$50 Million Loan to Blue Cross Blue Shield of Colorado Raising Concerns

Strategic Insights -

Colorado Insurance Commissioner William Kirven recently approved a $50 million loan to Blue Cross Blue Shield of Colorado from Indianapolis-based Anthem Inc. The loan is part of a deal that would allow Anthem to buy Blue Cross for $155 million in cash and $10 million in administrative services. Critics, however, argue that the terms of the loan hamper the nonprofit health insurer from pursuing other offers, potentially costing Coloradans in the long run.

Key Takeaways:

  • The $50 million loan to Blue Cross Blue Shield of Colorado is tied to a deal that would allow Anthem to buy the nonprofit health insurer for $155 million in cash and $10 million in administrative services.
  • The loan's terms include a 45-day restriction on Blue Cross discussing deals with any party other than Anthem.
  • If Blue Cross terminates its deal with Anthem after 45 days, Anthem has the right to match any competing offer for up to six months.
  • Critics, including attorney Ed Kahn, argue that the provisions of the deal may be unlawful, as they limit Blue Cross' ability to pursue better offers for its subscribers and a nonprofit foundation.
  • The $200 million offer made by California-based WellPoint Health Networks on Thursday had been turned down due to the loan's restrictive terms.
  • The final selling price, minus any Blue Cross debts, will be transferred to a nonprofit foundation to serve unmet health care needs of Colorado's residents.
  • Blue Cross spokesman Neil Westergaard stated that the conditions were necessary to secure the financial infusion from Anthem.

Statistics:

  • $50 million: The amount of the loan to Blue Cross Blue Shield of Colorado from Anthem Inc.
  • $155 million: The cash component of the deal for Anthem to buy Blue Cross.
  • $10 million: The administrative services component of the deal for Anthem to buy Blue Cross.
  • 45 days: The time period during which Blue Cross is restricted from discussing deals with parties other than Anthem.
  • 6 months: The time period during which Anthem has the right to match any competing offer if Blue Cross terminates its deal with Anthem.
  • $200 million: The amount of the competing offer made by WellPoint Health Networks for Blue Cross.

Sources:

  • "Critics Question Terms of Blue Cross Loan from Anthem" by Michele Conklin, News Staff Writer.
  • No publication date mentioned.