Proposed Conversion of Horizon BCBS of New Jersey

From Non-Profit to For-Profit Health Insurer: What Will the Conversion Mean For YOU?

On this page:

VICTORY & CONGRATULATIONS! NJ Horizon Watch Coalition S-2532 / A-3729 Why We Need a Fairness Analysis

Background on the Conversion NJ Horizon Watch Coalition Press Conference Resources In The News

VICTORY & CONGRATULATIONS!

Legislation (S 375) requiring that Horizon BC/BS conduct multiple public hearings concerning its conversion application and requiring the NJ Department of Banking and Insurance conduct a Health Impact Analysis as part of its evaluation of a conversion application passed the NJ State Senate with overwhelming bi-partisan support on May 20, 2010. The vote was 38-2. See how your senator voted.

This is a major victory for consumers everywhere! Your testimony, calls, letters and emails to the legislature worked! Thank you to everyone!

AND BIG NEWS: The Star-Ledger reports that Horizon will not pursue the conversion application during the Christie Administration! Between last year's election, national health care reform, our call for a health impact study and the scrutiny they are now under for giving themselves and their executives whopping pay increases, it appears they've decided to back off the application all together.

But their self-serving pay increases have caused more than the proverbial eyebrow to be raised, as reported in the Asbury Park Press. Now, Senate President Steve Sweeney is calling for a formal investigation of their compensation practices and how such whopping pay increases can happen as their customers are being hit with 30%, 40% and higher rate increases. Stay tuned...!

News Coverage:

• "Horizon Blue Cross Plans To Go Public Are On Hold Amid Scrutiny Of CEO Pay" (Star-Ledger — May 21, 2010)
• "Senate Advances Weinberg-Gordon Bill Creating Greater Transparency, Oversight For Potential Horizon Conversion" (PolitickerNJ — May 20, 2010)
• "Sweeney Blasts $9M Payday For Blue Cross Chief" (New Jersey Senate Democrats — May 19, 2010)
• "Hearings Ordered On Horizon Executives' Pay" (Asbury Park Press — May 19, 2010)
• "Blue Cross Boss Took Home $8.7 Million Salary As Premiums Rose In '09" (Asbury Park Press — May 17, 2010)

TAKE ACTION! Call NJ Senate President Richard Codey and tell him to post S2532 for a vote now!

Call Senator Codey: 973.731.6770

Horizon Blue Cross Blue Shield — New Jersey's largest and only non-profit health insurer — wants to become a for-profit company and become even wealthier than they are right now.

NJ regulators are considering Horizon's petition. We need to make sure when it comes to our health, this process is open and transparent and any decision about granting or denying Horizon's petition is made based on the public interest, including our health.

S2532, sponsored by Senator Loretta Weinberg, requires that state regulators conduct a health impact study to determine if Horizon's bid to go for-profit would hurt or help us when it comes to insurance premiums, access to quality health care and competition among insurance companies. An independent health impact study, the results of which will be available to the public, will also ensure that politicians don't cut a backroom deal with this insurance company to the detriment of our health.

This bill has broad support and has already passed in the State Assembly and in the Senate Commerce Committee. We need Senate President Codey to protect the health care needs of all New Jerseyans, including consumers and post this bill for a vote.

NEW! January 5, 2010 — Advocates Sent an Open Letter to Senator Codey Requesting he Post S-2532 for a Full Senate Vote

• Read the Letter.
• Press Release.
• News Coverage: "Use Lame Duck For Horizon Blue Conversion Bill, Advocates Tell Codey" (NJBIZ — January 5, 2010).
• Spread the Word! — Download the Flyer!

NJ Horizon Watch Coalition

The NJ Horizon Watch Coalition is a broad-based alliance of over 20 health care, consumer, labor, senior, faith-based, student, disability, civil rights and social justice organizations working to ensure that the proposed conversion of Horizon Blue Cross Blue Shield, from a non-profit to for-profit insurer, takes place in accordance with both the spirit and full letter of the law.

