Kelly Gooch | July 27, 2015
Blue Cross Blue Shield plans may be feeling apprehensive following Anthem’s purchase of Cigna, according to a Forbes report.
Last week, Anthem, Blue Cross Blue Shield’s largest member company, entered into a definitive agreement to acquire rival health insurer Cigna in a cash and stock transaction valued at $54.2 billion. The deal is expected to close in the second half of 2016.
Here are three things to know about how the deal is anticipated to impact Blue Cross Blue Shield.
1. The deal, which comes after Aetna entered into a definitive agreement to acquire all outstanding shares of Humana in a deal valued at $37 billion, would, to all appearances, make Anthem a stronger competitor with scale to negotiate better contracts with employers, potential national accounts and other clients, according to Forbes.
2. The Blue Cross and Blue Shield Association, a trade group and lobby for 36 “locally operated” Blue Cross and Blue Shield companies, has rules that stop Anthem from using the well-recognized Blue Cross Blue Shield brand in regions where Anthem lacks the Blue Cross license or doesn’t own a Blues plan, according to the report. Therefore, Anthem must sell health insurance under a different brand such as Amerigroup, which will compete for business against other Blues plans. “The deal sets Anthem in direct competition against other Blue Cross Blue Shield plans nationwide,” Paula Wade, analyst with Decision Resources, a healthcare research and consulting firm based in Boston, told Forbes.
3. Under the deal, Anthem will gain 14 million Cigna health plan members across the country in states where other Blue Cross plans have the license to market under the Blues brand, including states like Texas, Florida and Illinois, where there are major corporate accounts and company headquarters, according to Forbes.
In the meantime, Anthem has not speculated in detail about how things could pan out. According to Forbes, CEO Joe Swedish told analysts last week that “having conversations of any depth with the Blue Association at this stage would have been premature.”
“Internally, we’ve gone through lots of analytics regarding…how the Blue rules apply to us and how [Anthem] will have [or] may have to adapt relative to those rules at closing, which is still many, many months away,” Mr. Swedish said, according to the report. “We are a Blue Organization, and we will abide by those rules. And shortly after closing, then we will have to administer or deliver a plan that recognizes how we may adjust or adapt to those rules.”
Source: Beckers