- Horizon Blue Cross Blue Shield has operated under the same structure since 1932.
- The company said that prohibits investments in innovations that could lower consumer costs.
- It’s up to the state to decide whether it can make the change it wants.
TRENTON – Horizon Blue Cross Blue Shield of New Jersey executives pressed state regulators Thursday to approve a change in its corporate structure, saying the move would open the door to innovative programs that could help slow the rising cost of health care.
By changing its 90-year-old status as a not-for-profit company to an entity called a not-for-profit mutual holding company, Horizon would be free of what executives said are outdated restrictions and could invest more in behavioral health, social programs and prescription drug plans.
“We must be in a position to compete (with for-profit companies) if we are to continue our mission,” said Jennifer Velez, a senior vice president and general counsel for Horizon.
Velez, supporters and critics spoke during the first of three state Department of Banking and Insurance hearings looking at Horizon’s bid to change its corporate structure. Marlene Caride, commissioner of the department, is expected to approve or reject the insurer’s application in mid- to late November.
Horizon’s request comes as consumers brace for a spike in health insurance premiums in 2023. New Jersey public employees are in line for a 20% increase. And consumers who aren’t covered by their private employers and are buying policies through Get Covered New Jersey, the state’s marketplace, can expect an average increase of 8.8% before subsidies are factored in.
Newark-based Horizon is the state’s biggest insurance company with as many as 3.8 million members who buy policies ranging from Medicaid to Braven, a Medicare Advantage plan that it owns with two New Jersey hospital networks.
The company has operated as a nonprofit since 1932, when it was established as the insurer of last resort, agreeing to cover New Jerseyans who couldn’t get insurance in the marketplace. The state’s Health Service Corporation Act regulated its activities, keeping it focused on providing traditional commercial insurance services — collecting premiums and paying claims.
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Obamacare changed everything
Horizon executives, however, said the health care landscape changed when the Affordable Care Act started in 2010. The company no longer was the insurer of last resort since the law, commonly nicknamed Obamacare, required all insurers to cover consumers regardless of their risk. And it encouraged insurers and health providers to find ways to slow the rising cost of health care.
Horizon officials said they are hamstrung by rules that restrict how much it can invest in technology, data analysis or partnerships that could improve its customers’ health.
For example: Horizon in 2015 invested in a virtual behavioral health care company that it said showed promising results. But the insurer was prohibited from further investing in the company, which went on to be acquired by a competitor, Optum, a division of United Healthcare, Horizon said in its filing.
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Horizon said its mission — using its profits to improve the health of its members — wouldn’t change.
The company would be governed by a 22-member board of directors. Its members would vote for 13 directors. The governor, state Senate president and Assembly speaker would appoint the other nine.
Horizon would see a lower state tax on its premiums. But it would be required to pay the state an assessment totaling $1.25 billion over 18 years. (Before he died in July, Assemblyman Ronald Dancer, R-Ocean, proposed a constitutional amendment that would dedicate money from the assessment to lower premiums).
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Reimbursement rates frozen
Not everyone was keen for a more powerful Horizon. Brandon Cruz, a physical therapist, said Horizon has kept his reimbursement rate at the same level since 2005, forcing him to spend less time with more patients to stay afloat.
He was skeptical that the insurance company had patient health care as a priority.
“It comes down to patients and providers,” Cruz said. “Decreasing reimbursement rates decreases quality.”
Horizon had plenty of backing from business groups and nonprofits, which urged Caride to approve the application and help the insurer expand its reach.
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Vera Sansone, president and chief executive officer of CPC Behavioral Healthcare based in Red Bank, said her group has partnered with Horizon on a program called Integrated System of Care, or ISC. It is designed to treat patients’ mental health beyond seeing a clinical therapist, but also taking account other factors like food insecurity and affordable housing.
“Horizon is working under an outdated structure that doesn’t allow them to invest more in programs like the ISC,” Sansone said.
The Department of Banking and Insurance will have two more hearings, both on Zoom: at 6 pm Oct. 11, and at 1 pm Oct. 17. To attend, visit https://nj.gov/hschearings.
Michael L. Diamond is a business reporter who has been writing about the New Jersey economy and health care industry for more than 20 years. He can be reached at firstname.lastname@example.org.