The NJ Horizon Watch Coalition is also working to ensure that the public's interest is adequately represented, promoted and served, especially for low and moderate income individuals and families who are likely to have difficulty finding affordable health insurance.

• JOIN! NJ Horizon Watch.
• Statement of Principles.
• Current Horizon Watch Coalition Members.

Status of Horizon's Application

On October 14, 2008, the Commissioner of Banking and Insurance and the New Jersey Attorney General deemed Horizon's application incomplete and posed questions to Horizon about its application for conversion and plan for the creation of an independent foundation required by the conversion statute.

• View questions posed by DOBI.
• View the questions posed by OAG.

Horizon has responded to these questions:

• View Horizon's response to DOBI's questions.
• View Horizon's response to OAG's questions.

The New Jersey Hospital Association, QualCare, the Medical Society of New Jersey, the Catholic HealthCare Partnership of New Jersey, and the Alliance for Advancing Nonprofit Health Care have sent a written response to DOBI and OAG detailing why and how Horizon's response is inadequate.

• Read the Letter.
• Read the Alliance for Advancing Nonprofit Health Care Press Release.

S-2532 / A-3729

Legislation to Ensure Necessary Transparency, Consumer Protection and Public Participation in the Conversion Process

On August 15, 2008, Horizon Blue Cross Blue Shield of New Jersey, the State's largest, and only non-profit health insurer, filed an application with the NJ Department of Banking and Insurance (DOBI) and the Office of the Attorney General (OAG) to convert to become a for-profit insurance company. Horizon's latest bid to convert raises numerous concerns relative to the health of NJ consumers and taxpayers.

NJ needs to know what impact conversion will have on the health status of all NJ residents including access to quality and affordable health care for underserved and vulnerable members of our communities, children, seniors, low and moderate income families, disabled residents and those with chronic illnesses.

NJ law requires that the conversion application only be approved if it is in the public interest.

In order to determine whether or not conversion is in the public interest New Jerseyans must know whether or not a for-profit Horizon insurance company will help or hurt our health status on a broad range of indicators, including cost and quality of coverage.

Consumers must be given the opportunity to have a real voice in the conversion review process.

To do this, NJ, like other states who have faced these questions, must hire an independent expert to conduct a fairness analysis (Read More About A Fairness Analysis Below). DOBI has refused to conduct this analysis.

S-2532 (Weinberg) and A-3729 (Vainieri-Huttle) protects consumers three important ways:

1. Requires the State to hire an independent expert to conduct a fairness analysis evaluating the impact of the proposed conversion on the health status of all NJ residents. The fairness analysis allows the State to make a sound judgment regarding whether conversion is in the public interest as required by NJ law.
   
   
2. Requires the State to hold a minimum of four public hearings, with at least one hearing each in the northern and southern regions of the State and at least two in the central region of the State, giving the public adequate opportunity to have a voice in the conversion process.
   
   
3. Allows interested parties and those directly affected by the proposed conversion to apply for intervenor status so that concerns about the public health impacts and the protection of nonprofit assets are raised and addressed.

Download Talking Points on S-2532 / A-3729.

TAKE ACTION! CLICK HERE to Email Your Legislators and Urge them to Support and Co-Sponsor S-2532 / A-3729.

A-3729 (Vainieri Huttle) PASSED in the Assembly Financial Institutions and Insurance Committee!

On June 11, 2009, A-3729 (Vainieri Huttle) PASSED in the Assembly Financial Institutions and Insurance Committee!

This legislation requires additional public participation and a health impact "fairness analysis" as conditions of conversion of a health service corporation to domestic a stock insurer. As amended, the legislation creates a formal role for the NJ Public Advocate to intervene in the conversion process on behalf of NJ consumers.

