b'Horizon Blue Cross Seeks toLEGAL EASEConvert Its Legal Status in NJBy Jeffrey RandolphWhat Could This Mean to Doctors and Patients? ANJC Legal Counsel Horizon Blue Cross Blue Shield of NewIn general, conversion to a non-protmillion for the remaining four years. All Jersey (Horizon) is a health servicemutual holding company would permitpayments to the state for the conversion corporation organized and operatingHorizon to engage in new lines ofare capped at $1 Billion. Further, as the under the Health Service Corporationbusiness and raise capital in ways thatconversion is to a non-prot mutual Act. N.J.S.A. l 7:48E-l et. seq. and wasit cannot do at present. Horizon wouldcompany and not a direct for-prot established in 1932 as a non-prot orga- be permitted to start up, acquire orconversion, the change in structure may nization that was an insurer of last resort,merge with non-insurance relatednot trigger any requirement to tender providing insurance coverage to residentsenterprises such as selling vitamins,reserves to the state. of New Jersey regardless of their health.medical equipment, preventive health Over the decades since its creation, bothprograms, real estate investments or anyOne signicant issue that must be state and federal law has evolved toother non-insurance related enterprise.addressed in the proposed bill is the require all insurers to provide insuranceHorizon also could raise money by sellingexemption it provides Horizon for plans that cover insureds regardless ofstock in non-insurance subsidiaries thatany nancial lings it makes with the issues such as pre-existing conditions,it maintains a majority interest in or issueDepartment of Banking and Insurance. rendering the structure Horizon operatesbonds, which it cannot do now. Thus, itThe statute mandates annual lings but under antiquated and not in tune with thewould appear that there are a numberclassies them as condential and, thus, modern healthcare environment.of benets that the new structure couldnot subject to public disclosure under the As of Dec. 31, 2017, Horizon providedprovide to Horizon to expand its businessstate Open Public Records Act (OPRA). health insurance coverage to roughly 3.75and better compete in the insurance market with the intent to promote patientThis anti-transparency provision should be million members through commercialpreventative care to prevent illness andremoved or modied before the bills nal and governmental health plans. In thedisability in the rst place as opposed topassage. individual insurance market, Horizonstreating it after it has occurred. total individual membership at the endIt appears that the bill is supported of 2017 stood at 226,300, representingHowever, opponents have claimed thatby Senate President Steven Sweeny a 73.22% market share. In the smallthe change in structure is not in the best(D-Gloucester) but opposed by New employer market, Horizons estimatedinterests of the citizens of New JerseyJersey Governor Philip Murphy, which market share was 60.94% as of 2017.and that close scrutiny and public debatecould set up a prolonged political With regard to school employees andshould occur before the bill movesbattle regarding its passage and signing state workers, Horizons estimated marketforward. New Jersey Citizen Action andinto law. Overall, some change in the share was a staggering 83%. Thus,NJ Appleseed Public Interest Law Centercorporate structure of Horizon appears Horizon is, by far, the largest provider ofhave both publicly opposed the bill, claiming that it is not in the best intereststo be long overdue, as the structure it insurance to citizens of the State of Newof the citizens of New Jersey and theoperates under at present was created Jersey making any signicant changestate attorney general and courts shouldfteen years before New Jerseys modern in its structure a matter of high publichave a role in approving any change inconstitution was adopted in 1947. There importance. structure. Issues have also been raised ashave been myriad changes in health care A bill introduced in the New Jerseyto what would happen to the billions ofand insurance since then, including major legislature by Assemblyman Johndollars in reserves Horizon holds if conver- changes under the Patient Protection and McKeon (D-Essex), A.6062, wouldsion is approved. Under the presentAffordable Care Act, that protect insur-statutorily permit Horizon to change itsstructure, Horizon must pay its reservesance consumers. Thus, after full public corporate structure to a non-prot mutualto the state if it changes to a for-prothearings and provided amendments holding company, following the lead ofcorporate structure. The proposed bill isare made to ensure full transparency, a what has occurred with Horizon Bluesilent as to what would occur with these Cross plans in eighteen other states. Thereserves but it does provide for a serieschange in Horizons corporate structure is reasoning behind the change in structure,of payments mandated to the state bylong overdue. according to Horizon, is to provide it withHorizon should the structure be changed a level playing eld to compete againstto a non-prot mutual holding company. other insurers who are not hamstrung byThe initial mandatory payment is $200 its 1930s structure which subjects it tomillion followed by an annual payment higher tax rates than other carriers andeach year for six years after conversion of precludes Horizon from investing in any2% of annual revenue up to $200 million line of business other than insurance.for the rst two years and up to $100 www.njchiropractors.com I 7'