Planned hearing on Blue Shield acquisition is good news because the deal is suspect

California regulators just consented to holding a public hearing on Blue Shield’s proposed acquisition of Care 1st Health Plan on June 8. The Department of Managed Care, which has approval authority over the transaction, scheduled the hearing in response to requests by a coalition of consumer groups and me. 

The hearing is good news because based on what we know now the acquisition looks like a bad deal for the public. 

The $1.25 billion that Blue Shield proposes to spend would come from nonprofit assets that belong to the community and are supposed to be used exclusively for community benefit. Yet Blue Shield has offered no evidence that the acquisition would serve the public good.

In its regulatory filing, Blue Shield says the acquisition would turn it into “one of the largest Medi-Cal managed care plans in California.” That’s great for Blue Shield’s management, but where’s the benefit for Californians? 

Transferring control of Care 1st wouldn’t create any additional service capacity or price competition in Medi-Cal. And since Blue Shield has shunned the Medi-Cal program in the past, it has no experience or expertise in this highly specialized line of coverage. There’s no reason to believe it would improve the services Care 1st delivers.

Blue Shield’s nonprofit mission is to improve public access to healthcare. For the $1.25 billion that it plans to spend, an additional 25,000 people could be covered through Medi-Cal for 10 years. Unless Blue Shield can show that this acquisition would do as much to advance healthcare access, it should be rejected.