A plan from Gov. Chris Christie to raid the reserves kept by New Jersey’s largest health insurer, Horizon Blue Cross Blue Shield, will not get a committee hearing “at this time” and “is of serious concern” to the entire Democratic caucus in the Assembly, Speaker Vincent Prieto said Tuesday.
“At this point in time, I don’t think there’s the appetite for it,” Prieto (D-Hudson) told reporters about the Horizon proposal after an unrelated news conference. A committee hearing is required before any piece of legislation can get a floor vote. Prieto said he had no plans to refer Christie’s bill to any committee or to walk it onto the floor using an emergency maneuver.
Christie has been on a populist tear this year against Horizon, a not-for-profit enterprise with 3.8 million policyholders, calling on lawmakers to take any funds from the company’s $2.4 billion reserve account that are above the required cushion it must keep in case of emergencies. He also wants lawmakers to force Horizon to post executive compensation online and to add four political appointees to its 15-member board.
The Horizon raid is a top priority for the governor in his last year in office, but Prieto’s comments indicated that it is languishing in the Legislature and may not see any action before Christie’s self-imposed June 30 deadline.
No lawmakers from either party have endorsed the proposal since Christie rolled it out during his budget address in late February. Voices as disparate as the conservative Wall Street Journal editorial page and the liberal think tank New Jersey Policy Perspective have called it bad policy. S&P Global Ratings said it might downgrade Horizon’s credit rating if the plan gets enacted.
The Blue Cross Blue Shield Association requires Horizon to keep reserves of at least 550 percent what’s needed to pay all policyholder claims. Christie wants any funds above that level to be sent to a new state-run fund to combat addiction and the heroin-death epidemic, a plan that would kick in after he left office.
At a recent hearing of the Assembly Budget Committee, Christie’s banking and insurance commissioner, Richard Badolato, said that he was not consulted about the Horizon plan before the “front office” rolled it out and that no other health insurer in the state is currently subject to the regulatory and financial conditions the governor is proposing for Horizon.
The raid would be of roughly $300 million per year at Horizon’s current reserve levels, and CEO Robert Marino told NJBIZ on Monday that consumers could expect to see a premium increase of “$600 for an individual policy and $1,700 for a family of four” if the governor signs the plan into law.
“We don’t have a money tree outside I can go pick from; we would have to make that up in premium rate hikes,” Marino told NJBIZ.
“We want to make sure we don’t hurt their reserves because it’s not a surplus, it’s reserves that they have to have,” Prieto said Tuesday. “If a calamity happened, they would only have 75 days” to cover claims before draining their reserves, he said.
“That is of serious concern not just to me but to my whole caucus,” Prieto said.
Christie at his own news conference Tuesday said he was not ready to wave the white flag and said Prieto seemed to be having “a tough day.”
“The speaker has often changed his mind,” Christie said when asked what his next move would be.
A day earlier, at a news conference on Monday, Christie said that he was working on several legislative proposals behind the scenes and predicted lawmakers might move them during the last week of June. But Christie also acknowledged Monday that some of his plans may not get done.
“Speaker Prieto should be commended for his focus on protecting policyholders from those wishing to inject statehouse political agendas in the health insurance that protects 3.8 million New Jerseyans,” said Horizon spokesman Kevin McArdle. “Each passing day seems to bring more uncertainty and volatility from Washington and it is hard to imagine a worse time to impose a $300 million tax hike on Horizon’s policyholders or jeopardize the security of their health insurance.”
On Tuesday, Christie chafed when asked why he was not also targeting the pharmaceutical industry and the medical profession as he seeks funds to combat opioid abuse.
“The pharmaceutical industry does not have a nonprofit status in New Jersey, nor do physicians,” Christie said.
His plan, he said, would ensure that the company continues to perform a charitable mission in New Jersey now that it has moved away from its traditional role as an insurer of last resort. An expansion of Medicaid that Christie accepted in 2013 under President Barack Obama’s Affordable Care Act changed the health industry in New Jersey, capturing many of the patients who had sought out Horizon in the years before Obamacare.
“This is replacing Horizon’s previous charitable mission of being the insurer of last resort with a new charitable mission,” Christie said of his bill. “If they don’t care to have a charitable mission any longer, they should convert to a for-profit company. Pharmaceutical companies are for-profit companies. Physicians run for-profit operations in the state and pay significant taxes as a result, as do the pharmaceutical companies.”
Horizon reported $516 million in state and federal tax payments in 2016, with roughly $200 million of that paid to the state. In 2015, it paid $176.7 million in state taxes and insurance assessments and $338.5 million in federal taxes and assessments. The company’s not-for-profit status exempts it from New Jersey’s sales tax.