Senate Commerce Committee Hearing March 9, 2009

On March 9, 2009, S2532 (Weinberg) was heard for discussion in the NJ Senate Commerce Committee. NJ Horizon Watch Coalition partners and allies showed up en masse to show our support for this important legislation. NJ Citizen Action, Consumers Union, Health Professionals and Allied Employees, the NJ Main Street Alliance, the Statewide Parent Advocacy Network, BlueWave NJ, the NJ Primary Care Association, the NJ Hospital Association, the Medical Society of NJ, the National Association of Social Workers, and South Jersey NOW-Alice Paul Chapter testified in support of S2532. Read our testimony!

• NJ Citizen Action Testimony.
• Health Professionals and Allied Employees Testimony.
• NJ Main Street Alliance Testimony.
• Statewide Parent Advocacy Network Testimony.
• Consumers Union Testimony.

The NJ Department of Banking and Insurance, the Office of the Attorney General and Horizon Blue Cross Blue Shield of NJ testified in opposition to S2532.

• John Leyman, Director of Government Affairs at Horizon BCBS of NJ, Testimony.
• NJ Department of Banking and Insurance Testimony.

Why We Need a Fairness Analysis

The NJ Horizon Watch Coalition and our member organizations call on the NJ Department of Banking and Insurance to hire a qualified, independent expert to conduct a fairness analysis to examine the potential impact of the proposed conversion of Horizon Blue Cross Blue Shield on the health status of NJ residents.

In order for the proposed conversion of Horizon Blue Cross Blue Shield of NJ to be approved, it must be determined that conversion, and the likely sale or merger of Horizon, is in the public interest. Such a determination cannot be adequately made without a comprehensive fairness analysis conducted by a qualified, independent expert hired by the State.

The purpose of a fairness analysis is to inform New Jersey consumers, providers, taxpayers and policymakers of the economic impact conversion would have on the health status of New Jersey residents.

The goals of the fairness analysis are:

• To assess the impact Horizon's conversion and likely sale or merger would have on accessible, affordable, quality health care for consumers.
  
• To carefully analyze Horizon's proposed business plan and profit goals to determine whether they will adequately address the health care needs of the community.
  
• To assess the impact Horizon's conversion and likely sale or merger would have on access to health care specifically for vulnerable populations such as children, seniors, people with disabilities, low income families, people with HIV and people with chronic illnesses.
  
• To determine if Horizon's conversion plan would assure affordable and accessible services and products that will meet the community's needs.
  
• To include the community in the Fairness Analysis through comments provided in interviews and public hearing testimony.
  
  
• Download NJ Horizon Watch Coalition Letter to DOBI Commissioner Steven Goldman Requesting a Fairness Analysis.
• Download NJ Horizon Watch Coalition Memo to DOBI Commissioner Steven Goldman Describing a Fairness Analysis.

The NJ Department of Banking and Insurance has refused the Horizon Watch Coalition's request to conduct a fairness analysis. While the State has hired four outside contractors to assist in the review of the transaction, it does not appear that DOBI or the OAG have retained an expert that can adequately assist in evaluating the potential effects of the proposed conversion on health services and coverage in the State.

The Horizon Watch Coalition calls on the NJ Department of Banking and Insurance to act quickly in hiring a qualified, independent expert to conduct a fairness analysis so the State can make a sound judgment regarding whether conversion is in the public interest.

Background and More Information on the Conversion of Horizon BCBSNJ

Horizon Blue Cross Blue Shield, NJ's largest and only not-for-profit health insurer has filed an application to convert to a for-profit corporation. The conversion of Blue Cross raises serious concerns for NJ consumers and taxpayers.

NJ law requires the Commissioner of Banking and Insurance and the Office of the Attorney General to ensure that the proposed conversion is in the public interest and will not to have an adverse impact on access to health care or the health status of New Jersey Residents. If the conversion is approved, the full value of Horizon's assets must be transferred to a nonprofit foundation dedicated to "expanding access to affordable quality health care for underserved individuals and promoting fundamental improvements in the health status of all New Jerseyans."

