Elevance Health and Blue Cross and Blue Shield of Louisiana have halted plans to merge as they work to convince policyholders and politicians on the merits of the deal.
The proposed $2.5 billion transaction has attracted criticism from policyholders and providers concerned the combination will result in higher healthcare costs and a lack of competition in the local insurance market. Attorney General Jeff Landry (R) last week asked the companies to delay the deal until a new administration takes over in January. Landry is the front-runner in the governor's race and has previously said he opposes the merger.
"We have chosen to withdraw BCBSLA's plan of reorganization and Elevance Health's acquisition application from the Louisiana Department of Insurance to provide more time for key stakeholders to understand the benefits this transaction will provide to Louisianaians and how the quality service our stakeholders know, and value will continue," the companies said in a joint statement Monday.
The insurers did not say when they planned to refile the merger application with the state insurance department. Two-thirds of Blue Cross' policyholders and the state insurance commissioner must approve the deal.
Elevance, which operates Blue Cross Blue Shield plans in 14 states, announced in January that it would pay $2.5 billion for the Blue Cross Louisiana plan, which has 1.9 million policyholders across the Pelican State. The deal would require Blue Cross Louisiana to convert from a nonprofit carrier to a for-profit insurer. The companies had planned to close the deal by year's end.
Elevance is not obligated to pay Blue Cross Louisiana a $75 million "exit fee" because the companies remain committed to completing the transaction in spite of regulatory delays, a Blue Cross Louisiana spokesperson wrote in an email.
Blue Cross and Blue Shield of Louisiana leads the state's health insurance market with a 67% share, according to research the American Medical Association published last November. That's the third-largest share of any insurer in any state, the AMA said.