HELENA — Montana’s insurance regulator on Thursday approved, with conditions, the purchase of Blue Cross and Blue Shield of Montana by the fourth-largest health insurance firm in the nation.
The approval by state Auditor Monica Lindeen, coupled with the sign-off Tuesday by Attorney General Tim Fox, clears the way for Blue Cross of Montana — Montana’s largest private health insurer — to become a division of Chicago-based Health Care Service Corp.
“While this has not been an easy decision, I think that we’ve reached the best deal that we could for the people of Montana,” Lindeen said Thursday morning before signing her approval.
Lindeen and Fox attached conditions to the sale, including requirements that the new owner create 100 new jobs in Montana by 2016, freeze administrative fees on policies for three years, and publicly report the salaries of its top Montana executives.
A spokesman for the companies called the approval “an important milestone in the regulatory process,” but said company lawyers want to review the conditions set forth by Lindeen and Fox before deciding the next step for the transaction.
“BCBSMT and HCSC remain committed to the alliance, as it would mean greater strength in numbers and capabilities for new innovations,” said John MacDonald, a Helena consultant. “We will be looking over the details of the orders in the coming days.”
Fox also said he’ll unveil his plans Friday for oversight of the new Montana Healthcare Foundation, which will receive proceeds from the sale.
Under state law, proceeds from the sale of a nonprofit health-insurance company like Blue Cross must be transferred to a nonprofit foundation.
HCSC has agreed to pay $40 million for Blue Cross, and the Montana firm has other assets whose sale proceeds also will go to the foundation.
Blue Cross and Blue Shield, established in Montana in the 1940s, began searching for a possible buyer within the past two years.
Blue Cross executives said they feared their relatively small company didn’t have the resources to deal with sweeping changes in the health-insurance market, brought on by federal health-care reform.
Blue Cross has about 250,000 customers in Montana. HCSC, which owns Blue Cross companies in Illinois, Texas, New Mexico and Oklahoma, has 13.2 million customers.
Blue Cross of Montana also employs about 450 people in the state. As part of the approval by Lindeen and Fox, company officials agreed to maintain its Montana employees at their current salaries.
Company officials also have said Blue Cross customers won’t see much initial change under the new ownership, but could see improved services with the help of HCSC’s more sophisticated technology.
When asked whether the purchase of Blue Cross by a national giant would create a new super-competitor in Montana that could monopolize the market in the state, Lindeen said Thursday that the coming federal health insurance marketplace should help “level the playing field for competition” in the state.
The marketplace, an Internet shopping center for health insurance policies, is scheduled to open this fall, allowing consumers to examine and buy policies that all have required “essential” benefits.
Blue Cross and two other companies — PacificSource and the new Montana Health Co-op — will be offering policies on the marketplace.
Other conditions attached to the approval by Fox and Lindeen include:
— Blue Cross of Montana will now pay the state premium tax, from which it had been exempt.
— HCSC will have an immunization van to deliver free immunization to underserved areas of the state.
— The transaction will close within 60 days and the company will file a monthly report on the sale of other assets.
— Consumer inquiries and complaints will be handled in Montana, with regulators having direct access to the state president.
— HCSC will donate $3 million this year to two charities currently run by Blue Cross and continue Blue Cross of Montana’s charitable giving amounts for at least three years.