The Center Square

New Jersey Bill Allowing Health Care Firm Horizon To Form Nonprofit Holding Company Awaits Governor

The Center Square — December 18, 2020

By Kim Jarrett

A bill that will allow Horizon Blue Cross Blue Shield to form a nonprofit mutual holding company is on Gov. Phil Murphy's desk — but one organization is asking the governor to veto the bill.

Horizon executives said the restructuring is necessary so that the company can invest in new technologies and improve health care services.

"Right now, the company is limited in the ways it can stay competitive to benefit its 3.6 million members," said Assemblyman John McKeon, D-Essex/Morris, one of the bill's sponsors. "We must allow this organization to adapt its infrastructure so that it can make the investments it needs to in order to offer stable rates, promote innovative health care services and meet the evolving needs of its members — all while maintaining its charitable mission."

Horizon would remain under the supervision of the Department of Banking and Insurance. The company would pay a $600 million initial assessment and $625 million over the course of 17 years once the reorganization is completed.

The reorganization plan requires approval by the Department of Banking and Insurance. About 2,000 full-time jobs and $4.16 billion would be generated for the economy over the next 10 years if the reorganization is approved, supporters say.

Republican Assemblyman Hal Wirths said he agreed with 90% of the bill but was concerned about a $600 million assessment that will be made to the state. Wirths and other Republican Senate and House member said the money should go to ratepayers.

An amendment by Assemblywoman Nancy Munoz to reconsider where the $600 million would go was not approved. The bill passed the Senate by a vote of 23-16 and the Assembly 53-25 with one abstention.

Wirths also questioned the compensation for the board's 22 directors. The governor will appoint five, Senate President Steve Sweeney will appoint two and Assembly Speaker Craig Coughlin will also appoint two. Board members will be paid $77,000 a year.

"I've got to be honest, if this was in the private sector it would be called a shakedown," Wirths said.

The group New Jersey Citizen Action opposes the bill.

"We are calling on the Governor to conditionally veto this bill until important changes are made to fully protect Horizon's public assets, increase the role of the Attorney General, and ensure the funds going to the state from Horizon's reserves are dedicated to healthcare in New Jersey," the organization said in a social media posting.

Top Top | NJCA Homepage | NJCA in the News