President Donald Trump’s federal tax reform has given the state’s largest health insurer a windfall of $550 million, at least half of which it plans to immediately share with its 3.8 million members.
Horizon Blue Cross Blue Shield of New Jersey announced Wednesday that, as a result of the federal tax reform, which eliminated the corporate Alternative Minimum Tax, it anticipates tax credits over the next five years.
Horizon has paid the AMT since 1986, which has resulted in its paying more than what it would have under standard corporate tax rates, the insurer said in a statement. As a result, it has earned credits that have accrued to total $550 million.
Of that, $275 million will be shared publicly. But Horizon doesn’t know how, yet.
“Horizon is entirely focused on serving our 3.8 million members. In keeping with our longstanding mission to operate for the benefit of our customers, this plan seeks to provide to them this year, in the most direct way possible, $150 million in relief. Members will also benefit from the substantial investments this plan makes to expand access to care, improve health care quality and lower costs,” said Kevin Conlin, chairman, CEO and president.
The total will be disbursed over the next five years to the not-for-profit, and it is in discussions with the Department of Banking and Insurance on the options it has to legally share the credit with members.
Of the first $275 million, which Horizon has not yet received from the federal government, $125 million will be dedicated to behavioral health and substance abuse services.
Horizon will rely upon New Jersey health care providers and organizations to help deliver many of the planned initiatives, according to the statement.
What Horizon will do with the remaining half of anticipated tax credits is unclear.
“Horizon will manage the balance of refunds, as they are distributed by the federal government in future years, to benefit our members on cost, quality and the consumer experience,” Horizon said in the announcement.
This is Conlin’s first public action since taking over in January, succeeding Robert Marino.
It’s a touchy subject for the company, which came under attack from former Gov. Chris Christie last year when he tried to take $300 million from Horizon — when Marino was CEO — to use toward covering opioid abuse health services in the state’s budget.
Since then, the company has changed leadership and the state has a new governor.
When asked if the company anticipates a resurgence of interest from the state government, Horizon said no.
“That debate appears to have been settled with the enactment of S-2, which affirmed that Horizon operates for the benefit of our policyholders,” said spokesman Kevin McArdle.
Murphy came out against the move by Christie last year.
“I commend Horizon Blue Cross Blue Shield for reinvesting these profits into New Jersey through efforts such as increasing access to primary care in underserved communities, more fully connecting their members to behavioral and mental health programs, and strengthening substance abuse prevention,” Murphy said in a statement Wednesday.
“They are setting the bar for how corporations can responsibly reinvest in our communities.”