One reason why the deal won't harm competition is because certain Vantage health plans on the ACA exchange are already priced 60% higher than comparable Blue Cross plans, the DOJ says.
Blue Cross Blue Shield of Louisiana will be allowed to take majority ownership of a competitor, Vantage Holdings Inc., after sign-offs from state and federal regulators.
The planned acquisition, which was announced last fall, secured approval Tuesday from the U.S. Department of Justice Antitrust Division after previously being approved by the Louisiana Departure of Insurance.
The DOJ determined after a seven-month investigation in collaboration with state officials "that the combination of Blue Cross and Vantage is unlikely to result in harm to American consumers," said Assistant Attorney General Makan Delrahim in a statement announcing the approval.
Investigators made their determination after assessing whether the merger would substantially reduce competition among health plans both on and off the Affordable Care Act exchange.
"Vantage's membership in these products has been rapidly declining in recent years," the DOJ announcement said. "Moreover, Vantage has set premiums significantly higher than comparable Blue Cross products, and Vantage therefore does not appear to have a competitive impact on Blue Cross product pricing."
As an example, the DOJ pointed to the New Orleans market, where Vantage's cheapest silver plan this year costs 60% more than the lowest-cost Blue Cross silver plan.
When the proposed acquisition was announced, the organizations said it would help them innovate and wield control over cost and quality, while staying competitive with bigger organizations from outside Louisiana. They also said Vantage will continue to operate as a separate company under its existing management team, with Vantage CEO Gary Jones, MD, continuing to report to the Vantage board of directors, which will have majority representation from Blue Cross.
The organizations had initially said they expected the deal to close by the end of last year. In a statement Wednesday, a spokesperson for Blue Cross Blue Shield of Louisiana said the transaction is expected to close next month.
"We strongly believe the acquisition will allow both companies to grow more strategically and effectively," the spokesperson said. "Our shared focus on the health of all Louisianians further gives us the ability to innovate and impact cost and quality of care, continue to deliver exceptional customer service, as well as remain competitive with larger, out-of-state organizations."
"Following the close," the spokesperson added, "Vantage will continue to operate as it does today, as a separate company run by the current management team."
The parties declined to disclose the price of their transaction last fall, as The Advocate reported. And the spokesperson did not disclose the price when asked Wednesday.
Vantage, a Health Maintenance Organization (HMO) based in Monroe, Louisiana, provides coverage for more than 45,000 members statewide and contracts with more than 15,000 providers in the state, according to last fall's announcement.
Editor's note: This story was updated Wednesday afternoon to include comments from a Blue Cross Blue Shield of Louisiana spokesperson.
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.