Horizon moves one step closer to changing NJ's biggest insurer forever

TRENTON - A bill that would allow Horizon Blue Cross Blue Shield of New Jersey to change its corporate structure for the first time in 80 years inched ahead on Monday after two legislative committees gave their approvals.

The Assembly Financial Institutions and Insurance Committee voted to release the bill to the full Assembly for a vote, 9-2 with two abstentions.

On the Senate side, the Commerce Committee voted 3-1 with one abstention to approve the bill. It now goes to the Budget and Appropriations Committee, which has scheduled a hearing for the bill on Tuesday.

Supporters throughout a day of hearings said the change would give Horizon the flexibility it needs to invest in innovative programs that can lower the cost of health care.

"Doing nothing isn’t an option," said Assemblywoman Pamela Lampitt, D-Camden, who voted to release the bill. "We have to modernize. We have to move with the times."

More: NJ insurer Horizon built on 1932 rules; here's what a change would mean to you

Newark-based Horizon is the state's biggest health insurer with 3.6 million members. It reported $13 billion in revenue and 5,300 employees in 2018.

The company, however, says it is constrained by a corporate structure set up by the state that spells out how much of its reserves it can invest in other businesses, leaving it at a disadvantage in how it serves the community and competes with for-profit insurers.

Horizon's solution: Create a not-for-profit mutual holding company similar to Blue Cross Blue Shield organizations in 18 other states.

Mutual holding companies usually are owned by its members, who would share in their profits. In this case, though, there are no profits.

Horizon would be governed by a 22-member board of directors. Its members would vote for 13 directors. The governor, state Senate president and Assembly speaker would appoint the other nine.

The bill lowers a tax on Horizon's premiums to be in line with other insurance companies. And Horizon would be assessed a total of $1.25 billion during the next 18 years with the money going to New Jersey's general fund.

More: NJ health care giants team up to create Medicare Advantage plan

Horizon, however, long has been considered a charitable organization with an altruistic mission. And its attempt to change course has created no shortage of objections.

Consumer groups said they were worried Horizon's move would be a step toward becoming a for-profit company or a takeover target.

Blue Cross Blue Shield insurers in other states that have converted to for-profit companies have transferred their assets -- worth billions of dollars -- to foundations that use the money for public health.

"If Horizon wishes to change its corporate structure it can and should do so without taking away the assets and protections that current law secures for the people of New Jersey," said Maura Collinsgru, health care policy director for New Jersey Citizen Action.

Assemblyman John McKeon, D-Morris, one of the bill's sponsors, said the legislation includes safeguards. Horizon, for example, wouldn't be allowed to convert to a for-profit company or merge with another insurer. And the state Attorney General's office would supervise its operations.

Lawmakers who supported the bill could only wonder if they were missing something.

"The biggest hesitancy I have is, what don't I know?" Assemblyman Roy Freiman, D-Somerset, said before voting in favor of releasing the bill to the Assembly.

Michael L. Diamond is a business reporter who has been writing about the New Jersey economy for more than 20 years. He can be reached at [email protected].

This article originally appeared on Asbury Park Press: Horizon moves one step closer to changing NJ's biggest insurer forever

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