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Plan for Horizon Reorganization Gains Senate Approval

Trenton – Legislation that would allow for the reorganization of Horizon Blue Cross-Blue Shield was approved by the Senate today.

The bill, S-3218, sponsored by Senator Nellie Pou, Senator Paul Sarlo and Senate President Steve Sweeney, would give the state’s largest health insurer the ability to move forward with reforms that will help keep premiums down and compete in the rapidly-changing healthcare marketplace.

Horizon would continue to operate as a not-for-profit, converting from a not-for-profit health services corporation to a not-for-profit mutual holding company owned by its members.

The legislation would explicitly prevent Horizon from merging with another insurer or converting to a for-profit company without legislative approval.

“Horizon Blue Cross Blue Shield has been a mainstay in offering New Jerseyans affordable health insurance for several decades,” said Senator Pou (D-Passaic/Bergen), who chairs the Commerce Committee. “These reforms are meant to not only ensure that our only not-for-profit health insurer thrives today, but continues its valued service to our state for years to come. Under the new structure, Horizon will be able to expand its reach, modernize its business, and better protect its patients, while remaining viable in an increasingly competitive market.”

“This plan is a blueprint for change that will allow Horizon Blue Cross Blue Shield the ability to modernize its operations so it can better address the health care needs of its policyholders and continue to meet its obligations to provide affordable care to the people of New Jersey. said Senator Sarlo (D-Bergen/Passaic), the chairman of the Senate Budget Committee. “It is a changing world where technology matters, especially in medicine and health care services. With all the advancements in treatment and services, Horizon needs the flexibility to adapt to the evolving healthcare marketplace.”

“Horizon has a unique role and responsibility that needs to be protected and sustained with a reorganization that allows the insurer to adapt to the modern healthcare marketplace,” said Senator Sweeney (D-Gloucester/Salem/Cumberland). “The health insurer will continue its mission as a charitable institution, but it will have the flexibility to embrace innovation and provide more diverse services that meet patient needs.”

The legislation includes annual payments to the state totaling $1.25 billion over 18 years, including an initial contribution of $600 million.

By transitioning to a non-profit mutual holding company structure, Horizon will be able to maintain its non-profit status, while gaining the flexibility it needs to invest in new technologies, modernize care delivery and pharmaceutical benefits, and offer additional services such as dental plans, vision plans, student insurance and Medicare Advantage.

The reorganization would allow Horizon to pursue the acquisitions of providers, pharmacy benefit managers and other businesses to expand and enhance healthcare services for its members.

Before any reorganization could happen, Horizon would have to submit an application to the Commissioner of Banking and Insurance, who would review the plan to determine if it is financially sound and protects the interests of policyholders. During the process, the commissioner could hire expert consultants, at Horizon’s expense, and hold hearings on the proposal. The commissioner would continue to have regulatory oversight.

The reforms would increase public oversight with the board having a total of 22 directors, including nine appointed by state officials; five by the Governor, two by the Senate President and two by the Assembly Speaker.

A recent study found that restructuring Horizon as a non-profit mutual holding company would create $4.16 billion in additional economic output, create about 2,000 full-time jobs and generate about $1.9 billion in new wages and benefits over the next decade.

Horizon would continue to operate the Horizon Foundation for New Jersey, which has provided more than $53 million in grants to improve healthcare.

In recent years, 13 Blue Cross plans in 18 states have converted to a mutual structure. In 16 of the 18 states, the mutual operates as a non-profit.

The Senate vote was 23-16.