The governor’s plan is to use the insurance company’s reserve funds to pay for the state’s drug treatment programs in his ongoing effort to deal with the state’s opioid crisis.

Instead of harassing Blue Cross / Blue Shield, Christie should legalize & tax recreational marijuana...

NJ Gov. Christie Wants To Seize ‘Surplus’ Funds From Private, Non-Profit Health Insurer

In simple unadorned language, Christie wants the right to engage in theft.

The company at question is really Horizon, rather than BCBS. It is an independent, locally operated company under the umbrella of the Blue Cross Blue Shield Association. Horizon BCBS exists only in New Jersey as a company created under New Jersey law.

https://www.bcbs.com/about-us

The Blue Cross Blue Shield Association is an association of independent, locally operated Blue Cross and Blue Shield companies.

At issue is a bill currently under consideration in the New Jersey legislature, which threatens to change the law pertaining to how Horizon conducts it business.

https://legiscan.com/NJ/bill/S4/2016

The bill, S-4, passed the NJ Senate on June 29, 2017 (Vote 21-15).

Below is the statement by Horizon BCBS to the NJ Senate Budget and Appropriations Committee.

https://www.horizonblue.com/about-us/news/newsroom/horizon-blue-cross-blue-shield-of-new-jersey-delivers-testimony-on-legislation-would-make-major

Horizon Blue Cross Blue Shield of New Jersey Delivers Testimony on Legislation That Would Make Major Changes to Company's Mission and Operations

Delivered June 26, 2017 before the Senate Budget and Appropriations Committee on Senate Bill 4:

Chairman Sarlo, Vice Chairman Stack, and Members of the Senate Budget and Appropriations Committee:

Thank you for the opportunity to address the Committee concerning S-4, which significantly alters the mission, structure, operations and financing of health service corporations in the State of New Jersey.

As you are aware, Horizon Blue Cross Blue Shield of New Jersey is the only company in the State operating as a health service corporation. As New Jersey’s oldest and largest health insurer, Horizon has provided generations of families and businesses with access to quality, affordable health care coverage for over 85 years and, at present, is responsible for managing the health insurance needs of approximately 3.8 million New Jerseyans. For the entirety of our 85 years of existence, our company has been headquartered in New Jersey and has been committed to serving the citizens of our State. With nearly 5,500 employees, Horizon is one of the State’s largest employers, and is a significant tax payer despite its not-for-profit designation with over $500 million in federal and State taxes paid last year. Of that, $212 million in taxes were collected by the State of New Jersey. Without question, Horizon is an economic engine for the State of New Jersey and provides thousands of jobs for NJ residents, generating over $10 billion of economic activity primarily in the health care space, and paying hundreds of millions of dollars of taxes to the State.

If enacted, S-4 would impose sweeping new mandates upon Horizon alone that would fundamentally alter the way the company operates and would significantly disrupt the health insurance coverage of 3.8 million residents as well as the health care delivery systems across the State. The disruption visited by S-4 would only serve to compound the already chaotic legislative and regulatory environment enveloping the health care industry due to “repeal and replace” activities unfolding in Washington, D.C. We urge members of the Legislature to carefully consider the potential adverse impacts of enacting broad and far-reaching changes to New Jersey’s health care industry during this period of volatility and strongly encourage policy makers to take a deliberative and considered approach that provides for enough time to engage in a thoughtful and comprehensive analysis of the measures, and undoubtedly catastrophic impact of S-4.

As part of that analysis, we respectfully ask that you consider the following:

As presently drafted, S-4 would alter the well-established and long-standing statutory mission of health service corporations from being organized for the benefit of their members to being organized for “charitable” purposes unrelated to our members and would establish a process for the diversion of reserve funds built by our members to the State for unspecified public health programs. The broad expansion of the mission negatively impacts the 3.8 million New Jerseyans and serves as a hidden tax to those Horizon members who will bear the financial cost of the expanded mission and any diversion of the reserves they helped build.

Specifically, Horizon’s reserves act as a safety net to protect our members from unexpected increases in health care costs due to unforeseen circumstances such as pandemics, natural disasters, the introduction of costly new drugs such as the recent Hepatitis C drugs the company spent in excess of $100 million dollars on without any planning, and other unforeseen health care needs and crises. The bill’s provisions that allow for the diversion of reserve funds to the State if reserve levels are deemed “inefficient” would undoubtedly jeopardize the health of the company and the security of the insurance purchased by its 3.8 million customers. In fact, the reserve fund maintained by Horizon only amounts to 75 days in claims payment and is critically important to ensure that we are able to deliver on the promise of financing the health coverage needs of our members. It should be further noted that our reserve funds are among the lowest of any insurer of its size, and for the complexity and breadth of risk it insures. We reiterate that a diversion of the reserve funds for unspecified public health programs removes the security and stability expected by our members, but more importantly burdens our members alone with a hidden premium tax.

