The Bergen Record ran an editorial about Horizon BCBSNJ's conversion. A number of statements were inaccurate or based upon a misunderstanding of Horizon BCBSNJ’s business. Horizon BCBSNJ has answered those inaccurate statements below: 
 
Record Editorial: "Those are the hundreds of thousands of people who depend on Horizon Blue Cross Blue Shield as the insurer of last resort for affordable health coverage." 
 
Response: In 1992, the State Legislature effectively eliminated an insurer of last resort in this state. Now, all insurers who sell individual health policies are required to sell to any individual regardless of his or her health condition. Therefore, the Record Editorial statement above is inaccurate.
 
Prior to 1992, Blue Cross and Blue Shield of New Jersey (as it was then known) was the sole insurer of last resort. Horizon BCBSNJ is not the insurer of last resort today. 

 

Record Editorial: "It's tempting that the conversion would add $1 billion or more to the state treasury, to be used for affordable health care. That's attractive to a cash-strapped state, but it's only one consideration of many." 
 
Response: The above statement is not accurate. The state's conversion law requires the creation of an independent foundation to receive 100% of the fair market value of Horizon BCBSNJ upon conversion. The proceeds of the conversion DO NOT go to the state treasury. Moreover, the conversion law specifically provides that the proceeds must be used for "purposes of expanding access to affordable, quality health care for underserved individuals and promoting fundamental improvements in the health status of all New Jerseyans."

 

Record Editorial: "Why wouldn't rates go up following a conversion? Wouldn't a for-profit entity owe more allegiance to shareholders than to policyholders?" 
 
Response: The above statement reflects a misunderstanding of the competitive market for health insurance. Premium rates are not affected by the company's not-for-profit or for-profit status. Premiums are set in the competitive market, and are not affected by an insurer's corporate form. If any health plan (for-profit or not-for-profit) were to charge premiums above the competitive market level, it would lose business.
 
Moreover, health insurance premiums are a reflection of the underlying costs of health care, which rises every year. As those costs increase, so do premiums. This is not a function of an insurer's corporate form.
 
In other states where Blue plans have converted, premiums have not gone up. 

The Press of Atlantic City interviewed Etti Baranoff, associate professor of insurance and finance at Virginia Commonwealth University, and reported she said: By making the company public, there would be more incentives for Horizon to be a more modern and sophisticated company. For Virginia, it hasn't impacted rates, but if the co-pays for specialists and emergency room visits go up, people should begin asking questions. 'In my mind, there shouldn't be any fear of rate increases,' she said, referring to monthly payments. (8/16/08, Press of Atlantic City article: Horizon Blue Cross applies to become for-profit insurer) 

 

Record Editorial: "As of now, Horizon NJ Health is the state's primary insurer of Medicaid and FamilyCare clients. That kind of coverage isn't necessarily profitable, but it serves an essential purpose as a safety net." 
 
Response: This statement is a misunderstanding of Horizon BCBSNJ's business. A decision whether or not to continue to participate in government-run programs is not dependent upon Horizon BCBSNJ's status as a not-for-profit or for-profit company. If state government adequately funds Medicaid and FamilyCare, Horizon BCBSNJ will continue to participate in those programs. 

It must be understood that Horizon BCBSNJ could not stay in a government program that is losing money even as a not-for-profit. To do so would require other members to subsidize the government program members' health care. This would essentially amount to a tax on our individual, small group and other private sector members. Furthermore, staying in a government program that is consistently under funded would undermine the company's strength, which could harm all of our members. This is the case whether Horizon BCBSNJ remains not-for-profit or converts to a for-profit health insurer.