Horizon Blue Cross Blue Shield of New Jersey Executive Chairman Kevin Conlin began making the case to legislators Tuesday that the insurer should be allowed to reorganize as a not-for-profit mutual holding company.
Conlin, appearing in a Zoom conference with the Assembly Financial Institutions and Insurance Committee, said allowing Horizon to change its corporate structure would enable the organization to better serve its customers.
With more than 3.6 million covered lives, Horizon easily is the biggest health insurer in the state. But it is one, Conlin argued, that cannot react rapidly to changes in customer needs or technological updates in the marketplace.
“It was evident even before COVID-19 changed our lives that health care is rapidly changing,” Conlin said in a prepared statement. “Private equity and the large, publicly traded for-profit health insurers are moving in to aggregate technology assets.
“Some have even moved into the provider space. Innovators and disruptors — companies like Amazon, Google and Apple — see widespread opportunity in health care. Given how few structural barriers these for-profit insurers and tech companies face, they have been able to move quickly to engage select opportunities and populations — all of which they can pick and choose.
“Some of these tech giants and competitors have also dramatically reshaped consumer behavior and expectations. Consumers now routinely use their phone to pay their bills, order their groceries or video chat with family and friends. Even in health care, consumers are demanding more. They want high quality care that is more convenient, more connected and more affordable.”
Conlin said Horizon must change to meet — and match — this coming change. It is a difficult balancing act, he said.
“Unlike our for-profit competitors, who focus on delivering value to their shareholders and make decisions based on financial reward, Horizon is a New Jersey-based not-for-profit,” he said. “Our focus is on delivering value for our members, not shareholders. How does that difference play out? Two of the most challenging insurance markets paint a clear picture.
“Faced with difficult market conditions that threatened profitability, many of the for-profit insurers stopped offering plans on the Affordable Care Act exchange that cover more than 300,000 New Jerseyans. Horizon remained and responded by developing new, high-quality products that actually lowered the cost of coverage. Similarly, while the national for-profits cherry picked their way across the state offering Medicaid coverage in only the counties they choose, Horizon offered a Medicaid option in every ZIP code across New Jersey.”
Opponents of the proposal, which has been around for more than a year, argue Horizon is asking for the change to become more of a for-profit entity.
Conlin said the insurer’s goal is to better serve its customers.
Horizon, currently organized as a not-for-profit health service corporation under the Health Services Corporation Act, is limited to using only 2% of its reserves for investment in any one entity, regardless of the benefits — or cost savings.
“The change Horizon is seeking — and the reason we are before you today — is to continue to create real outcomes for real people: for our 3.6 million members,” Conlin said. “It’s about creating a better Horizon.”
“A better Horizon means the ability to deliver on programs and services that improve the lives of real people.”
Conlin then detailed what that would mean, saying it would bring lasting investments in health programs that benefit the communities we serve.
Conlin said Horizon launched the largest and most comprehensive social determinants of health program in New Jersey earlier this year, investing $25 million and partnering with many of the state’s top health care organizations to deploy Community Health Workers to help address challenges historically considered beyond the reach of health care.
Conlin said the insurer launched Horizon Neighbors in Health with the goal of helping 24,000 members over the next three years. He said, to date, Horizon has signed up more than 1,500 members and hired 60 program employees.
“Horizon’s current corporate structure imposes restrictive rules unique to Horizon and controls how much the company can invest to improve our members’ health and to drive innovation, quality and efficiency in health care delivery,” he said. “We are limited by state law in how much we can invest in programs, no matter how successful or impactful they are.
“Even with this change, we will remain a not-for-profit, charitable and benevolent company. Our mission, and our unique commitment to members and New Jersey, will not change.”
A change in form would have to be passed by the Legislature and signed by Gov. Phil Murphy. Tuesday’s presentation is the first of many discussions.