Blue Cross' assets (worth over $1 billion, possibly up to $8 billion) have been built up over decades of favorable tax and regulatory treatment provided by the government because Blue Cross is organized to pursue the nonprofit, charitable mission of offering affordable health insurance. By contrast, the mission of a for-profit insurer is solely to maximize returns for its shareholders.

As a nonprofit, the people of New Jersey are effectively Horizon's current 'shareholders,' and should be treated as such.

As shown in other states around the country, the Blues have been forced to further their charitable mission by disgorging excess reserves that they have built up to support the expansion of health insurance, have been denied the right to convert when the State has determined that conversion would have a negative impact on premiums and other access indicators, or, if permitted to abandon their nonprofit mission, to transfer the full value of their assets to a foundation for the benefit of state residents. Under all circumstances, Horizon's assets should be dedicated to activities that improve the health of New Jersey citizens, particularly the medically underserved, and not be used as a one shot revenue source to satisfy current state obligations.

Horizon filed an application on August 15, 2008, with the State of New Jersey to convert from a health service corporation to a domestic stock insurer. In accordance with the state's conversion law on October 14, 2008, the Commissioner of Banking and Insurance and the New Jersey Attorney General deemed the application incomplete and posed questions to Horizon BCBSNJ about its application for conversion and plan for the creation of an independent foundation required by the conversion statute.

NJ Horizon Watch Coalition Press Conference

NJ Horizon Watch Coalition held a major press conference in the Trenton State House on November 20, 2008. The Coalition called on the State to do its job in evaluating the proposed conversion of Horizon Blue Cross Blue Shield of NJ.

Advocates discussed the principals for evaluation that should be followed by state regulators to ensure that health care consumers are protected including the preparation of a health impacts study by qualified experts, transparency and public participation.

• Media Release: Expanding NJ Horizon Watch Coalition Holds State House Press Conference, Demands Governor & Regulators Protect Consumers and Do Their Job on Proposed Horizon Conversion — November 20, 2008
• Photos and a Slideshow of the Horizon Watch Coalition Press Conference

Resources

• Most Top Member-Satisfying Health Plans Are Nonprofit, Latest Rankngs By J.D. Power And Associates Show Once Again.
• Horizon Blue Cross Blue Shield of NJ Resource Page.
• HealthCareBeforeProfits.com — information on Horizon Blue Cross Blue Shield’s application to convert to a for-profit insurance company.
• NJ Department of Banking and Insurance response to Horizon's conversion application.
• NJ Attorney General's letter response to Horizon's conversion application.
• Looking at the Full Picture: Analyzing the Community Health Impact of Hospital and Insurer Transactions, By Community Catalyst.
• Conversion and Preservation of Charitable Assets of Blue Cross and Blue Shield Plans: How States Have Protected or Failed to Protect the Public Interest, By Community Catalyst.

