Where can the state get more revenue? How about from one of its biggest nonprofits? Gov. Chris Christie thinks that’s an option.(Editor’s note: This report was updated at 4:05 p.m. with comments from Horizon Blue Cross Blue Shield of New Jersey and again on Wednesday at 8:00 a.m. with comments from NJEA.)
Where can the state get more revenue? How about from one of its biggest nonprofits? Gov. Chris Christie thinks that’s an option.
In his budget address for fiscal 2018 on Tuesday, Christie spent a major chunk of his speech on a plan that would have Horizon Blue Cross Blue Shield of New Jersey, the state’s largest health insurer, contribute from its surplus to a special fund for vulnerable New Jerseyans.
“Horizon Blue Cross Blue Shield of New Jersey enjoys nonprofit status despite making billions of dollars,” Christie said. “They insure over 55 percent of the health insurance market. … They have over $2.9 billion in surplus on nearly $12 billion a year in revenue. While some would argue for converting Horizon to a for-profit company, which would bring a windfall of billions of dollars to state taxpayers, I am not advocating that move today. Nor am I suggesting that we use Horizon to fill any budget gaps. Our budget is balanced and needs no such one-shot gimmicks to be balanced.
“No, what I propose today is that we work urgently to establish a permanent fund that Horizon would fund every year through their abundant surplus, provided by their 3.8 million New Jersey members, to support our most vulnerable population who access charity care and Medicaid. …
“As the sole insurer with this unique nonprofit status and historically charitable mission, Horizon shares in the financial obligation of caring for our most vulnerable citizens and can set aside in this fund excess surplus monies and other revenue to support our efforts to beat (drug addiction).
“I am confident Horizon will embrace this opportunity” — Christie paused to acknowledge some chuckles in the audience — “and partner with us to establish this permanent, sustainable fund. They will not turn their back on the people of New Jersey who pay their salaries, and, as the people’s representatives, we will partner with them to make sure it happens by June 30.”
Horizon officials were preparing an official response after the remarks Tuesday afternoon, but one official — speaking on the condition of anonymity because a statement had not been released yet — said the plan doesn’t add up and that Horizon’s surplus will only cover its claims for 75 days.
“Horizon is always willing to partner with New Jersey to drive down health costs and expand health care access to all our residents,” the insurer said in a prepared statement Tuesday afternoon. “As New Jersey’s largest health insurer, serving over 900,000 Medicaid members, Horizon knows well that more is needed to help New Jersey’s most vulnerable and financially challenged residents, and agrees with the governor that more should be done.
“However, raiding the reserves that protect the families we insure, including our Medicaid members, will only make insurance more expensive and less secure. The claim that Horizon and our policyholders have an ‘abundant surplus’ is just plain wrong — those reserves have only enough to cover 75 days of claims, or just a single day of hospital care for every person Horizon insures. Moreover, the company’s net income was less than 1 percent of revenues in 2016.
“Despite being structured as a not-for-profit, Horizon paid more than half a billion dollars in federal, state and local taxes last year. While other insurance companies have left, Horizon has stayed in the Affordable Care Act marketplace, demonstrating our commitment to New Jersey. Instead of taking our members’ reserves, we should partner to create a permanent and stable source of revenue to help New Jersey’s less fortunate by tackling, once and for all, the $1 billion out-of-network billing abuse and surprise medical billing problem.”
The proposal also drew immediate criticism from Ray Castro of the liberal-leaning think tank New Jersey Policy Perspective.
“This is absolutely the worst time for the state to raid funds from Horizon,” the senior policy analyst said. “The likely repeal of the Affordable Care Act would create a health care crisis, and the possible loss of all health coverage for about 800,000 New Jerseyans. Horizon, as the state’s largest insurer and the only nonprofit, would have an especially important role in helping the newly uninsured. …
“In these uncertain times, New Jersey must continue to support Horizon, not undermine its solvency. If there are excess surplus funds, Horizon should use them to reduce premiums for their members and make insurance more affordable, which is the single biggest health problem facing the state.”
NJEA President Wendell Steinhauer said he has “deep concerns” about the governor’s reserve grab scheme.
“NJEA has deep concerns regarding the governor’s proposal to raid the reserve trust of Horizon Blue Cross Blue Shield for one-shot funding,” he said. “The reserve he proposes to raid exists for a purpose and is maintained according to industry standards. If funding is simply taken out of the reserve and must be replaced, that would likely raise the health care premiums on people who get their health insurance through that system. Our members and other New Jersey residents should not be asked to pay even more for health insurance to fund Gov. Christie’s other budget priorities.”
Deputy Managing Editor Anjalee Khemlani contributed to this report.