Legislation has been introduced that would turn Horizon Blue Cross Blue Shield of New Jersey into a not-for-profit mutual and have it adopt the same corporate form as Blue Cross Blue Shield plans in 18 other states.
According to the Newark-based health insurer, the new corporate form would preserve Horizon’s obligation to operate for the benefit of its members and its historic not-for-profit status, while allowing the company to better respond to a rapidly evolving health care marketplace by permitting increased investments in new technologies and innovations that positively impact members and the state economy.
What does this all mean? The company released the following Q&A statement as an explainer. Please remember all questions and answers come from Horizon BCBSNJ.
1. What is the change being proposed by Horizon Blue Cross Blue Shield of New Jersey?
Horizon BCBSNJ is pursuing an effort to modernize our corporate structure to a not-for-profit mutual holding company. This is a technical change to how we are legally organized that will better enable us to deliver on our member-focused mission and drive the future of health care forward in New Jersey. Part of this change will be an update to modernize an outdated law dictating our structure.
The proposed change is a common structure adopted by many others. Blue Cross Blue Shield plans in 18 other states are organized as a mutual company. Horizon has decided to evolve to a not-for-profit mutual in order to be more responsive to our customers’ changing needs and empower them to achieve their best health.
2. What will change in this new form?
We will continue to be a not-for-profit, and our core health insurance business will remain the same. Modernizing Horizon’s corporate form better positions us to make health care work the way our members want it to by gaining greater strategic and operational flexibility to deliver on those needs.
With greater strategic and operational flexibility, we will be able to accelerate innovations that improve health care quality, cost and convenience. By doing so, we will also preserve and strengthen our 87-year legacy as a New Jersey health insurer that is not-for-profit and therefore focused on its members rather than on shareholders, as is the case with for-profit insurers.
3. Why does Horizon BCBSNJ need to change its corporate form?
Our current corporate form as a health services corporation has served us well for many decades, but it was built for a different time. As health care continues to evolve, so do our customers’ needs and expectations. Today, that means lower costs, more connected care and less confusion. But change is accelerating faster than in times past, and our customers expect our solutions to keep pace by investing in key member-focused technologies and tools that improve the quality of care — the pace and scale of our investment have been limited by our corporate form.
Restrictive rules that are unique to Horizon control how much the company can invest in our members’ health — including in ways that would allow us to keep health care costs under control and bring better health outcomes to New Jersey residents.
Restrictions that currently apply to Horizon:
- Strict limits on the size of investments we can make — no matter how beneficial to our members;
- A ceiling on the mix of business outside of traditional commercial insurance services — even from critically important state services, such as Medicaid, and senior care, such as Medicare;
- A much higher tax rate on our members’ premiums compared to other insurers doing business in New Jersey.
By evolving to a not-for-profit mutual company, Horizon can shed these restrictions and invest more on behalf of our members to drive the future of health care forward in New Jersey.
4. How will changing to a not-for-profit mutual allow you to better serve your members?
Modernizing Horizon’s corporate form better positions us to make health care work the way our members want it to. With greater strategic and operational flexibility, we will be able to accelerate investments in technologies and innovations that improve health care quality, cost and convenience.
We are exploring investments in multiple areas:
- Member-facing technologies such as health care wearables, expanded telemedicine including access to mobile behavioral health consultations, mobile pharmacies and other innovations that will make our members’ experiences easier, faster and more affordable;
- Additional products and services for our members such as dental plans, greater senior care, student insurance and stop-loss;
- Programs for underserved populations including joint ventures to deliver care to underserved communities (e.g., programs to address social determinants of health) and behavioral health initiatives;
- Data and analytics for providers we do business with, to further affordability and quality of care, as the industry moves toward value-based payments and more integrated care;
- Medicare Advantage and other senior care solutions to expand our reach and offerings to New Jersey’s senior population.
5. How will a change to your corporate structure better serve the state of New Jersey?
As an anchor institution in New Jersey, we care about improving the health of New Jersey residents and also the economy. We are proud to employ more than 5,000 people. Through this modernization, we would be able to further expand our contributions to the state, while also serving members and contributing to the innovation economy. Independent research firm Econsult Solutions Inc. projects the added flexibility from this modernization will raise economic output, employment and tax revenues across the state.
In fact, similar changes in other states like Florida and Michigan saw increased employment. Additionally, the rate of uninsured residents in both Florida and Michigan decreased faster than the national average.
6. Why modernize Horizon’s corporate structure now?
Our current corporate form was created decades ago. Today, change is accelerating faster than in times past, and our customers expect our solutions to keep pace. That means it’s time for the next step in our evolution.
In the last decade, there has been a dramatic shift in how we interact with health care providers and how we use data. There is also greater demand for lower costs, more connected care and less confusion. Health care has also experienced the:
- Prevalence of mobile technology and enhanced focus on consumerism: Today, an estimated 65% of all interactions with health care facilities are via mobile devices, and consumers continue to demand greater convenience and ease of access to care.
- Exponential growth of health data: It is estimated that, by 2020, the volume of health-related data could reach 40 trillion gigabytes. This new data is changing the way doctors look at and treat diseases, including making it possible for insurers, doctors, hospitals and consumers to stay connected in new ways.
- Rising costs: New Jersey residents have experienced this shift firsthand. Health cost expenditures in New Jersey reached $6,200 in 2016, the fifth-highest in the United States. The demand for affordable, high-value health care continues to increase.
As New Jersey’s not-for-profit health insurer, we have already made critical investments to meet our members’ needs, but to keep pace and deliver on our members’ expectations we need to do more. A not-for-profit mutual holding structure will provide us with the strategic and operational flexibility to accelerate investments in technologies and innovations that improve health care quality, cost and convenience. It will also allow us to remain a not-for-profit and continue to exist for the benefit of our members, our No. 1 priority, as opposed to shareholders, as is the case with for-profit insurers.
7. What is the process for this proposed new corporate form?
Evolving Horizon BCBSNJ’s corporate form means creating new legislation. Under this plan, Horizon’s corporate structure would move from a not-for-profit health services corporation to a not-for-profit mutual holding company that continues to exist for the benefit of our members. This is a technical change to a type of corporate structure that has already been put in place by Blue Cross Blue Shield plans in 18 other states.
8. Will this change member benefits? Will members still be able to use their doctors and hospitals?
The corporate form change will not affect our members’ health plan benefits and current choices of doctors and hospitals. But, modernizing Horizon’s corporate form better positions us to make health care work the way our members want it to — providing access to new services and technologies.
9. Will this change the products and services you offer?
Current products and services will not be affected. Under the new corporate structure, we will be more agile, with greater strategic and operational flexibility to invest in new technologies and offer health-related products for the ultimate benefit of our members. That will enable us to offer more products and services beyond traditional insurance offerings over the long term.
We are currently exploring investments in member-facing technologies such as wearables; additional products and services such as dental and student insurance; programs for underserved populations, including in critical areas such as behavioral health initiatives; improved data and analytics for providers; and expanded Medicare Advantage programs.
10. Will this raise premiums?
No, this change will not affect premiums. Our goal is that longer-term, our ability to make greater investments in important health care solutions will help improve service and quality and keep premiums affordable.
11. Will this change the way Horizon works with my doctors and hospitals?