Legislation introduced on Nov. 25 would make it possible for Horizon Blue Cross Blue Shield (BSBSNJ) to become a not-for-profit mutual and adopt the same corporate form as Blue’s plans in 18 other states.
The company said that the new corporate form would preserve Horizon’s obligation to operate for the benefit of its members and its historic not-for-profit status, while allowing the company to better respond to a rapidly evolving health care marketplace by permitting increased investments in new technologies and innovations that positively impact members and the state economy.
The legislation, introduced by Assemblyman John McKeon, D-27th District, establishes a process through the Department of Banking and Insurance that would enable the change.
Not-for-profit mutual companies are owned by their policyholders, not outside shareholders, and re-invest generated income into activities that benefit policyholders.
In a statement Horizon BCBSNJ Chairman, President and Chief Executive Officer Kevin Conlin said, “Our members are and have always been Horizon’s top priority. Our current structure was created decades ago at a time that could not have anticipated that the health care system would become what it is today, let alone what it may be five years from now.
“This technical change to our corporate form reaffirms Horizon’s commitment to our historical mission as New Jersey’s not-for-profit health insurer, but gives us the flexibility to accelerate the pace and scale of investments that will help us continue to deliver for our members in the face of a rapidly changing health care marketplace,” Conlin added.
Horizon BCBSNJ is currently a not-for-profit health services corporation, a corporate form that restricts its ability to invest in technologies and innovations that support its goal to improve health care cost, quality and consumer experience. Specific limitations include caps on the size of investments the company can make, a ceiling on business outside of the core commercial insurance services, and an inability to use a modern holding company structure commonly used by health insurers and important to facilitating investments beneficial to members
Senate President Steve Sweeney, D-3rd District, said that he supports the legislation.
“This bill will help Horizon to move forward with reforms that aid health care consumers and enhance the quality of care they receive. These changes will better enable New Jersey’s only not-for-profit health insurer to modernize the way it is organized so it can invest more in member benefits, including consumer technology and preventive care,” said Sweeney.
An administration official with knowledge of the discussions rejected the proposal, saying there were “serious concerns… with the way that everything is structured” in the legislation.
The source said that the bill was essentially a “run-around the laws” — by letting Horizon go from a not-for-profit health insurance company to a not-for-profit mutual, rather than a for-profit.
“This kind of seems like there are windfalls for insurance executives at the expense of three million [state residents] who have Horizon,” this person said.
Daniel J. Munoz contributed to this story.