Blue Cross Blue Shield of Delaware must create and fund a healthcare foundation if it wants to merge with Pittsburgh-based Highmark, Attorney General Beau Biden announced last week.
The foundation would ensure that BCBSD's $165 million pot of reserves that accrued at the expense of Delaware taxpayers be used for the benefit of Delaware residents. The Attorney General's office is working to determine the amount to be set aside in the foundation.
Biden's order came as part of a determination that the Blue Cross-Highmark deal constitutes a "nonprofit healthcare conversion" under a 2004 state law, which was designed to protect public investment in nonprofits that had become takeover targets, according to the Delaware News Journal.
Under the terms of the deal, Blue Cross would maintain local operations and its chief executive, but it would cede three board seats to Highmark executives. Biden said this board restructuring constituted a change of control, warranting a "conversion" decision. "Instead of corporate decisions being made by BCBSD locally, the new Highmark-controlled board will make the decisions about BCBSD's provision of healthcare in Delaware," the AG's office told the News Journal.
BCBSD said it is analyzing Biden's decision and reviewing its options, the Newark Post reports. "We are disappointed with this determination and still believe that the proposed affiliation is in the best interests of Delawareans. It will allow us to remain a strong local leader, maintain our not-for-profit status, and retain the Blue Cross and Blue Shield brand," the insurer said in a statement.
Delaware Insurance Commissioner Karen Weldin Stewart has the final say on whether to approve or deny the merger, but that decision is not likely until at least the fall. Meanwhile, the AG's office and the state department of insurance will continue to review the affiliation to determine its effects on quality of care and customer service, notes the Post.