Blue Shield will fund its purchase of Care1st, which primarily serves Medicaid managed-care patients, by using its financial reserves of nearly $4.2 billion, according to the report. A Blue Shield spokesman told the Los Angeles Times $50 million of the $1.25 billion would go toward operating expenses in a holding company created as part of the deal.
The insurer’s corporate spending, use of reserves and lack of disclosure are being scrutinized amid recent news that the insurer lost its tax-exempt status , according to the report. Blue Shield is protesting that decision.
But in the meantime, some critics would like to see public hearings on the potential Care1st deal, and are also calling for a public debate about whether Blue Shield’s cash “could be put to better use for Californians statewide,” according to the report.
The Care1st deal is expected to close later in 2015.
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