In The News

• "Horizon Blue Cross Plans To Go Public Are On Hold Amid Scrutiny Of CEO Pay" (Star-Ledger — May 21, 2010)
• "Senate Advances Weinberg-Gordon Bill Creating Greater Transparency, Oversight For Potential Horizon Conversion" (PolitickerNJ — May 20, 2010)
• "Sweeney Blasts $9M Payday For Blue Cross Chief" (New Jersey Senate Democrats — May 19, 2010)
• "Hearings Ordered On Horizon Executives' Pay" (Asbury Park Press — May 19, 2010)
• "Blue Cross Boss Took Home $8.7 Million Salary As Premiums Rose In '09" (Asbury Park Press — May 17, 2010)
• "Insurance Firms Still Don't Get It" (Daily Record — January 10, 2010)
• "Use Lame Duck For Horizon Blue Conversion Bill, Advocates Tell Codey" (NJBIZ — January 5, 2010)
• "Horizon Extends In-Network Coverage At Fuld By A Month" (The Times of Trenton — July 11, 2009)
• "Insurance Competition Urged" (The Record / NorthJersey.com — July 11, 2009)
• "Insurer, Hospitals In Rate Dispute" (The Times of Trenton — July 7, 2009)
• "Vainieri Huttle / Wagner / Cruz-Perez / Voss Bill To Increase Public Participation And Scrutiny Of Health Insurer Conversions Advances" (Assembly Democrats News Release — June 22, 2009)
• "Extra Regulation Sought For Horizon's Conversion" (NJBIZ — June 22, 2009)
• "Health Insurers' For-Profit Conversion To Get More Scrutiny Under Proposed New Jersey Bill" (Insurance & Financial Advisor — June 15, 2009)
• "Assemblywomen Huttle, Wagner, Cruz-Perez & Voss Sponsor Bill To Protect Public" (Paramus Post — June 12, 2009)
• "Bill Would Tighten Scrutiny On Insurer's Bid To Go Public" (NorthJersey.com — June 11, 2009)
• "N.J. Lawmakers Want Hard Look At Horizon Blue Cross Blue Shield For-Profit Shift" (Star-Ledger — June 10, 2009)
• "NJ's Largest Health Plan" (WHYY News and Information — April 22, 2009 — both article and AUDIO NEWS INTERVIEW)
• "Horizon Should Be More Clear About Possible Conversion" (NJBIZ — April 13, 2009)
• "Fraying Safety Net: Insurer Of Last Resort Feeling Financial Pinch" (American Medical News – Issue of February 23, 2009)
• "Will Horizon Conversion Benefit New Jersey Residents?" (The Cutting Edge / Mental Health Association in NJ — Issue of December 2008)
• "Doctors Want Further Scrutiny Of Horizon For-Profit Conversion" (American Medical News — December 8, 2008)
• "Ask The Right Questions About A Horizon Switch" (Star-Ledger — December 1, 2008)
• "Watchdog Group Says Horizon Wants To Dump Medicaid" (Asbury Park Press — November 21, 2008)
• "Rates Could Rise If Horizon Goes For-Profit " (NorthJersey.com — November 21, 2008)
• "Coalition Calls For Close Watch On Horizon Blue Cross Blue Shield" (Star-Ledger — November 21, 2008)
• "Horizon, Watchdog Spar Over Medicaid's Future In Plan" (Asbury Park Press — November 20, 2008)
• "Horizon Of NJ Denies It Plans To Drop Medicaid" (Daily Record — November 20, 2008)
• "Will New Jersey Blues Filing Prompt For-Profit Rush?" (American Medical News — September 22/29, 2008)
• "Blue Seeks The Green" (Asbury Park Press — September 21, 2008)
• "Horizon Bid Bad Medicine" (Asbury Park Press — August 20, 2008)
• "Should Horizon Blue Cross Blue Shield Seek For-Profit Status?" (Star-Ledger — August 16, 2008)
• "Horizon Wants For-Profit Status" (CourierPostOnline — August 16, 2008)
  
• "N.J.'s Biggest Insurer May Turn For-Profit" (Philadelphia Inquirer — August 16, 2008)
  
• "Horizon Blue Cross Applies To Become For-Profit Insurer" (Press of Atlantic City — August 15, 2008)
  
• "Horizon Blue Cross Blue Shield Seeks For-Profit Status" (Star-Ledger — August 15, 2008)
• "Horizon Files To Become For-Profit" (NJBIZ — August 15, 2008)

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***Please note that no lobbying activities are paid for by the Robert Wood Johnson Foundation or the New Jersey Consumer Voices for Coverage Coalition. All legislative and/or C4 activities are paid for by the New Jersey Citizen Action Education Fund's allies and partners New Jersey Citizen Action and the Health Care for America Now (HCAN) Campaign.***