NJ sued over Horizon reorganization plan as defenders warn it could force bounty hikes

NJ sued over Horizon reorganization plan as defenders warn it could force bounty hikes

The Murphy administration failed to adequately protect the interests of Horizon’s 3.6 million policyholders when it approved the $13 billion insurance company’s corporate reorganization last month, according to a lawsuit filed Tuesday by consumer advocates and a union.

The Health Care Workers Union, Allied Healthcare Professionals and Employees, consumer advocacy group Citizen Action New Jersey and New Jersey public interest law firm Appleseed are seeking to overturn the Nov. 1 decision of State Banking and Insurance Commissioner Marlene Caride approving Horizon’s application to convert from a not-for-profit health services organization to a not-for-profit mutual holding organization.

The lawsuit argues that Caride rushed the approval process and did not dig deep enough to prove Horizon’s commitment that policyholders would be protected from steep premium hikes and that Horizon’s charitable assets are protected. .

“We are filing this lawsuit to protect the insurer, to ensure the entity’s charitable assets are properly used and protected, and to protect millions of New Jersey’s health care policyholders,” said Maura Collinsgru, director policy and advocacy for New Jersey Citizen Action. .

State approval allows Horizon to operate more like its for-profit competitors by creating for-profit subsidiaries and investing money in new technologies to track members’ health, or buying a chain of medical offices, among other options. Horizon was authorized to spend $300 million for these unspecified investments.

In exchange for Horizon’s reorganization approval, the company pledged to pay the state $1.25 billion over 25 years to soften the blow of the loss of other tax revenue that the company based in Newark provided, including $600 million up front.

The Healthcare Professionals Union and Citizen Action, which are covered by Horizon, argue that Caride did not dig deep enough to verify Horizon’s claims that policyholders would not see premiums rise as a result of the change. How could Horizon so easily part with $900 million of its reserve without impacting policyholders, the lawsuit asks.

“The State of New Jersey is putting policyholders at risk without exercising due diligence to ensure that this decision by Horizon Blue Cross Blue Shield, our largest insurer, is in their best interests,” said the president of the union Debbie White, RN. “We believe that the Banking and Insurance Department moved too quickly and that this decision should not be rushed. We must have all the necessary information before determining that this is a wise decision.

Horizon is New Jersey’s largest insurer. It covers 3.6 million New Jersey residents, one in three of whom are poor and have coverage under NJ FamilyCare, the state’s Medicaid program.

The lawsuit asks a state appeals court to overturn the Murphy administration’s approval of Horizon’s corporate change. Horizon is not the target of the litigation.

Spokespersons for the governor and commissioner declined to comment on the lawsuit, as did Horizon spokesman Tom Wilson.

Approval of Caride – following a two-year law signed by Murphy that paved the way for Horizon to change its governance structure.

Caride’s approval comes with certain conditions. Horizon must wait three years after using the $300 million credit to pay any future dividends. Horizon must also maintain minimum levels of cash and other assets and regularly report its level of capital at risk to the state.

Manatt Health, a consultant hired by the state to assess the impact of the reorganization, said in a report that Horizon must continue to make charitable investments in nonprofit and government entities that rely on its help.

Our journalism needs your support. Please subscribe today to NJ.com.

Susan K. Livio can be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio.

#sued #Horizon #reorganization #plan #defenders #warn #force #bounty #hikes

Leave a Comment

Your email address will not be published. Required fields are marked *