Carrying through on a controversial concept he outlined in his budget speech, Gov. Chris Christie outlined a plan that would overhaul Horizon Blue Cross Blue Shield, increasing financial transparency and disclosure, expanding its board, and tapping into its revenue to help fund New Jersey’s urgent public health needs.
The governorhe is seeking legislation to reform the state’s largest insurance provider on Thursday, at an unrelated event designed to focus on the economy, during which he chastised the nonprofit insurance company for what he called “outrageous and offensive executive salaries” and “profiteering from the poor.” Christie said the company has the “best of both worlds,” a nonprofit status that protects it from “prying public shareholders,” and the freedom to behave like a for-profit operation.
His proposal makes good on an idea he first raised publicly in February and has picked away at ever since, despite strong pushback from dozens of business interests, healthcare providers, industry groups, and community organizations, among others.
As, the plan would require Horizon — which reported $2.4 billion in capital reserves at the end of 2016 — to post online the salaries and bonuses for its executives and lobbyists and expand the board of directors to 19 to include four more members, appointed by lawmakers and charged with representing public interests. Most members are appointed by the company’s CEO.
It would also allow state officials to annually review the company’s balance sheet and divert any profits above a certain threshold into a state-operated fund dedicated to expanding healthcare access, addressing public health crises, like the opiate addiction Christie has prioritized, or other health-related needs.
Horizon immediately outlined its opposition to the plan. Spokesman Kevin McArdle said the governor is “attacking the company for protecting our policyholders” from higher costs.
“Not once in the prior seven years has the governor raised any concern aboutfinancial information, including executive compensation,” McArdle said. “Packing Horizon’s Board with political appointees, jeopardizing the security of health insurance, and taxing our 3.8 million members is wrong.”
The governor’s office declined to say if the measure had a sponsor, but Democratic and Republican leadership in the Senate and Assembly have received details of the plan, staff members confirmed, but several said it was too soon to comment on the concept. Sen. Joseph Vitale (D-Middlesex), the longtime health committee chairman, said he was “open to looking at the proposal” and didn’t rule out sponsoring the measure himself, along with other leaders.
But Assembly Speaker Vincent Prieto (D-Hudson) suggested the governor’s proposal faced an uphill battle in his chamber. “I’ve always said I will listen to ideas, especially those that improve transparency and accountability, but I think it’s going to take a very persuasive argument to convince the Assembly that the state should be taking Horizon’s funds, especially amid the dire healthcare uncertainty in Washington,” Prieto said. “I would like to see the governor put as much effort into saving the Affordable Care Act and the benefits it brings to millions of New Jerseyans as he is targeting Horizon.”
Christie’s proposal stems from a months-long battle with Horizon in which the governor worked, first behind-the-scenes, to convince the insurance giant to provide as much as $300 million — possibly as an annual contribution — to state health efforts, particularly to address New Jersey’s opiate epidemic. Horizon made a counterproposal, offering less than half as much — hopefully as a one-time payment — in return for a deal on legislation related to healthcare billing and changes to the tax code.
When negotiations fell apart, Christieduring his budget speech, saying he was “confident Horizon will embrace this opportunity to partner with us,” prompting nervous laughter among the crowd. But despite his rhetoric, the proposed budget for fiscal year 2018, which starts in July, did not include any revenue from Horizon and there has been no concrete proposal put out by his office until he called for the plan he outlined Thursday.
Those opposed to the concept have not held back in the interim. Communications leaders at Horizon have gathered a growing list of individuals and organizations who have raised concerns about Christie’s plan, which many termed a “raid” on funds Horizon needs to hold in order to protect their policyholders.
The reserves are needed not only to pay out potential claims and offset unexpected costs that could otherwise be passed on to consumers, but also for the company to maintain a strong credit rating, they note, and setting such a precedent could discourage other insurance companies from doing business in New Jersey.
In addition to providers and insurance-industry groups, the list includes diverse voices ranging from the Boys and Girls Clubs in New Jersey, to the state NAACP chapter, to the Ironbound Community Corporation, to Steve Forbes. Even the sponsor of the event at which Christie chose to unveil his plan on Thursday, the Commerce and Industry Association of New Jersey, objected to his plan.
“Horizon Blue Cross Blue Shield is the state’s leading health insurance company, providing coverage to nearly 4 million people. Any abrupt change could jeopardize its ability to satisfy claims, “ warned CIANJ President Anthony Russo, who urged a careful review of the legislation discussed at the event, held at Goya Foods in Jersey City.
Christie’s actions have also sparked a coordinated opposition campaign,, which was formally launched Wednesday by the Latino Consumer Alliance, with support from Horizon. The campaign launched a website last weekend with a page with dozens of “testimonials,” several culled from news coverage of the debate.
“What the Governor is proposing is essentially a radical and hostile takeover of the largest healthcare insurer in New Jersey,” said Douglas Johnston, the campaign manager, noting that it could snowball into raids on other nonprofit organizations in the future. “And, no matter how good his new government program may seem to some, the ends do not justify the means.”
Christie’s proposal would apply to “health benefit corporations,” a term that dates back to the company’s founding 85 years ago; Horizon is New Jersey’s only “health benefit corporation” and the sole nonprofit insurance provider. In addition to requiring the online posting of salaries — now filed with state regulators — and expanding the board from 15 to 19, the proposal would give the Department of Banking and Insurance authority to demand information on how Horizon is “supposedly meeting its non-profit mission,” Christie said.
The most contentious section is the one that would authorize DOBI to annually assess Horizon’s profits and “determine” if there is “extra money” left over after Horizon puts away reserve funds at a level determined by state and federal regulators. This money would be transferred each year into a new state fund, administered by the Department of Health, to help improve healthcare.
“Horizon is a taxpayer-supported charity with a responsibility to prioritize and facilitate access to quality healthcare for New Jerseyans,” the governor said, adding that it had “lost its sense of mission.” He also predicted lawmakers would support the plan, despite the pressure they are facing from Horizon and other stakeholders.