On August 22, 2008, an Op-Ed from Raj Gupta, President of the Medical Society of New Jersey, appeared in the Daily Record addressing Horizon Blue Cross Blue Shield of New Jersey’s conversion. In order to further the public deliberations, we offer the following responses to clarify inaccuracies in Dr. Gupta’s Op-Ed:

 

Dr. Gupta: “If it is granted this opportunity, it will have to set up a foundation to repay the state for its years of tax forgiveness. Presumably, this foundation will be dedicated to improving health care for New Jersey.” 
 
Answer: The conversion law requires the creation of an independent foundation that is to receive 100% of the stock of the health service corporation upon conversion. 
 
The proceeds of Horizon BCBSNJ’s conversion are required by law to 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." 
 
State law, therefore, requires the proceeds of conversion be used for health care. 

 
Dr. Gupta: “Many to whom I speak with predict that the nominal $1 billion Horizon says it will pay back to create this foundation will be dedicated to the Legislature's Universal Healthcare plan to provide coverage for the uninsured... However, $1 billion is too little to make this plan work.”  
 
Answer: The market, not Horizon BCBSNJ, will determine the value of the company. Horizon BCBSNJ specifically has said its conversion could generate MORE THAN $1 billion. 
 
Under the conversion law, 100% of the stock of Horizon BCBSNJ will be placed with the independent foundation upon conversion. Whatever the market determines to be the value of Horizon BCBSNJ at that time will go to the independent foundation. This value will be dedicated to improving New Jersey’s health care system. 
 
The Trustees of the independent foundation will have the authority over how to spend the proceeds of conversion to meet the statutory requirement that the money be used for health care. Horizon BCBSNJ will not decide how the proceeds are used. 

Dr. Gupta: “Horizon may tell us that the $1 billion will be paid out over three years.”  
 
Answer: This is not accurate. Horizon BCBSNJ is not paying any money to the foundation. Under the conversion law, 100% of the stock of Horizon BCBSNJ will be placed with the independent foundation upon conversion. The Trustees of the foundation will determine how much of that stock will be sold and when it will be sold. Horizon BCBSNJ specifically has said its conversion could generate more than $1 billion. 

 
Dr. Gupta: “I find difficulty in believing that one of the reasons Horizon is seeking to become a for-profit company is to aid and assist New Jersey's neediest. On the contrary, becoming a for-profit company provides Horizon executives the potential to join the ranks of New Jersey's wealthiest.”  
 
Answer: Horizon BCBSNJ has listed a number of reasons why it is exploring conversion at this time. The possibility of generating more than $1 billion to improve our state’s health care system is just one benefit of many that can be achieved through conversion. 
 
Additionally, Horizon BCBSNJ’s conversion is in the public interest in that it will make the company more efficient and competitive. Our health care system is in a period of rapid transformation and many current health care reform proposals will significantly affect the health insurance industry. 
 
At the same time, employers, members, and health care professionals are demanding enhanced services from health insurers. Employers are demanding sophisticated analysis of the employees in order to develop customized health and wellness programs to keep medical costs down. Members are demanding more real-time information on the cost and quality of hospitals and physicians as well as information on health and wellness and claims status. Hospitals, physicians and health care professionals are demanding more efficient transactions with more online, real-time processing and payment. 
 
As a public company with access to the capital markets, Horizon BCBSNJ will have greater flexibility to invest in and acquire new capabilities and technologies to better serve the changing needs of our members and network physicians, hospitals and other health care professionals. 
 
For more than 75 years, millions of New Jersey residents have trusted Horizon Blue Cross Blue Shield of New Jersey to be there when they needed us most. We feel a special obligation to maintain that trust and to continue to be there when we’re needed. That’s why we are exploring conversion. 
 
The rigorous public process required for Horizon BCBSNJ’s conversion is a great opportunity for the people of New Jersey to determine how best to utilize resources to improve our health care system. We hope the Medical Society of New Jersey will take this opportunity to engage in meaningful deliberation and objective consideration of what would be best for the people of our state. 

Dr. Gupta: "Is Horizon's conversion really in the best interest of the people of New Jersey?"  
 
Answer: Yes. Horizon BCBSNJ’s conversion is in the public interest as required by the state’s conversion law. 
 
The people of New Jersey are the biggest beneficiary of Horizon BCBSNJ's potential conversion because it unlocks the value of the health service corporation for the purposes of improving the state's health care system. 
 
The conversion law requires the creation of an independent foundation that is to receive 100% of the stock of the health service corporation upon conversion. 
 
It is estimated that the sale of Horizon BCBSNJ's (or its parent company’s) capital stock in the public markets after conversion could raise more than $1 billion for the independent foundation. This money is required by the conversion law to 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." 
 
Additionally, Horizon BCBSNJ’s conversion is in the public interest in that it will make the company more efficient and competitive. Our health care system is in a period of rapid transformation and many current health care reform proposals will significantly affect the health insurance industry. 
 
At the same time, employers, members and health care professionals are demanding enhanced services from health insurers. Employers are demanding sophisticated analysis of the employees in order to develop customized health and wellness programs to keep medical costs down. Members are demanding more real-time information on the cost and quality of hospitals and physicians as well as information on health and wellness and claims status. Hospitals, physicians and health care professionals are demanding more efficient transactions with more online, real-time processing and payment. 
 
As a public company with access to the capital markets, Horizon BCBSNJ will have greater flexibility to invest in and acquire new capabilities and technologies to better serve the changing needs of our members and network physicians, hospitals and other health care professionals.