It should be also noted that the bill vests the Commissioner of Banking and Insurance with the power to make arbitrary determinations regarding the appropriate reserve levels without being bound by any independent evaluations or recommendations. Moreover, the lack of any benchmarks or guideposts as to what would constitute an appropriate and efficient reserve level based on an unbiased, third-party industry expert exacerbates the arbitrary nature of this bill and the decisions it allows. Most troubling, the costs of an inaccurate determination and biased decision would be borne by our members alone whose premiums will be required to be increased to replenish the reserves swept by the State.

Moreover, the specter of diminished reserves and the obligation to serve as a charity or public health oriented entity would restrict Horizon’s ability to make investments in infrastructure, technology and other measures that improve service delivery to its members. Having fewer dollars to reinvest in the company would inhibit economic growth and innovation by the company, thereby resulting in deteriorating service conditions and poorer health outcomes for our subscribers.

We also ask this Legislature to recognize that Horizon is made up of its members - the 3.8 million people of New Jersey who rely on us, in often their most trying times. At its core, this bill strains the pocketbooks of our members and suppresses the ability of Horizon to deliver affordable quality health insurance. This bill seeks to take Horizon’s reserves, the very money paid by our members, to be used in an unspecified manner. The ripple effect of this “taking” is wide ranging. By weakening our members’ reserves and expanding Horizon’s scope of obligations to the State as a whole this bill will put Horizon at a steep economic disadvantage and saddle our members with higher premiums. Additionally, with the threat of having its members’ reserves diverted for unspecified public health needs, Horizon will be unable to drive innovation and invest in its core business. Placed at a competitive disadvantage due to an unfair financial burden and premium pressures not felt by our competitors, Horizon will struggle to deliver on its ability to carry-out its charted purpose, which is to deliver low cost insurance to the people of New Jersey. This bill simply saddles Horizon with more responsibility, less flexibility, and threatens the continued availability of an affordable quality health insurance option that 1 in 2 New Jerseyans chose for their health care needs.

Next, it should be noted that the bill’s requirement that Horizon serve as the insurer of last resort would conflict directly with the landmark reforms this very Legislature adopted over 25 years ago. It also directly conflicts with the Affordable Care Act. In fact, the notion of an “insurer of last resort" has been obsolete since 1992 in New Jersey and was addressed on a federal level by the 2014 Affordable Care Act market reform rules. Now, every insurer in the individual and group markets offers coverage on a guaranteed availability basis. We are puzzled as to why this bill seeks to reintroduce a concept that is legally obsolete and previously proven to be disastrous.

I respectfully remind this Legislature that it introduced sweeping reforms in this State’s health care system in 1992 including the elimination of “an insurer of last resort” in an effort to stabilize a volatile and failing marketplace. In 1988, the Department of Insurance, as it was then known, hired Ernst & Whinney [predecessor to Ernst & Young] to conduct a management audit of the Company and concluded that the state needed to redefine and reduce the public policy role of the company as the “insurer of last resort “ in order for it to survive. In fact, Horizon was essentially bankrupt in the late 1980’s and early 1990’s, as a result of its status as the insurer of last resort and because it was used as a health care policy arm of the State to singly absorb the financial losses of the individual market while allowing others to turn away members for their health status. The Legislature in 1992 chose to end the Company’s public policy role in this regard and now requires every insurer to cover an individual regardless of his or her health status.

A retreat back to the “insurer of last resort” model would return New Jersey to the past where the marketplace was unstable and the insurer of last resort was nearly insolvent. This bill ignores decades of history and experience with that failed model and puts us on a track to jeopardize the security of the health insurance of millions of New Jerseyans. Unequivocally, saddling Horizon with the insurer of last resort obligation in direct contradiction of the previous studies, this very Legislature’s own actions, and without further consideration on the merits of that concept puts our 3.8 million members at risk.

