How health-insurer debate ground Christie’s Trenton to a halt

July 02--TRENTON -- For months, Gov. Christie waged a one-man crusade against New Jersey's largest health insurer, attacking its highly-paid executives and lobbyists as he sought to make the case that it should establish a fund to provide drug-addiction services to the poor and uninsured.

And for months, no one in the Legislature joined his cause -- until late June, when he conditioned his support for Democrats' $34.7 billion spending plan on their support for restructuring the health insurer.

"This may not be a popular governor; he's still the governor," said Assemblyman John Burzichelli (D., Gloucester). "He has something we need."

Still, how did a debate over Horizon Blue Cross Blue Shield of New Jersey lead to New Jersey's second-ever government shutdown?

The answer involves Christie's political rehabilitation -- helping drug addicts -- and his alliance with the same South Jersey Democrats who made him a rising Republican star in his first term.

It also reflects a divide in the state Democratic Party amid a fight for the speakership. Speaker Vincent Prieto (D., Hudson), facing a strong challenge for his leadership post, appears to be making his last stand as he squares off with Christie and members of his own party.

The governor, whose ambitions for higher office had faded, was appointed by President Trump this year to lead a national opioid addiction commission.

"That became the thing he's hanging his hat on for his political ambitions," said Patrick Murray, a political analyst at Monmouth University.

Christie initially called on Horizon to dedicate money for a drug addiction program. But with apparently no support in the Legislature for what had been criticized as a money grab, some Democrats looked for a compromise to ensure he enacted their budget priorities.

Senate President Stephen Sweeney (D., Gloucester) asked Sen. Joe Vitale, the Senate's Democratic point man on health care policy, to take the lead. Vitale's running mate in Middlesex County is Assemblyman Craig Coughlin, who is challenging Prieto for speaker, assuming both are reelected in November.

Coughlin's bid is supported by South Jersey Democrats, led by the insurance and hospital executive George E. Norcross III, and a coalition of members from other counties across the state.

Norcross's allies in the Legislature, such as Sweeney and Assembly Majority Leader Lou Greenwald (D., Camden), support the Horizon proposal.

"The political phenomenon that was Chris Christie owes much of its success to being aided and abetted by the George Norcross Democrats," Murray said, pointing to the governor's first-term changes to the state's pension and health benefits systems.

"And now he's going out with that same partnership," he said.

It might all make for smart politics, but there's been hardly any public debate or testimony from experts on an issue that even Christie says is of great importance.

The legislation establishes a process by which Horizon and the state would determine an appropriate range for the insurer's surplus. If the company's surplus exceeded that range, it would have to submit a plan to dedicate that money to benefit its 3.8 million policyholders and improve the health of the general public.

However, the bill does not include any language explaining what standard would be used to determine that range. The legislation would also require greater financial disclosure and change the company's board.

The legislation could make the insurer vulnerable to health care cost shocks, insurance and financial analysts say.

"The idea of having a committee or regulator saying, this is how much surplus the company should hold and if it's above that, force the company to use that, I don't regard that as good policy," said Scott E. Harrington, professor of health care management, insurance, and risk management at the University of Pennsylvania's Wharton School.

Such "government intervention" would make it more difficult for the company to operate and make the insurer "vulnerable to adverse outcomes on the claims side" and "vulnerable to competition by other carriers" because of special rules imposed, said Harrington, who has studied insurance markets for 40 years.

The state already requires insurers to maintain minimum reserve levels; Blue Cross also has standards for its licensees.

Horizon says it had $2.4 billion in capital reserves at the end of 2016. Standard & Poor's affirmed Horizon's "A" rating in April but said if the state tapped its reserve funds, the ratings agency would "view any such event as source of potential capital volatility."

Yet Christie has portrayed Horizon as a symbol of corporate greed, lavishing its executives with bonuses even as "the middle-aged carpenter" faces higher and higher premiums and single mothers are denied claims, as he put it Saturday.

Christie had been pushing his anti-drug addiction message for years -- including during his unsuccessful presidential campaign -- declaring the war on drugs a failure.

Horizon was an easy target. Governors dating back to Democrat Jim McGreevey in the early 2000s have tried to squeeze money out of the insurer, including by seeking to convert it to a for-profit company. (At times, Horizon was on board with such proposals, but they never came to fruition.)

Trenton observers said Christie's tying of the Horizon legislation to the budget -- while assuring Democrats that he would sign their spending priorities into law -- was politically astute.

Christie's Democratic allies have now framed the budget standoff this way: "Do we worry about Horizon over the next five or six months? Or do we worry about the people represented on this list?" said Senate Majority Leader Loretta Weinberg, pointing to budget line items intended to support schools, legal services for the poor, and rape victims.

Prieto argued that tapping reserve funds would be a "Christie tax" on policyholders and accused the governor of extorting the Legislature.

On Saturday, the Christie and Prieto camps were still divided. The governor, who leaves office in January, appeared to be enjoying what may be his last battle with the Legislature.

Christie even watched Prieto give a TV interview. "He was sweating like crazy last night, wasn't he?" the governor told reporters. "That was brutal, watching that."

Staff writer Maddie Hanna contributed to this article.

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