Trenton Legislative House

Horizon Blue Cross-Blue Shield Reorganization Now Law in New Jersey

The reorganization of Horizon Blue Cross-Blue Shield of New Jersey has been approved by both houses in Trenton was recently signed into law.

Backers of the bill say the state’s largest health insurer will now have the ability to move forward with reforms that will help keep premiums down and compete in the rapidly-changing healthcare marketplace.

“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 healthcare needs of its policyholders and continue to meet its obligations to provide affordable care to the people of New Jersey,” said State Sen. Paul Sarlo (D-36), the chairman of the Senate Budget Committee, said in a press statement. “With all the advancements in treatment and services, Horizon needs the flexibility to adapt to the evolving healthcare marketplace.”

State Payments

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

“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,” said State Sen. Nellie Pou (D-35), who chairs the Commerce Committee. “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.”

Remaining Competitive

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

“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-27). “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 have to submit an application to the Commissioner of Banking and Insurance to review the reorganization plan to determine if it is financially sound and protects the interests of policyholders. 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.

Oversight Protections

“This carefully thought-out legislation not only ensures thorough oversight and protections—including a ‘can’t convert clause’—but it ultimately reinforces Horizon’s mission to empower its members to achieve their best health,” said Assemblyman Benjie Wimberly (D-35). “Reorganization will help stabilize premiums at a time when affordable health care is so critical for families throughout our state.”

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. 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.

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