Blue Shield Plans To Enter Medi-Cal Market Via Care1st Acquisition

Blue Shield of California has agreed to acquire Monterey Park-based Care1st, a health plan that insures more than 500,000 patients, the Los Angeles Times reports.

The decision marks Blue Shield's first move into the Medi-Cal market. Medi-Cal is California's Medicaid program.

Background on Care1st

Most Care1st members are located in Los Angeles and San Diego counties. However, the company also insures residents in Arizona and Texas, according to the Times (Terhune, Los Angeles Times, 12/8).

As of Nov. 30, Care1st policyholders include:

• 473,000 Medicaid beneficiaries;
• 46,000 Medicare beneficiaries; and
• 5,300 enrollees eligible for both programs (Rauber, "Bay Area BizTalk," San Francisco Business Times, 12/8).

Details of Deal

Neither Blue Shield nor Care1st disclosed the terms of the acquisition.

Blue Shield President and CEO Paul Markovich said the insurer had been looking for a way to enter the Medi-Cal market.

Markovich said, "One in three Californians are getting their health insurance through Medicaid. It's really a big gap to not be in that line of business at all" (Los Angeles Times, 12/8).

He added that the deal "is the ideal way for us to not only enter a new market, but also to help transform it together" ("Bay Area BizTalk," San Francisco Business Times, 12/8).

Care1st CEO Anna Tran said, "This commitment from Blue Shield will allow us to continue our mission in partnership with them."

The deal is subject to regulators' approval and is expected to be completed in the third quarter of 2015.

Reaction

Howard Kahn -- CEO of L.A. Care Health Plan, for which Care1st is a subcontractor --  said L.A. Care is "not for or against the deal yet," but will review the potential acquisition in coming months "to make sure the interests of our membership and interests of L.A. Care and the community are protected." L.A. Care could approve or reject the acquisition because it involves the plan's Medi-Cal members (Los Angeles Times, 12/8).