A decision to restructure Horizon Blue Cross Blue Shield met little opposition in the first of three public hearings before the Department of Banking and Insurance on Thursday.
Horizon is the state’s largest health insurance company and the only such nonprofit here. Revamping its corporate structure would allow it to eliminate tax burdens and regulatory hurdles that it says make it unable to compete with for-profit institutions.
The restructuring, launched under a bill signed by Governor Phil Murphy in late 2020, would transform Horizon from a nonprofit health services company into a nonprofit mutual holding company.
“Our current corporate structure as a health services company has allowed us to achieve our goals for many years, but our structure was built for another era,” said Jennifer Velez, general counsel of the insurer, to government officials. “Many of the laws governing our current structure date from the 1980s and contain outdated restrictions and limitations that other New Jersey health insurers are not subject to.”
Those restrictions included limits on the size of investments made by Horizon, a one-time tax on insurance premiums and limits on income from certain services, including Medicaid, Velez said.
The law authorizing Horizon’s reorganization required the company to pay the state $600 million in June plus up to $625 million in additional payments over the next 17 years to compensate the state for about $50 million. dollars in annual revenue lost as a result of the restructuring, a change Velez said it would reduce premiums for those insured by Horizon.
The new structure would also allow Horizon — which administers benefits for public health plans that cover more than 800,000 state, local and county workers — to operate for-profit subsidiaries it acquires, although the State officials stressed that Horizon would remain a nonprofit organization if the reorganization is approved.
Horizon’s restructuring efforts have been broadly supported by a host of business, insurance and healthcare industry groups, who have pointed to opportunities for Medicaid expansion, potential job growth and other economic gains in support of the change.
“It will create income. It will boost the economy. Health care is an essential part of our economy. Horizon is a vital part of health care in New Jersey,” said Chris Emigholz, director of government affairs for the New Jersey Business and Industry Association. “It’s good for our economy. It’s good for our business climate.
At the same time, the reorganization is facing some opposition from advocates who have said they fear the process will be rushed with little chance of public participation and insufficient information about how the reorganization will affect health services. state health.
The law authorizing Horizon to restructure requires the Ministry of Banking and Insurance to hold three public hearings within 90 days of Commissioner Marlene Caride’s determination that the insurer’s restructuring application is complete.
Caride released the completeness letter on September 22, a date that allows for hearings until December 21. But the hearings will follow a much tighter schedule, with the other two scheduled for October 11 and 17.
The commissioner is required by law to approve the plan within 30 days of the final hearing, unless she finds it violates the law, threatens to destabilize Horizon, or provides no benefit to policyholders.
“Having them all within two weeks speeds the process,” said Maura Collinsgru, health policy analyst for New Jersey Citizen Action.
“It is literally impossible to review the documents that have been uploaded to the site to provide more meaningful testimony before a decision is made,” she said.
She also pointed to the lack of a health impact study measuring how the reorganization would affect the health of Horizon policyholders and the general public.
This study, which is not required by law, is ongoing but not yet complete, Caride said. The commissioner said it will be made public when completed, but it is unclear if it will be completed before October 17, when the final hearing is held.
“It’s a dilemma for us how a decision of this magnitude can be made before this study is actually complete,” Collinsgru said.