Health Insurance Giant to Acquire Louisiana Blue

Elevance Health — the health insurance giant formerly known as Anthem — has agreed to acquire Blue Cross and Blue Shield of Louisiana.

Elevance, an Indianapolis-based company with about $160 billion in annual revenue and 47 million health plan enrollees, would be getting a Baton Rouge, Louisiana-based carrier with $4 billion in annual revenue and 1.9 million health plan enrollees.

Elevance expects to pay for Louisiana Blue, a policyholder-owned mutual insurer, by creating a “multibillion-dollar foundation,” the companies said.

Anthem covers about 15% of all U.S. residents and 2.9 million, or 6.6%, of the 44 million residents with Medicare Advantage or Medicare supplement insurance coverage.

Louisiana Blue covers 41% of its state’s 4.6 million residents, and it has a 3.7% share of its state’s Medicare market, according to 2021 Louisiana Department of Insurance data.

What It Means

For clients worried about their investment portfolios, the deal implies that corporate buyers still have plenty of cash and could help stabilize the valuations of attractive companies.

For clients who have Medicare coverage, or who are thinking about future coverage needs, the deal may mean that Blue Cross and Blue Shield carriers will be in a position to compete harder for Medicare plan business in Louisiana and in the rest of the country. That could increase the quality of private Medicare plan options and hold down the cost.

Louisiana Blue

Six New Orleans hospitals formed the core of Louisiana Blue in 1934, which was originally known as the Hospital Service Association of New Orleans.

Louisiana Blue’s official name is Louisiana Health Service & Indemnity Company. The company has about 3,000 employees.

Elevance and Louisiana Blue already share ownership of Healthy Blue, a carrier that serves Louisiana residents who are eligible for both Medicare and Medicaid.

The Deal

WellPoint, the company that eventually became Elevance, filed an extensive deal valuation analysis in 2005 when it acquired Empire Blue Cross and Blue Shield, a big, nonprofit New York state Blue Cross and Blue Shield carrier.

Based on that analysis, the Louisiana Blue deal could have a price ranging from about $1.5 billion to $5 billion.

Louisiana Blue CEO I. Steven Udvarhelyi told members in a letter that Louisiana Blue expects to keep its current operations and employees in place after the deal closes.

“Across health care, scale has become increasingly important,” Udvarhelyi said. ”Aligning with Elevance Health will allow us to accelerate our mission of improving the health and lives of Louisianans.”

Elevance CEO Gail Boudreaux said the combined company will offer a “whole health personalized approach” in Louisiana.

Elevance says its whole health approach involves strengthening communities as well as working to keep enrollees healthy.

Pictured: Gail Boudreaux. (Photo: Al Drago/Bloomberg)