The California Department of Managed Health Care (DMHC) will hold hearings in June on the $1.25 billion bid by Blue Shield of California to acquire Care1st health care system based in Monterey Park, California. The review comes after a former Blue Shield executive, Michael Johnson, and several consumer groups complained to the state agency about the planned acquisition.
Originally announced in December, the purchase of Care1st would move Blue Shield of California into a new health care niche, since the company has not previously participated in Medi-Cal, the state’s Medicaid program for low-income residents. Care1st has more than 500,000 patients, with 473,000 people in Medicaid managed-care plans and 46,000 Medicare patients, primarily in southern California.
San Francisco Business Times reporter Chris Rauber wrote this month that the June 8 hearing by the state regulator of HMOs is sure to attract health care critics, including Johnson, Consumers Union, Health Access, the Western Center on Law & Poverty, as well as the California Public Interest Research Group.
In responding to questions about the planned hearing, a Blue Shield of California spokesperson told Rauber, “We welcome the opportunity to share how the acquisition of Care1st furthers our mission by serving Medi-Cal beneficiaries and to answer any questions the DMHC may have.”
Johnson, a former public policy director at Blue Shield, has suggested the insurer has misused its non-profit status and should convert to a for-profit company. The California Franchise Tax Board pulled the tax exemption of Blue Shield of California last August, but news of the decision remained unreported until earlier this year. Blue Shield is appealing the tax board decision and has said it remains committed to staying a non-profit insurer.