NJ's largest health plan

If Horizon Blue Cross Blue Shield courts stockholders what’s the outlook for policyholders and health care in New Jersey?

New Jersey’s largest health insurance plan, Horizon Blue Cross Blue Shield, is a nonprofit company now but wants to convert to a publicly traded company. It’s up to the state insurance commissioner to decide if that switch is in the best interest of New Jersey residents. But a watchdog group says the state government doesn’t have the expertise to make the right call.

Listen: [audio:090422tecoverage.mp3]

Managers say Horizon needs money to improve its computer systems and online tools. The company wants to sell stock to raise the cash. If the conversion is approved, state law requires Horizon to place the proceeds from the initial stock offering into a public foundation for New Jersey residents.

Rubino: They’re gonna have this pool of money that’s not there now, and they don’t have to raise taxes to get it.

Company spokesman Tom Rubino says the foundation would be independent of the for-profit company, and the dollars would be used exclusively to improve health.

Horizon says the initial stock sale could earn a billion dollars or more. But company officials have been quoting that estimate since last August. Consumer advocate Bruce McPherson says a lot has happened since then.

McPherson: The economic world, and the stock market situation has deteriorated so drastically that all of the assumptions that they used before are no longer valid.

McPherson leads the Alliance for Advancing Nonprofit Health Care, and he thinks Horizon needs to take a new look at its numbers to prove the conversion would benefit the public. Rubino says when – and if – the company goes public, the stock market will determine Horizon’s worth.

Rubino: We are not making any specific estimates, it could be much higher, it could be around that number, and that’s why we don’t think it’s worthwhile to get into these estimating hypotheticals.

Critics say a for-profit company will focus on stockholders instead of policyholders. Evelyn Liebman with New Jersey Citizen Action says that shift could lead to pricey health premiums and fewer coverage options.

Liebman: Given the size of Horizon as an insurance company and its ability to impact the entire market, even going beyond its current policy holders, those are very serious concerns.

Horizon makes up about 45 percent of the state’s health insurance market. Citizen Action wants New Jersey to hire policy experts to figure out how the conversion will affect health across the state. State officials are examining the need for more consultants, but Liebman worries that the insurance department is moving ahead, without the right expertise.

Liebman: They’re closing the door to even considering the fact that other groups like consumers, providers, hospitals may have significant and meaningful suggestions about what they should be looking for.

The insurance department is still reviewing Horizon’s massive application, but New Jersey doctors are already concerned about what the conversion might mean for them – and the rates that Horizon pays for their services.

Insurance giant Wellpoint has acquired nearly every other Blue Cross company that’s made the for-profit switch. The Medical Society of New Jersey says the Indianapolis company could swoop into the Garden State and do the same, here.

But Horizon spokesman Tom Rubino says the company will remain local.

Rubino: The management team here has said that they plan to stay owned here in New Jersey, they’re not looking to be acquired they are not looking to merge, that’s not part of this application.

Months of regulatory wrangling and public debate lie ahead before Horizon’s fate is decided.