The departure of top executives at Health Care Service Corp. could open the door to an eventual merger with a number of Blue Cross and Blue Shield plans including Anthem.
The regulatory and political hurdles could be too steep to pull off given the different ownership structures of Health Care Service Corp., also known as HCSC, and Anthem, but these aren’t ordinary times when it comes to deals within the health insurance industry.
Because Anthem, the nation’s second-largest health insurer with 41 million enrollees, is a for-profit publicly-traded operator of Blue Cross plans, the acquisition of HCSC would face additional layers of approvals given HCSC is a mutual health insurer owned by policyholders. HCSC, the nation’s fourth-largest health insurer with 16 million health plan enrollees, owns and operates Blue Cross plans in five states.
Such mergers of investor-owned for-profit plans and a mutual that executives inside HCSC consider “not-for-profit” typically face intense scrutiny among insurance regulators as well as attorneys general and perhaps even state lawmakers given proceeds of such sales can be considered charitable assets depending on state rules.
But sources close to HCSC say the board wasn’t happy with departed chief executive Paula Steiner because she wasn’t thinking big enough for their liking when it came to long-term strategy and potential deals. Health Care Service made billions of dollars and grew under Steiner but the board wants a more aggressive long-term strategy.
“HCSC’s board of directors and new leadership intend to pursue a more forward leaning long term strategy, while continuing to help our members access quality, affordable health care,” HCSC said in a statement, adding that the health insurer “won’t speculate about its strategy or future plans.”
Still, sources say some in executive leadership at HCSC are open to at least looking into large mergers and acquisitions given CVS Health’s $69 billion acquisition last year of Aetna and health insurer Cigna’s $67 billion purchase of the pharmacy benefit manager Express Scripts. Meanwhile, the nation’s largest health insurer, UnitedHealth Group, is spending billions of dollars buying up providers of medical care from urgent care centers to a chain of doctor practices.
Over the years, HCSC has added smaller Blue Cross plans that are considered nonprofit or mutual, but there hasn’t been such an acquisition in years. There have, however, been discussions between HCSC with other Blue Cross plans over the years but such deals eventually failed to come together.
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