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NJHA Raises Questions Regarding Horizon's Proposal to Convert to For-Profit Health Insurer
Date:8/15/2008

PRINCETON, N.J., Aug. 15 /PRNewswire-USNewswire/ -- Following is a statement of Betsy Ryan, President and CEO, New Jersey Hospital Association:

Horizon Blue Cross Blue Shield today submitted an application to the state to convert from a non-profit insurer to a publicly traded for-profit company.

All New Jerseyans should be concerned about the prospect of such a conversion. With approximately 2.9 million members, Horizon is the largest provider of health benefits in the state. Horizon is currently a not-for-profit insurer, with deep roots as a provider of last resort for those unable to obtain health insurance from other insurers. Therefore, any attempt by the carrier to convert should be reviewed carefully and deliberately by the Department of Banking and Insurance and the Attorney General, the agencies charged by statute with considering the application.

While NJHA has not yet taken a position on the issue, key questions that need to be considered if Horizon proceeds with its application include:

-- Is the conversion in the public interest, as the statute requires?

-- Will a conversion of the state's largest non-profit insurer to a publicly traded company raise the rates New Jerseyans pay for health insurance - already the highest in the country - even further? Will it lead to lower payments to beneficiaries and providers?

-- Would Horizon's conversion to a for-profit company, combined with its market share, give it monopoly-like power in the New Jersey market? And if so, what can be done to prevent such an outcome?

-- Will a for-profit Horizon, responding to shareholder expectations, reduce or eliminate coverage for children and families enrolled in Medicaid, FamilyCare and small business plans and for other vulnerable populations such as the mentally ill, as has happened in other states where plans have converted to for-profit companies?

-- Concerns are already being raised about the inadequacy of Horizon's provider networks. Will these concerns be considered and addressed as part of the conversion review process?

-- Horizon's market share will make it a likely acquisition target for out-of-state insurance companies. What would the impact of such an acquisition be on competition, access to care and premium rates?

-- What can be done to insure that "insiders" to the conversion process don't reap windfall benefits from the new for-profit company?

-- What will come of the charitable asset generated by the conversion? Will it be devoted to ensuring expanded access to healthcare, as the statute requires, or will the state do an "end-run" and divert the funds to non-health purposes?

After similar review, regulators in Washington, Maryland, Alaska and Kansas all rejected conversions of their Blue Cross Blue Shield plans to for-profit companies. New Jersey regulators need to scrutinize the Horizon application with the same level of detail and openness in determining whether approving it would truly serve the public interest in New Jersey.

NJHA has started an intensive review of the Horizon application in an effort to ensure that its members are protected and that the public interest is not ignored.


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SOURCE New Jersey Hospital Association
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