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Christie Seeks ‘Charity’ from Insurance Company to Bolster Healthcare for Poor

Horizon Blue Cross Blue Shield resists, says governor overstated its cash reserves, already supports healthcare programs for vulnerable residents

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In his final budget address on Tuesday, New Jersey Gov. Chris Christie called for hundreds of millions of dollars in new funding to help disabled adults stay in their homes, expand graduate medical education and build on his ongoing work to improve addiction services, among other healthcare-related priorities.

But one of the most newsworthy notions Christie championed in his speech was not actually factored into the $35.5 billion spending plan for fiscal year 2018: a plea for Horizon Blue Cross Blue Shield, the state’s largest health insurance provider, to create a charitable fund that could be used to help pay for drug treatment for those without health coverage or other services for vulnerable residents. The nonprofit has had a historic role caring for the New Jersey’s poor citizens, but in recent years the company has amassed billions in surplus and annual revenues, he said, insisting it should do more to help offset the state’s escalating healthcare costs.

“I am confident Horizon will embrace this opportunity and partner with us to establish this permanent, sustainable fund,” Christie said, prompting laughter from the crowd packed into the State House Assembly chamber. “They will not turn their back on the people of New Jersey who pay their salaries and, as the people’s representatives, we will partner with them to make sure it happens by June 30,” he added.

Horizon officials say $2.4B reserve is appropriate

Horizon officials shot back within the hour, insisting Christie had overstated the company’s earnings and cash reserves and highlighting ways in which it supports healthcare programs for the state’s most vulnerable residents. In addition, industry regulations require insurance providers to maintain significant reserves in order to cover unexpected claims, the company said, adding that the $2.4 billion Horizon had in reserve at the end of 2016 is entirely appropriate, given the company’s size and costs. Horizon covers some 3.8 million Garden State residents, including 900,000 Medicaid patients; it is one of two companies that issues Medicaid plans in the state.

“Horizon is always willing to be a partner with New Jersey to drive down health costs and expand health care access to all our residents,” said company spokesman Kevin McArdle. “However, raiding the reserves that protect the families we insure, including our Medicaid members, will only make insurance more expensive and less secure.”

While Christie couched the plan as a voluntary agreement, it echoes past attempts to tap Horizon dollars to supplement taxpayer revenues or plug a budget gap. In 2001, the state adopted a law to allow Blue Cross Blue Shield to convert to for-profit status, a move that would have triggered the creation of a public foundation to be fueled by proceeds from an initial sale of company stock. After years of debate, the company initiated the lengthy regulatory review required to undergo conversion, but the process was stalled by concerns about the impact on premium costs and a court challenge that eventually blocked the deal.

“While some would argue for converting Horizon to a for-profit company, which would bring a windfall of billions of dollars to state taxpayers, I am not advocating for that move today. Nor am I suggesting that we use Horizon to fill any budget gaps,” Christie said yesterday, insisting the annual state budget “needs no such one-shot gimmicks to be balanced.”

Some Democrats open to Christie’s proposal, others cautious

Instead, Christie argued for a permanent fund that Horizon would pay into annually to offset the state’s costs for Medicaid and hospital care for uninsured residents. He noted that Blue Cross Blue Shield of Massachusetts “took the initiative themselves” to reduce the availability of prescription painkillers that have led to higher addiction rates and to fund other programs related to drug abuse. “In New Jersey, government has taken the sole responsibility for these actions,” the governor said.

Several Democratic lawmakers — whose support would be essential if legislation is required to access Horizon’s reserves — indicated they were open to discussing such a possibility, but they first needed more information on Christie’s proposal. The administration did not brief them in detail on this proposal in advance, they said, and offered no details to reporters of how it would work.

“We’re not against Horizon,” Senate President Steve Sweeney (D-Gloucester) said after the speech. “I just want to know the details that he’s talking about and then have an adult conversation about it.”

Assembly Speaker Vincent Prieto (D-Hudson) agreed: “I look forward to having that discussion.”

But others, including Assembly Budget Chairman Gary Schaer (D-Bergen) were more cautious. “We are unclear of the item in its totality,” he said, “especially given the fact that such an attempt ten years ago was met with a court denial.”

Lawmakers had less to say about other key health initiatives that were actually reflected in the FY18 spending plan, including the governor’s pledge to commit another $200 million — an even split of state and federal dollars — to programs covered under the Medicaid waiver, which has made it easier for disabled adults to get healthcare and support services at home.

Governor pledges 52% increase for addiction services

The governor also pledged to include $430 million in the budget for addiction services, a 52 percent increase from the year he took office, although Treasury officials were unable to provide any detail on this spending Tuesday. Christie has prioritized anti-addiction efforts almost exclusively in recent months and dedicated much of his State of the State address in January to the topic.

Christie also included $30 million in new funding — $20 million of it from federal sources — to expand graduate medical school programs, something that has long been a priority for healthcare providers concerned about a shortage of physicians in New Jersey. But he trimmed $50 million, a split of state and federal funds, from the state’s Charity Care program, an account that is used to help hospitals cover the cost of treating those without insurance; this comes on top of a $150 million reduction in this account this current year.

State Treasurer Ford M. Scudder explained that the expansion of the state’s Medicaid program under the federal Affordable Care Act added nearly 800,000 New Jersey residents to the insurance rolls and has therefore decreased the need for Charity Care funding. But hospital leaders insist this shrinking pool is not enough to cover their costs and they fear that a potential repeal of the ACA, now under discussion in Washington, D.C., could erase these insurance gains and leave hospitals holding the bag for even more costs.

“There continues to be tremendous uncertainty today for both healthcare providers and for the 800,000 New Jersey residents who have health insurance under the Affordable Care Act, and it's not the right time to further cut charity care,” said Betsy Ryan, president and CEO of the New Jersey Hospital Association. “We need to keep this vital safety net program — and those federal dollars — intact as we wait to see what Congress and President Trump have planned for the future of health insurance coverage.”

Assemblywoman Shavonda Sumter (D-Passaic) noted even the gains the state has made recently to address opiate addiction could be erased if the ACA is repealed, since many of these services are funded through Medicaid. Advocates had rallied on the State House steps Monday to urge Christie to include protections in the FY18 budget to guard against this possibility.

Sen. Joseph Vitale (D-Middlesex), who chairs the health committee, also urged caution. “Any scaling back of the ACA could have a devastating impact on New Jersey residents and their health needs, and we can expect to see a rise in the need for charity care once more if that happens,” Vitale said. “Perhaps the governor can use his connections in Washington to help protect the funding we so desperately need to keep our residents healthy and insured.”

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