Consolidation of the nation's Blue Cross and Blue Shield plans continued last week as the parent of the Illinois and Texas plans said it will buy Blue Cross and Blue Shield of New Mexico.
The Albuquerque-based plan covers about 213,000 people, or about one quarter of the state's commercial enrollees. Of those, 53,000 members are in a for-profit HMO subsidiary, while the remainder are in nonrisk indemnity PPO and point-of-service plans. The Blues lost nearly $1.7 million in 1999 on premium revenue of $135.6 million, following an $11.9 million loss on revenue of $135.1 million in 1998, according to the New Mexico Insurance Division.
Both sides said a price had yet to be established, but they expected to file a proposal with the New Mexico insurance division by the end of May.
The buyer, Chicago-based Health Care Service Corp., is among the financially strongest Blues plans with more than 6 million members. It posted a gain of $49.7 million in 1998 on revenue of $7.8 billion, the latest year for which data were available, company spokesman Robert Kieckhefer said.
Earlier last week, the company gained approval from Texas Insurance Commissioner Jose Montemayor to acquire Aetna's 522,600-member NYLCare Health Plans in that state. The $500 million sale will fulfill the antitrust requirements of Aetna's acquisition of Prudential's managed-care business (Aug. 16, 1999, p. 10).
New Mexico Superintendent of Insurance Don Letherer, who has approval power over the latest deal, said he doesn't expect any problems. He said any proceeds from the sale should go to a charitable trust.
"(The New Mexico Blues) has had very poor results over the last few years, and we're delighted to have a sound institution like the Health Care Service Corp. involved," Letherer said.
In a news release, Health Care Services Chief Executive Officer Ray McCaskey said his company will improve customer service and cost controls at the New Mexico Blues, which is the state's only not-for-profit health plan.
"We are particularly interested in cross-border business possibilities between New Mexico and Blue Shield of Texas," McCaskey said in the written statement.
Meanwhile, other deals could be in the works. Kieckhefer said Health Care Services is actively pursuing a strategy of consolidating not-for-profit Blues plans, regardless of geographic location. He said McCaskey is "fond of saying that we're probably talking to more Blues plans than we're not talking to."