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New Jersey Shuts Down Government Over Fight With Blue Cross

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New Jersey Gov. Chris Christie is ejecting swimmers from state beaches and campers from state campgrounds in a battle over the role, and cash, of Horizon Blue Cross Blue Shield of New Jersey.

Christie, a Republican, issued an executive order shutting down the state government Friday. He accused Vincent Prieto, the state Assembly speaker, of forcing the shutdown, by blocking passage of S-4, a state Senate bill that would impose new requirements on health care service corporations.

Horizon Blue is the only company in New Jersey chartered as a health care service corporation.

(Related: S&P Analysts Say Health Insurers Are Strong, for Now)

Christie says he’s counting on passage of S-4 to provide cash a multi-billion-dollar insurance company does not really need to pay for opioid abuse treatment programs.

Horizon Blue says the bill would let political appointees raid its reserves, and, in effect, take control of its operations,

“The bill is a giveaway to special interests who will make millions in windfall profits as insurance premiums skyrocket,” the company says.  


A copy of S-4 is available here.

S-4 would require a health care service corporation based in New Jersey to:

  • Have a charitable mission.

  • Serve as the state’s “insurer of last resort.” This means that, if Congress changed the Affordable Care Act, and medical underwriting returned in the individual health market, the health care service corporation would have to cover all of the people commercial health insurers refused to cover.

  • Comply with a cap on capital surplus, or reserves, set by the state commissioner of banking and insurance.

  • Put what the state banking and insurance commissioner classifies as excessive reserves in a state health quality and wellness fund.

  • Let policyholders vote on 20% of its board seats.

Christie and Horizon Blue have waged a bitter war of press releases and press conferences over the bill. Christie’s team has posted many documents about the bill on the governor’s official press release website.

In a press conference on Thursday, Christie blamed Prieto for the budget impasse resulting from lack of lawmaker action on S-4.

“Is the speaker going to close state government to protect the multibillion-dollar insurance company?” Christie asked. “And you got to wonder what his incentive is here.”

Horizon Blue, in turn, has responded with many press releases, print ads, radio ads and lobbying efforts of its own.

Horizon Blue

Horizon Blue, which is based in Newark, New Jersey, ended 2016 providing or administering major medical coverage for about 3.8 million people.

The carrier reported $85 million in net income on $12 billion in revenue, for a profit margin of 0.7%.

The company had about $3 billion in capital reserves, or about $790 in reserves per major medical plan enrollee.

Insurer of Last Resort

In the past, Horizon Blue was New Jersey’s insurer of last resort. New Jersey lifted that requirement in 1992, when Horizon Blue was near the edge of bankruptcy.

(Related: Michigan Blue Asks for Individual Market Changes)

Horizon Blue says in a commentary on the bill aimed at policyholders that returing to the insurer-of-last-resort system would be a gift to its for-profit competitors.

“Other carriers aren’t held to the same standard and would be free to abandon the sickest and most expensive New Jerseyans,” the company says.

Reserve Cap

Horizon Blue says the bill would give state political appointees too much authority to set Horizon Blue reserve limits.

S-4 is “Governor Christie’s plan to raid $300 million from the reserve funds that Horizon BCBSNJ keeps to protect policyholders from emergencies,” the company says in its statement to policyholders.

Board Members

The provision requiring 20% of the board members to be elected policyholders may sound good, but, in reality, it would probably mean that special interests could manipulate the board member elections, Horizon Blue says.

The license that lets Horizon use the Blue Cross and Blue Shield trademarks, and participate in Blue Cross and Blue Shield programs, requires that Horizon Blue board members be independent and operate only for the benefit of the policyholders, the company says.

Scott Serota, president of the Blue Cross Blue Shield Association, said in a statement that the restrictions on Horizon Blue that would be imposed by Horizon Blue appear to “go significantly beyond what is typically required by other states” and may threaten the company’s independence.

The New Jersey State Government Shutdown

State laws and regulations have limited some of the impact of the shutdown.

State colleges and other state schools are open.

Casinos are open.

State offices, such as departments of motor vehicles, are closed, but many of those would have been closed over the weekend even if the state government were still operating.

For ordinary state residents, the most obvious impact has been a shutdown of state beaches and campgrounds.

This weekend has been one of the first hot, sunny weekends in New Jersey this summer. Christie’s shutdown order closed the beaches and campgrounds early Saturday morning. Park rangers made leave their camping sites, according to press reports.

Would-be swimmers can go to city and federal beaches, which are still open, but campers trying to find backup sites now may be out of luck. Many of the Fourth of July campers reserved their sites six months or more in advance.

Christie’s family has a house in one state park, Island Beach State Park. State troopers let Christie and his family get into the park to go to their house as they turned other people who wanted to go to the beach away.

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