicaid coverage for poor Americans. Thus, Anthem cannot market certain products like UnitedHealth Group, Aetna, Cigna and Humana given the Blue Cross Blue Shield Association rules.
But Anthem’s strategy to build their existing businesses avoids complex legal and regulatory rules should the insurer attempt to buy a mutual or nonprofit plan. When that has happened in the past, it has draw intense scrutiny from attorneys general, consumer groups and lawmakers concerned about who gets sale proceeds if a nonprofit or mutual is taken over by an investor-owned company that answers to shareholders. Such deals take months and, in some cases, years to pull off and sometimes are derailed by regulators or local politics.
Even the Cambia- Blue Cross NC deal isn’t a full asset merger so the regulatory hurdles it faces aren’t expected to be as intense. Cambia, which operates Blue plans in Idaho, Oregon, Washington and Utah, and Blue Cross NC call their ownership structures “taxpaying not-for-profit.” While other Blue plans and their parent companies have ownership structures that are considered tax-exempt nonprofits or mutual plans owned by policyholders.
“The strategic affiliation . . . will maintain the separate health plans in five states, all locally led and regulated,” Cambia and Blue Cross NC said. “Through the transition to the strategic affiliation, members, employers and providers will continue to receive the same high-quality service they have come to expect. The strategic affiliation is subject to regulatory approval in North Carolina, Oregon, Washington, Idaho, and Utah.”