Hearing on Blue Cross and Blue Shield of Alabama’s Reorganization

A hearing is scheduled for Wednesday in the House Financial Services Committee to discuss Blue Cross and Blue Shield of Alabama’s proposal to establish a holding company.

State Sen. Andrew Jones (R-Center) is backing the measure, which aims to reorganize the health services firm under a nonprofit holding company. The Senate approved the bill unanimously last week.

“This bill really just focuses on preserving about 4,000 jobs in Alabama,” Jones stated. “Back in 1990, there were over 70 Blue Cross plans nationwide; now, that number has dropped to 33. We’re seeing health care merge more across state lines. Do we want Alabama’s Blue Cross under another state’s control, like Mississippi? The current legislation also prevents holding companies from acquiring hospitals,” he explained to 1819 News. “Blue Cross operates as a nonprofit under Title 10A, while other insurance firms in Alabama can already do this under Title 27. Plus, this bill places additional restrictions on Blue Cross compared to those under Title 27.”

Sophie Martin, a spokesperson for Blue Cross, shared her perspective with 1819 News: “SB 247 simply allows Blue Cross and Blue Shield of Alabama to create a holding company, which other insurers can already establish. This law is necessary because, although the Insurance Holding Company Act applies to us, Title 10A currently lacks provisions for a holding company. This new bill gives us that authority.”

She added, “There’s considerable consolidation among Blue Cross plans nationwide. Establishing a holding company would help us maintain our independence while allowing potential partnerships with other Blue Cross plans if we decide to go that route. Ultimately, we want to stay a robust Alabama-based company, and this provides more options to safeguard that.” Martin reassured that “this legislation won’t change anything regarding our health plans’ operations, including premiums, benefits, or contracts with customers and providers. Our oversight by the Department of Insurance, Congress, and our tax obligations remain intact. We won’t add or reduce the products we can offer. Blue Cross can already own subsidiaries, including those providing health care through our plans. In fact, we already have several health insurance subsidiaries. This new law won’t alter that.”

Martin emphasized, “This is a chance to update our corporate structure to match new growth initiatives and capital goals, while still protecting our interests in Alabama. We’re solely focused on remaining a nonprofit organization based in Alabama and partnering with other Blue Plans in different states, not using the holding company for other aims.”