In addition, S-4 substantially expands Horizon’s statutory mission by requiring it to “assist and support public and private health care initiatives for individuals without health insurance,” “promote the integration of the health care system that meets the health care needs of the residents of the State of New Jersey,” and “recognize an ongoing responsibility to contribute to fundamental improvements in the overall health status of all New Jersey residents.” While these are all laudable goals, it is unclear why Horizon’s 3.8 million members alone must shoulder the burden of paying for these traditionally government sector obligations. Without clarification, this nebulous language could potentially be interpreted to transform Horizon into an instrumentality of the State and may result in the taking of the Company’s private assets and funds into State assets and funds to be used for public purposes. While it is the expectation of our members that their premium dollars are used to serve their health insurance needs as having directly contributed to the reserves, this bill takes those funds into subsidies for the public at large. Furthermore, if the company is to be considered a charitable entity, it should be imbued with the benefits traditionally conferred upon charities. Instead, this bill saddles Horizon with all of the obligations of a charitable institution but does not convey any of the benefits typically afforded them. The bill also places Horizon at a significant competitive disadvantage and diminishes its ability to serve the healthcare needs of its members because it will drive up the cost of doing business and impose new hidden taxes that no other insurers or their members will have to pay.

Like all insurance companies operating in this State, Horizon exists in a very competitive marketplace. When faced with cost increases visited by ill-advised public policies, the company must decide whether to increase costs to its members, cut expenditures through layoffs, outsourcing, or other labor related maneuvers, or adopt some combination of both. Given that S-4 singles out Horizon for disfavored treatment, for-profit out-of-state insurance companies will now have a significant competitive advantage over Horizon, the only health insurance company established in New Jersey and operating solely within the State’s borders. The only possible outcome of this transformation of the marketplace will be increased costs for health insurance statewide and increased instability in the health care economy.

Accordingly, we urge you to vote no on this bill. Thank you for your time and consideration.

Published on: June 27, 2017, 10:48 AM ET
Last updated on: June 27, 2017, 10:50 AM ET

Below is the text of NJ Senate Bill S-4.

https://legiscan.com/NJ/text/S4/2016

SENATE, No. 4

STATE OF NEW JERSEY

217th LEGISLATURE

INTRODUCED JUNE 22, 2017

Sponsored by:

Senator JOSEPH F. VITALE

District 19 (Middlesex)

SYNOPSIS

Clarifies charitable role of health service corporations, revises membership of board of directors, establishes process to determine efficient level of surplus, and requires timely publication of certain information by DOBI.

CURRENT VERSION OF TEXT

As introduced.

An Act concerning health service corporations and the publication of certain health insurance carrier information, amending and supplementing P.L.1985, c.236 and supplementing P.L.1997, c.192 (C.26:2S-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 3 of P.L.1985, c.236 (C.17:48E-3) is amended to read as follows:

3. a. [No] A health service corporation shall not be established as a corporation organized for pecuniary profit. Every health service corporation established pursuant to the provisions of [this act] P.L.1985, c.236 (C.17:48E-1 et seq.) shall be operated for the benefit of its subscribers and shall have a charitable mission. The charitable mission of the health service corporation shall be to:

(1) fulfill its obligation as an insurer of last resort in this State;

(2) provide affordable and accessible health insurance to subscribers;

(3) assist and support public and private health care initiatives for individuals without health insurance;

(4) promote the integration of the health care system that meets the health care needs of the residents of the State of New Jersey; and

(5) recognize an ongoing responsibility to contribute to fundamental improvements in the overall health status of all New Jersey residents.

A health service corporation shall develop goals, objectives, and strategies for carrying out, in accordance with this section, its statutory mission.

b. No person, firm, association or corporation, other than a health service corporation or an insurance company authorized to transact life or health insurance in accordance with Title 17B of the New Jersey Statutes, shall establish, maintain or operate a health service plan. No person, firm, association or corporation, other than a hospital service corporation, a medical service corporation, a dental service corporation to the extent permitted by P.L.1968, c.305 (C.17:48C-1 et seq.), or an insurance company authorized to transact life or health insurance business or the kinds of insurance specified in subsection d. of R.S.17:17-1, shall otherwise contract in this State with persons to pay for or to provide for health services on the basis of premiums or other valuable considerations to be collected by the person, firm, association or corporation from any persons for the issuance of the contracts. This section shall not be construed as preventing the exercise of any authority or privilege granted to any corporation by a certificate of authority issued by the commissioner pursuant to any law of this State, or as preventing any person, firm, association or corporation from furnishing health services required under any workers' compensation law, or law pertaining to health maintenance organizations, or as otherwise provided by law.

c. A health service corporation shall, unless prohibited by the commissioner, offer as an option medical-surgical contracts and dental subscriber contracts which afford subscribers prepaid or postpaid benefits pursuant to which payment is made to participating providers for medical-surgical and dental services rendered by a participating provider network with agreements granting an aggregate differential allowance or discount on charges, as well as a limit on total allowances which may or may not be related to the subscriber's income level, where the aggregate differential or discount on charges and limit on total allowances may be achieved by payment of either the individual provider's actual charge or the health service corporation's allowance on the charge, whichever is less.

