Insurance & Financial Advisor

Health Insurers' For-Profit Conversion To Get More Scrutiny Under Proposed New Jersey Bill

Insurance & Financial Advisor — Monday, June 15, 2009

By Keith L. Martin
IFA Webnews

A bill calling for increased public participation and independent analysis for health insurers seeking to become for-profit entities in New Jersey has taken another step forward.

Assembly Bill 3729, sponsored by Assemblywoman Vainieri Huttle (D-Bergen), passed through a financial institutions and insurance committee and now goes to the assembly speaker, who will decide when and if it is debated by the full legislative body. It proposes more public hearings and a study by an outside consultant examining the health impact of any proposed conversion.

The bill's debate comes as the state's largest health insurer, Horizon Blue Cross Blue Shield, seeks to become a for-profit entity. The insurer currently serves over 3.6 million members in New Jersey.

During a hearing on the bill June 11, John Leyman, Horizon's director of government affairs, spoke about the insurer's opposition of the bill, indicating that existing law contains a process that is "transparent, fair, detailed, and adequate."

"I want to underscore the point that Horizon is absolutely committed to an open conversion process," Leyman told legislators according to a copy of his testimony.

Under the proposed legislation, in addition to two additional public hearings and an independent analysis, the New Jersey Public Advocate would get to apply for intervenor status, giving them access to all the material included in the conversion process and authority to subpoena additional information and witnesses. The cost for the advocate's work would be covered by the insurer applying for conversion.

"This bill simply ensures sufficient public participation and that every issue has been carefully reviewed before a decision is reached on a conversion application," Huttle said in a statement. "We need extra caution when moving forward on issues that could, among other things, increase premium costs and influence the health care of so many New Jerseyans."

Leyman questioned the need for a third department, the Public Advocate's Office, to be involved when the state's attorney general's office and insurance regulators are already involved in the process to advocate for the public. He also questioned the associated cost "to what is already a very expensive process."

According to published reports, since Horizon announced its desire to become a for-profit entity nearly a year ago, the New Jersey Department of Banking and Insurance and the Attorney General's office have spent $1.7 million related to the conversion, money Horizon must reimburse the offices.

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