Prieto Digs in, Controversial Horizon Reform Remains Budget Stumbling Block

Lilo H. Stainton | June 30, 2017 | Health Care
Assembly Speaker describes Senate-approved measure as a pig with ‘no lipstick, maybe just a little bit of blush’

Credit: NJTV News Online
Assembly Speaker Vincent Prieto
The controversial proposal to reform Horizon Blue Cross Blue Shield continues to bedevil a deal on New Jersey’s 2018 budget, even as some Democratic leaders framed the measure as a temporary fix they could undo after it is used to secure the governor’s support for the annual spending plan.

The Senate approved a bill Thursday to overhaul how New Jersey regulates Horizon, its largest health insurance company, which could enable officials to tap into some of its surplus dollars for public health needs. But the measure did not even get posted for a vote in the Assembly, where Speaker Vincent Prieto (D-Essex) stressed that the issue needs more study and shouldn’t be rushed through with the annual budget — and it was unclear if the issue would be scheduled for an Assembly vote today, when both houses return to Trenton to finalize any business before the budget deadline.

Gov. Chris Christie has focused his growing wrath on Horizon, a nonprofit with some 3.8 million members, and he has Insisted that lawmakers pass a reform bill in return for his support of changes they made to the fiscal year 2018 budget — which must be adopted by midnight tonight in order to avoid a shutdown of state government. His push has sparked a massive public relations backlash from the company and an expanding list of allies from the business community, labor unions and patient advocacy groups, among others.

In a press conference Thursday afternoon, Christie blasted Prieto for not holding a vote on the bill, suggesting the speaker cared more about protecting a “multi-billion dollar insurance company” than New Jersey residents who would be hurt by a shutdown of non-essential state services, like parks, beaches and operations at the Department of Motor Vehicles.

Sweeney: Pass bill now, maybe repeal next year

Senate President Steve Sweeney (D-Gloucester) later downplayed the impact of the Horizon reform bill and urged Prieto to reconsider his strong stance against the bill in order to break the budget stalemate. Sweeney noted that any Horizon measure could be passed now and repealed early next year, before it takes full effect, if Democratic gubernatorial candidate Phil Murphy is elected; Murphy has opposed the reform.

“Is it responsible? It’s reality,” Sweeney said, when asked if passing a Horizon bill to secure the governor’s support, only to repeal it later, reflected good government procedure. A spokesman for Murphy did not respond to a request for comment Thursday evening.

Garden State leaders have previously explored options to reform Horizon, a nonprofit company that is the state’s only health services corporation, a unique entity created by the Legislature in 1985 that has traditionally insured some of the state’s most vulnerable patients. Christie first raised the issue in February, when he tried to secure as much as $300 million from the company to help fund his highly public battle to address opiate addiction.

The governor’s stance has evolved since then and the outline of a bill he provided lawmakers in April called for additional Horizon board members, far more public disclosure of the company’s financials, and a mechanism to allow the state to siphon off money it determined to be surplus for addiction and other public health programs. In his press conference Thursday, Christie said his focus on the reform was never about securing money from Horizon, but has been driven by “long-term concerns” that he has had about the company’s operations.

The bill adopted by the Senate (S-4), sponsored by Sen. Joe Vitale (D-Middlesex), the longtime health committee chairman, made additional changes that would — among other things — set up a public process to determine appropriate surplus levels, enable funds to be returned to policyholders and ensure that no financial review took place before Christie is scheduled to leave office, in late January. The company reported nearly $2.4 billion in reserves at the end of 2016, a figure it has said is within industry norms and appropriate for the risks involved.

‘…Horizon banging its chest’

“Senator Vitale did a masterful job of re-writing a bad bill and making it a good bill, or a better bill,” Sweeney said, suggesting that the frenzied opposition to the proposal is overblown. “This is egos. This is Horizon banging its chest.”

But Prieto insisted that Assembly Democrats had not received a copy of the legislation and that any reform proposal deserved a thorough, unhurried review. (Assemblywoman Elaina Pintor Marin (D-Essex) who represents Newark, where Horizon is based, has agreed to sponsor a companion to Vitale’s bill, but while a number has been assigned there was no text for the Assembly measure posted to the Legislature’s website late Thursday.)

“If we had a bill, we need to vet it,” Prieto said. “We need to have a pause.” He suggested Vitale’s take on Christie’s proposal was like a pig with “no lipstick, maybe just a little bit of blush.”

“It’s a bad bill that is going to impose a Christie tax on 3.8 million New Jerseyans,” Prieto added, suggesting that the bill is just a way to collect state revenue from individuals who are covered by Horizon.

Vitale’s bill, which was introduced and approved by a Senate committee Monday after hours of contentious testimony, would require three of the 15 board members to be elected by policy-holders, force Horizon to post disclosure statements similar to other nonprofits, and codify its charitable mission in more detail. The measure would also require the Department of Banking and Insurance to set up a public process to determine an appropriate range of surplus, and empower state regulators to review the company’s financials.

If the DOBI determined Horizon had funds in excess of this range, the company would be required to come up with a plan to redistribute this difference — either to policyholders or through programs designed to benefit public health. If they couldn’t reach an agreement, these dollars would be deposited into a new state fund that the Legislature would appropriate for health programs based on recommendations by the state health commissioner. If Horizon failed to act on this plan, the state could suspend its license to operate.