Currently Viewing:
In Focus Blog
Currently Reading
Horizon BCBS Impasse May Shut Down NJ Government
June 30, 2017 – Mary Caffrey
In NJ, Horizon Looks at Patient Engagement, Mental Health to Narrow Disparities
May 16, 2017 – Mary Caffrey
In New Jersey, Quality Group Lays Out Plan to Reform Medicaid
March 08, 2017 – Mary Caffrey
New Jersey Poised to Pass Opioid Treatment Mandate - and Health Plans Are Part of the Solution
February 14, 2017 – Mary Caffrey and Christina Mattina
Princeton Study Finds Kids With Public Health Plans Admitted Less Often, With Same Outcomes
January 13, 2017 – Mary Caffrey
Christie Proposes Far-Reaching Plan to Combat Opioid Abuse
January 11, 2017 – Mary Caffrey
Time to Teach Consumers What "Patient-Centered" Means
November 29, 2016 – Mary Caffrey
Will Trump Take Steps to Rein in Drug Prices?
November 11, 2016 – Mary Caffrey
Expert: No Pain, No Gain Applies to Healthcare Innovation, Too
November 07, 2016 – Mary Caffrey

Horizon BCBS Impasse May Shut Down NJ Government

Mary Caffrey
Speaker Vincent Prieto would not post a bill overhauling Horizon's governance, saying it should not be rammed through in 4 days with little debate. As a result, 35 Assembly members withheld their votes on the budget. New Jersey Governor Chris Christie has demanded that the Horizon bill be part of a budget deal, and state government will shut down at midnight without a new spending plan.
UPDATE: New Jersey Governor Chris Christie declared a state of emergency shutting down all non-essential government services as of 12:02 am ET July 1. The order came after Assembly Speaker Vincent Prieto posted the state budget for the second time in 2 days, and failed to get enough votes. The board stayed open for members to change their votes for more than 4 hours Friday evening until midnight, with Prieto telling members they must report on 2 hours' notice if an agreement is reached to reopen state government. Prieto had appeared with union members earlier in the day to repeat his refusal to post S-4, which concerns Horizon Blue Cross Blue Shield. Christie held a press conference Friday saying he would execute a budget "tonight" that would cancel spending priorities, using his line-item veto power, if the package did not include the bill concerning Horizon governance.

This story is based on Legislative action Thursday.

A plan to give regulators more control over New Jersey’s largest health insurer caused an impasse in the legislature Thursday, blocking passage of the $34.7 billion state budget.

With the fiscal year set to expire at midnight, state government could shutter over the busy July 4 weekend—closing parks and idling non-essential workers—unless a deal is reached to give Governor Chris Christie, a Republican, what he wants from Horizon Blue Cross and Blue Shield (BCBS). 

Horizon, a not-for-profit that covers 3.8 million people and has 49% market share, has vigorously fought Christie’s plan since February. What began as a request for $300 million in surplus has morphed into an overhaul of the insurer’s governance, board, and mission. The Blue Cross Blue Shield Association said the plan would make Horizon an arm of the state and cost the insurer its “Blue” license.

Christie isn’t budging. He called a late press conference to say he won’t make a budget deal without S-4, which passed the state Senate Thursday with the minimum 21 votes. Democratic Assembly Speaker Vincent Prieto refused to post the bill, and that could cost him his job.

“I have a bipartisan deal with the Senate,” Christie said, referring to Democratic Senate President Steve Sweeney. “If government closes, it closes.”

"My position hasn't changed and won't change. The only obstruction left is the speaker, who, for some reason, has decided that the interests of a multi-billion dollar insurance company are more important to protect than the people's ability to have their government remain open," Christie said. He claimed that the Assembly speaker “is playing a very dangerous game.”

Late Thursday, Sweeney told POLITICO New Jersey that the Horizon bill could be repealed after Christie leaves office. But for now, the governor’s Constitutional powers give lawmakers few options.

The bill targeting Horizon would:

(1) Reconfigure the insurer’s board, with 3 members elected from Horizon subscribers,
(2) Require more disclosure of financial information, including executive pay, and
(3) Create a “public process” that gives the Banking and Insurance Commissioner final say on whether Horizon has “excess surplus.” If the Commissioner finds this is so, Horizon would be required to spend some surplus funds on public health programs.

Minutes before the Senate opened debate on S-4, Prieto was forced to abandon a vote on the state budget when it received just 24 votes, well short of the 41 needed for passage—even though the plan is loaded with election year goodies. Thirty-five Assembly members did not vote after Prieto refused to post the Horizon bill.

“To be clear—the budget bill has nothing to do with the reworking the state’s largest health insurer in 4 days, for no apparent reason, during a time when Trumpcare threatens millions of Americans,” Prieto said in a statement Thursday morning. “The Horizon bill is an unfair Christie tax on the insurer’s 3.8 million policyholders. I will not negotiate on that bill as part of the budget process.”

Sweeney, meanwhile, has said he’s trying to find a compromise to keep government open. The only person who spoke in favor of the Horizon plan during floor debate was its sponsor, Senator Joseph Vitale, who is well-regarded as both a healthcare expert and a voice for the state’s poor.

“This legislation doesn’t do any of the things that those who oppose it say that it does,” Vitale said. “What it does do is reaffirm what their mission is.” The bill spells out Horizon’s charitable obligations and restores its status as the “insurer of last resort.”

Vitale discussed the process in which state insurance regulators would establish a lower and upper target range for Horizon’s surplus; if the insurer’s surplus exceeded the upper end of the range, the insurer would be asked to put at least some of the excess into a “wellness fund,” and Vitale said Horizon could work with the state to direct its use.

Vitale has said the plan would work like the regulatory structure in Pennsylvania, which calls for a risk-based capital (RBC) range of 550% to 700%. However, the New Jersey bill does not include specific RBC ranges—or even define “excess” surplus. This has alarmed both Horizon and veteran business leaders, who have spent decades watching legislators make off with unemployment taxes and other “dedicated” funds that were no match for a process that allows “budget language” to override statutory good intentions. 

Horizon fears shipping its surplus to other uses will force higher premiums. Sweeney has promised this will not be the case.

Two Republican senators who opposed the bill Thursday—including 1 who said he supported more oversight of Horizon—said if the insurer has too much surplus, it should go to policy holders, not a “wellness fund.”

Copyright AJMC 2006-2020 Clinical Care Targeted Communications Group, LLC. All Rights Reserved.
Welcome the the new and improved, the premier managed market network. Tell us about yourself so that we can serve you better.
Sign Up