Advocates want top court to review massive Horizon reorganization - Health Professionals & Allied Employees

Advocates want top court to review massive Horizon reorganization

Taken from NJSpotlight News

By Lilo Stainton

June 22, 2023

State’s biggest health insurance company says it must restructure to compete, but critics warn coverage for 2M residents could be imperiled

New Jersey has collected an initial payment of $600 million from Horizon Blue Cross Blue Shield as part of a multiyear corporate restructuring that state officials and company leaders insist will benefit millions of residents insured through Horizon health plans.

But health care and labor advocates want the courts to take one more look at the restructuring deal, which they believe state insurance regulators erred in approving last fall. Advocates worry the restructuring would undermine Horizon’s charitable mission and allow it to raise the cost of care for more than 2 million of its policyholders.

On Monday nonprofit advocacy group New Jersey Citizen Action joined the Health Professionals and Allied Employees (HPAE), the state’s largest health care union, to file notice with the state Supreme Court of their plans to appeal a decision. The ruling issued in May by the Superior Court’s Appellate division upholds the state’s approval of Horizon’s restructuring. Horizon, which insures 3.8 million New Jersey residents, has said corporate changes are necessary to allow it to remain competitive against for-profit companies.

“We will use every means at our disposal to continue our fight to protect Horizon’s policyholders and its billions of dollars in charitable assets,” said Maura Collinsgru, Citizen Action’s director of policy and advocacy, who said the reorganization — if permitted — could have “devastating consequences for millions of New Jerseyans already struggling to access affordable health care.”

Officials at Horizon declined to comment Wednesday on the notice to appeal.

Reform long sought

Horizon, a nonprofit company that reported more than $16 billion in revenues in 2022 has long sought to reform what leaders say is an outdated business structure with complex regulatory and tax burdens. Lawmakers and some governors have also pushed to overhaul Horizon’s structure, which is codified in state statute, and use this conversion to access company assets to pay for health care programs or plug budget gaps. But advocates have long warned that such a shift could erode benefits for policyholders, including roughly 1 million Medicaid members and hundreds of thousands of public workers insured through Horizon.

Negotiations during the pandemic resulted in a law Gov. Phil Murphy signed in December 2020 outlining the steps for Horizon to convert to a nonprofit mutual holding company, if approved by the state Department of Banking and Insurance. The new structure provided Horizon greater flexibility on investments, enabled it to expand a profitable Medicare Advantage business and reduced certain tax burdens.

In return, Horizon pledged to pay the state $1.25 billion over 25 years to offset some of the tax losses.

Horizon soon submitted a request for conversion. Officials at the state Department of Banking and Insurance reviewed the proposal and gathered input from public hearings, a consultant and others before Commissioner Marlene Caride approved the plan last fall.

Advocates appealed Caride’s decision, claiming she had essentially misinterpreted the 2020 law but three appellate judges unanimously affirmed the commissioner’s action in May. Days later, Horizon submitted the first payment of $600 million to the state, the company said.

“We are fully confident that the Appellate Division’s decision, which allowed Horizon to modernize its structure for the 21st century, was correct,” said Jennifer Sciortino, a senior communications adviser to Murphy. “The modernization of Horizon’s organization will benefit the millions of New Jerseyans who are policyholders. We are thankful to the legislative sponsors who worked with the administration to pass this law.”

Rubber-stamp approval

Advocates, however, insist the court merely rubber-stamped Caride’s decision without conducting a proper, independent review. And they believe Caride failed to take into full account how the corporate changes would impact Horizon policyholders, the majority of whom they fear will not be properly protected from price hikes under the restructuring deal approved.

“We will continue to demand that the interests of all policy holders are protected,” said HPAE President Debbie White. “We believe that the state failed to place conditions on this deal that would have created safeguards for all of us. Healthcare costs are skyrocketing and without safeguards we are left vulnerable to the unjust business practices that place the interests of shareholders above those of policyholders.”

New Jersey Appleseed Public Interest Law Center attorney Renee Steinhagen, who is working with the advocates, said they will file their arguments for appeal by June 30, seeking to overturn the appellate court decision and return it to Caride’s department for a fresh assessment. With a schedule that allows for Horizon’s response and additional filings by both sides, Steinhagen said advocates should know in August if the Supreme Court will indeed hear the case.

“We are not opposed to a reorganization,” Steinhagen said. “But we are opposed to this plan for reorganization because it does not meet the standards that the Legislature set” to protect policyholders.

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