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Pou, Sarlo & Sweeney Introduce Horizon Reorganization Bill

Trenton – Senator Nellie Pou, Senator Paul Sarlo and Senate President Steve Sweeney introduced legislation that would allow for the reorganization of Horizon Blue Cross-Blue Shield, giving 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 health care 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.

“These reforms will enable New Jersey’s only not-for-profit health insurer to modernize the way it is organized so it can hold down premiums and invest more in member benefits, including modernized technology and preventive care,” said Senator Pou (D-Passaic/Bergen), the chair of the Senate Commerce Committee. “Horizon needs to be able to compete in the rapidly evolving marketplace that is putting upward pressure on health-care costs. This change will ensure the company can continue to provide the highest quality healthcare into the future.”

“Horizon needs greater flexibility in investments and innovation to bring more affordable and accessible products to its members,” said Senator Sarlo (D-Bergen/Passaic), the chairman of the Senate Budget Committee. “It will continue its mission as a charitable and benevolent institution, using its assets and revenues as a non-profit organization, but it will be able to adapt to the marketplace. The policyholders and the state remain protected.”

“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 healthcare marketplace,” said Senator Sweeney (D-Gloucester/Salem/Cumberland). “This bill will allow for changes, but prevent the company from abandoning its obligations to its members and the people of New Jersey.”

The Senators praised Assembly Speaker Coughlin for working to include annual payments to the state totaling $1.25 billion over 18 years, including an initial contribution of $600 million.

The reforms would increase public oversight with a 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.

The bill would authorize the Department of Banking and Insurance to allow Horizon to reorganize into a Non-profit Mutual Holding Company.

In recent years, 14 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.

By transitioning to a non-profit mutual 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.

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.

Senator Sarlo said he is committed to a thorough and transparent discussion of the bill, including full consideration by the Budget Committee.

Legislation attached.