Two large operators of Blue Cross and Blue Shield health insurance plans announced what they are calling a “strategic affiliation” that will merge key management and operational functions into a larger health insurance company with business on the East and West Coasts.
Cambia Health Solutions and Blue Cross and Blue Shield of North Carolina Tuesday said they have formed a “a strategic affiliation” between the two companies with a goal of improving healthcare quality and lowering costs. The combined health insurer will have six million health plan enrollees and $16 billion in annual revenues.
The deal comes as publicly-traded investor-owned health insurers are already engaged in unprecedented consolidation with Aetna, the nation’s third largest health insurer, sold last year to drugstore giant CVS Health. Meanwhile, the health insurer Cigna purchased Express Scripts, a large manager of pharmacy benefits.
Though there are investor-owned Blue Cross plans like Anthem, most Blue Cross branded companies remain private or mutual plans owned by policyholders. Blue Cross and Blue Shield of North Carolina is described as “fully taxed,” according to information on the company’s web site.
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Anthem, the nation’s second-largest health insurer, operates Blue Cross and Blue Shield plans in 14 states and remains much larger than Cambia with nearly 40 million health plan enrollees.
Blue Cross plans have perhaps the most recognizable health insurance brand in the industry and merging will allow them to expand that marketing ability, competing with national insurers like Aetna, Anthem, Cigna and UnitedHealth Group for large national employer accounts in the fast-growing northwestern and southeastern U.S.
Cambia operates health plans in several Western states and includes: Regence BlueCross BlueShield of Oregon; Regence BlueShield in Washington; Regence BlueShield of Idaho; and Regence BlueCross BlueShield of Utah.
“By sharing resources, innovations, and best-in-class services we can fundamentally transform the way individuals and families experience the health care system,” said Dr. Patrick Conway, President and CEO of Blue Cross and Blue Shield of North Carolina who will be CEO of the combined health plan.
Conway, a former high-ranking healthcare official in the administrations of former Presidents Barack Obama and George W. Bush, has made a name for himself by coming up with innovative ways to improve healthcare quality via value-based approaches that move reimbursement away from fee-for-service medicine. “We have to do something different to make health care better, simpler, and more affordable for the people we serve,” Conway said Tuesday in a statement announcing the deal.
Cambia Health Solutions President and CEO Mark Ganz will be the new Executive Chair of Cambia’s board, which “will be made up of 10 members from Blue Cross NC’s current Board of Trustees and nine members from Cambia’s current Board of Directors,” the insurers said.
Unlike the recent mergers of investor-owned companies, Cambia and Blue Cross of North Carolina say each company will retain its current assets, including reserves and capital. “This is a long-term management agreement where the two companies have contracted to operate under a common management team, and to share key management, administrative, operational, and other corporate services,” a North Carolina Blue Cross spokesman said.
Date: March 18, 2019