d. A health service corporation shall maintain an open enrollment period for coverage to persons who are otherwise unable to obtain hospital, medical-surgical, or major medical coverage in accordance with the provisions of P.L.1992, c.161 (C.17B:27A-2 et al.).

e. No health service corporation shall have the power to underwrite life insurance as defined in Title 17B of the New Jersey Statutes directly, but a health service corporation may, at such time as the aggregate special contingent surplus is greater than 0%, own stock in, control, or otherwise become affiliated with a life, health or accident insurance company organized pursuant to Title 17B of the New Jersey Statutes or under the laws of any other state, provided that the company is admitted in this State.

f. No health service corporation shall solicit subscribers or enter into any contract with any subscriber until it has received from the commissioner a certificate of authority to do so, but if a health service corporation is established by means of the merger of a medical service corporation into a hospital service corporation, which hospital service corporation possesses a valid certificate of authority issued prior to the effective date of [this act] P.L.1985, c.236 (C.17:48E-1 et seq.), the health service corporation thus established need not reapply for a new certificate of authority, but the corporation shall file in the Department of Banking and Insurance any documents relating to the merger, including, but not limited to, information concerning the operation of the health service corporation as set forth in subsection a. of this section, which the commissioner may require.

g. Nothing in [this act] P.L.1985, c.236 (C.17:48E-1 et seq.) shall be deemed to prohibit a health service corporation from contracting with, or paying commissions to, any duly licensed affiliated or independent insurance producer, to the extent permitted by the laws applicable to those producers.

h. On or before June 30, 2019, and annually thereafter, the commissioner shall report to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), on the compliance of a health service corporation with the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

(cf: P.L.1992, c.161, s.18)

2. Section 6 of P.L.1985, c.236 (C.17:48E-6) shall be amended to read as follows:

6. The board of a health service corporation which is formed as the result of a merger between a medical service corporation and a hospital service corporation shall be composed of not more than 15 members. Initially, after the merger has been effected, the board shall be constituted as follows:

a. Four members of the board shall be public members, who shall be appointed by the Governor with the advice and consent of the Senate. The public members so appointed shall be persons whose background and experience indicate that they are qualified to act in the broad public interest, who may or may not have coverage under a contract or contracts issued by the corporation, its subsidiaries or affiliates, and who, or whose spouses or minor children, are not officers, directors or owners of more than 10% of the stock of a corporation whose aggregate sales to hospitals, other health care facilities or other providers of health care services exceed 5% of its total sales. The remaining [eleven] 11 members shall be selected by the board of directors of the health service corporation in accordance with the provisions of its certificate of incorporation and bylaws.

b. Of the initial members of the board, as provided for in subsection a. of this section, one public member and three members selected by the board of the health service corporation shall serve for a term of one year; one public member and three members selected by the board of the health service corporation shall serve for a term of two years; and two public members and five members selected by the board of the health service corporation shall serve for a term of three years. Thereafter, all members of the board shall serve for a term of three years, and shall hold office until their successors are appointed or elected and qualified.

c. After the constitution of the initial board as provided in subsection b. of this section, and as the initial terms expire as provided for in that [section] subsection, the board shall be constituted as follows:

(1) Four members shall be public members of the board appointed by the Governor with the advice and consent of the Senate; [and]

(2) [Eleven] Eight members shall be elected by the board of directors, as provided in the bylaws; and

(3) Three members shall be elected by subscribers of the health service corporation, pursuant to the process established in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

d. The provisions of subsection c. of this section shall not be construed to preclude the reappointment or reelection of any member appointed or elected pursuant to subsection a. of this section.

(P.L.1991, c.208, s.20)

3. Section 7 of P.L.1985, c.236 (C.17:48E-7) is amended to read as follows:

7. a. The board of directors of a health service corporation which is established in accordance with paragraph (1) of subsection a. of section 2 of P.L.1985, c.236 (C.17:48E-2) shall have four public members appointed by the Governor with the advice and consent of the Senate [and eleven] , eight members elected as provided in the bylaws, and three members elected by subscribers of the health service corporation, pursuant to the process established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

(P.L.1991, c.208, s.21)

4. (New section) Within six months of the effective date of this section, a health service corporation shall submit to the commissioner a plan to create a process for three board members of the board of the health service corporation to be elected by subscribers. The plan shall allow every plan subscriber to cast a vote in an election for each of the three subscriber-elected board positions. The election shall not require the physical presence of the subscriber to vote and shall include a mail-in vote option. The plans shall include a process to phase in the three subscriber-elected board members upon the expiration of the terms of current board members. The plan shall ensure that the subscriber-elected board member positions are filled within three years of the effective date of this section. Upon the commissioner's approval of the plan, which shall be no later than six months after the submission of the plan, the process shall become effective.

