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New Jersey Sets Horizon Blue Reserve Cap

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New Jersey Gov. Chris Christie approved deals Tuesday that put a soft cap on how much capital Horizon Blue Cross Blue Shield of New Jersey can have, and reopened state campgrounds and beaches for the Fourth of July.

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

A bitter fight over the carrier’s reserves led to a partial state government shutdown that started early Saturday morning.

Christie, a Republican, tried to frame the conflict as a battle between state health care funding needs and a multi-billion-dollar insurance company. Horizon worked hard to win support from state residents, including members of public employee unions. Many state residents ended up seeing the conflict as a battle between state officials who wanted to seize control of Horizon’s money and people who wanted to go to the beach.


Horizon, a Newark, New Jersey-based company, provides or administers major medical coverage for 3.8 million people. It has $3 billion in capital reserves.

Horizon is the only company in New Jersey with a health care service corporation charter.

S2 v. S4

Originally, Christie backed S4. That bill would have given the state insurance commissioner the authority to set limits on how much capital a health care service corporation could have.

The commissioner could have required a health care service corporation to put any excess capital in a state health care quality and wellness program.

S4 would have also classified Horizon as an insurer of last resort. If the federal government eliminated the Affordable Care Act ban on medical underwriting, Horizon would have had to take applicants who were too risky to get individual medical coverage from other major medical coverage providers.

S4 supporters, including Christie, argued that Horizon was loosely regulated and had too much capital. Christie talked about using $300 million in excess Horizon reserves to pay for anti-opioid abuse programs.

Horizon argued that insurer-of-last-resort status would hurt its finances and force its enrollees to provide a subsidy for other carriers. The company argued that the reserve cap provision was so vague that it would have let state political appointees use Horizon’s reserves to create a slush fund.

S2, the bill Christie actually signed, sets the maximum risk-based capital ratio for a health care service corporation at 725%. If a health care service corporation exceeds that RBC cap, the corporation is supposed to come up with a plan for using the excess capital to help its enrollees, not put the extra cash in a state fund.

S2 also eliminates the insurer-of-last-resort provision.

S4 would have required Horizon policyholders to elect 20% of the company’s board members. S2 simply gives state officials the authority to appoint two members to the company’s board.

Christie signed S4 shortly before midnight on Tuesday, and he signed a budget deal early today.

Horizon’s Reaction

Horizon executives posted a statement praising the S2 compromise.

The compromise legislation “is reasonable, avoids higher costs for our members, and … does not impose unfair or excess obligations,” the company said in the statement.

Horizon mall stand (Photo: Allison Bell/TA)

(Photo: Allison Bell/TA)

The company made a point of thanking state lawmakers, and “a broad coalition of business, labor and consumer groups who stood up for Horizon’s 3.8 million policyholders.”

Horizon did not thank Christie.

Shutdown Fight

Last week, Christie accused Horizon and its supporters of playing a dangerous game, by blocking passage of S4.

Christie said Friday that the state government would have to shut down, because lawmakers had not sent him a budget he could sign.

Christie issued a shutdown order Friday. The order kept public safety agencies, schools and casino oversight operations open. It closed many state offices that serve the public, such as Department of Motor Vehicles offices and courthouses.

For members of the public, the most obvious immediate effect was a shutdown of the state’s beaches and state campgrounds during the first hot, sunny weekend of the summer.

Angry travelers posted reports of being evicted from state park campsites they had reserved months in advance.

State troopers shut would-be beachgoers out of popular state beaches, including the beaches at Island Beach State Park.

The state opened the park in 1953. Christie’s family and five other families still have beach houses in the park, according to the Newark Star-Ledger. State troopers let Christie’s family enter, while they ejected other families with beach houses in the park and kept members of the public from entering.

News services published pictures of Christie sitting on a beach that was closed to the public. Some people used Twitter, Facebook and other social media services to post parody versions of the photos, with Christie sitting in his beach chair in new, absurd settings. The pictures, and the parody campaign, hurt Christie’s effort to portray himself as a David standing up to an insurance company Goliath.

— Read Christie Wants Moratorium on Towns Seeking Hospital Payments on ThinkAdvisor.


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