5. (New section) a. The commissioner shall establish a public process to examine a health service corporation's annual regulatory filings for the prior calendar year, along with such other information as the commissioner may require, to determine an appropriate, efficient surplus range for a health service corporation. The process shall include input from the public including written and verbal testimony, public testimony from health insurance experts determined by the commissioner to be necessary to inform the process, and the opportunity for the health service corporation to respond to such public testimony. Testimony submitted, including the health service corporation response, if provided, shall be made available on the department's website.

b. A health service corporation surplus in excess of the maximum of the range established pursuant to subsection a. of this section, shall be deemed inefficient. The commissioner shall, on an annual basis, examine the surplus amount to determine whether the surplus is inefficient pursuant to this section.

c. (1) If at any time the commissioner determines that a health service corporation surplus is inefficient, the department shall notify the health service corporation and the health service corporation shall, within 90 days of notice from the commissioner, file a report with the commissioner.

(2) The report shall either:

(a) justify, to the satisfaction of the commissioner and consistent with the range established pursuant to subsection a. of this section, that the current surplus level is appropriate and efficient; or

(b) provide a plan to reduce the current surplus level in a manner that results in the surplus being within the efficient surplus range established pursuant to subsection a. of this section. The plan shall include:

(i) proposals to benefit to policyholders; and

(ii) proposals to improve the overall health status of all New Jersey residents by: expanding access to affordable, quality health care for underserved individuals; responding to emerging health care issues in New Jersey; and promoting fundamental improvements in the health status of all New Jersey residents, including but not limited to substance use disorder treatment and prevention, behavioral healthcare, maternal, child and chronic health services, cancer screening, research and treatment, and improving veterans' access to health care.

(3) The commissioner shall review the report and make a determination concerning the surplus. The commissioner may:

(a) approve the surplus level if it is justified consistent with this section;

(b) approve the health service corporation plan to reduce the surplus to an efficient level; or

(c) direct the health service corporation to revise the plan to reduce the surplus to an efficient level.

d. A health service corporation with a previous-year surplus in the efficient range, as established pursuant to subsection a. of this section, shall not include a risk or contingency factor in its filed premium rates unless and until the surplus level is at or below the lower bound of the surplus range.

e. In order to implement the provisions of this section, the department may engage and retain attorneys, appraisers, independent actuaries, independent certified public accountants or other professionals or examiners, at the expense of the health service corporation.

6. (New section) The Department of Banking and Insurance shall publish on its website the annual financial statement of each carrier required to file with the department within 30 days of the receipt of that statement.

7. Sections 1 through 5 of this act shall take effect on February 1, 2018 and section 6 shall take effect immediately.

STATEMENT

This bill makes various revisions to the regulation of health service corporations. The bill clarifies the charitable role of health service corporations, revises the membership of the board of directors of health service corporations, and establishes a process to determine an efficient level of surplus. Specifically, the bill provides for three members of a health service corporation board of directors to be elected by its subscribers.

The bill also requires a public process, including input from experts, members of the public, and the health service corporation, to be established to determine an efficient and appropriate range of surplus for a health service corporation. If a surplus falls above that range and the health service corporation cannot justify the excess, the health service corporation must provide a plan to reduce the surplus level in a manner that results in the surplus being within the efficient surplus range established under the bill.

The plan shall include:

(1) proposals to benefit to policyholders; and

(2) proposals to improve the overall health status of all New Jersey residents by: expanding access to affordable, quality health care for underserved individuals; responding to emerging health care issues in New Jersey; and promoting fundamental improvements in the health status of all New Jersey residents, including but not limited to substance use disorder treatment and prevention, behavioral healthcare, maternal, child and chronic health services, cancer screening, research and treatment, and improving veterans' access to health care.

The bill takes effect on February 1, 2018, except effective immediately upon enactment, the bill requires the Department of Banking and Insurance to publish on its website the annual financial statement of each carrier required to file with the department within 30 days of the receipt of that statement.

" NJ Gov. Christie Wants To Seize ‘Surplus’ Funds From Private, Non-Profit Health Insurer "

He needs the money to buy a truck load of pizzas, and a truck load of ice cream.

Instead of harassing Blue Cross / Blue Shield, Christie should legalize & tax recreational marijuana...

You're earnings should be taxed at 125 percent. If you don't pay you should be sent to gay prison.