While NJHA has not yet taken a position on the issue, key questions that need to be considered if Horizon proceeds with its application include: 
 
Is the conversion in the public interest, as the statute requires? 
 
Answer: Yes. Horizon BCBSNJ’s conversion is in the public interest as required by state 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. Horizon BCBSNJ’s conversion potentially could generate more than $1 billion to be dedicated to improving our state’s health care system without raising taxes.
 
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.

Will a conversion of the state's largest non-profit insurer to a publicly traded company raise the rates New Jerseyans pay for health insurance - already the highest in the country - even further? Will it lead to lower payments to beneficiaries and providers? 
 
Answer: Health insurance premiums are a reflection of the underlying costs of health care (e.g., hospital costs, physician costs, utilization, new medical technology, and prescription drug costs). As these underlying costs rise, so do health insurance premiums. Whether Horizon BCBSNJ remains a health service corporation or becomes a for-profit health insurer, health insurance premiums will be a function of the underlying cost of health care.
 
Therefore, health insurance premiums will not rise because Horizon BCBSNJ converts to a for-profit health insurer. Health insurance premiums will continue to rise as the underlying costs of health care rise.
 
New Jersey is a competitive health care market. Horizon BCBSNJ must provide quality and affordable health care products and services or it will lose customers.
 
Similarly, Horizon BCBSNJ will have to continue to balance the needs of its network hospitals and physicians for fair reimbursement for their quality services with its members’ need for access to affordable health insurance products and services. This will not change upon conversion.
 
"'Across the U.S., there has not been a displacement of customers or an increase in rates as many had feared,' said Dave Knowlton, president and CEO of the New Jersey Health Care Quality Institute." (8/16/08, Press of Atlantic City, Horizon Blue Cross applies to become for-profit insurer) 

"Baranoff [Etti Baranoff, associate professor of insurance and finance at Virginia Commonwealth University] 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, Baranoff said, 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,' said Baranoff, referring to monthly payments." (8/16/08, Press of Atlantic City, Horizon Blue Cross applies to become for-profit insurer) 

Would Horizon's conversion to a for-profit company, combined with its market share, give it monopoly-like power in the New Jersey market? And if so, what can be done to prevent such an outcome? 
 
Answer: Corporate form does not affect the market share of a company. In a competitive market such as New Jersey, market share is determined by the health insurer providing the best products and services at the most affordable costs. Horizon BCBSNJ will continue to provide quality products and services at the best possible cost after conversion.
 
Additionally, the health insurance market in New Jersey is heavily regulated. There is no risk of Horizon BCBSNJ becoming a monopoly given the fact that more than 50% of the market is insured by other, for-profit health insurers, including some of the biggest insurers in the nation such as Aetna, CIGNA, and United Healthcare. 

 
Will a for-profit Horizon, responding to shareholder expectations, reduce or eliminate coverage for children and families enrolled in Medicaid, FamilyCare and small business plans and for other vulnerable populations such as the mentally ill, as has happened in other states where plans have converted to for-profit companies? 
 
Answer: A decision whether or not to continue to participate in government-run programs is not dependent upon Horizon BCBSNJ's status as a non-profit or for-profit company. Provided the 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. 

 
Concerns are already being raised about the inadequacy of Horizon's provider networks. Will these concerns be considered and addressed as part of the conversion review process? 
 
Answer: Horizon BCBSNJ, as the state's largest health insurer, has extensive provider networks. Horizon BCBSNJ welcomes a review of its networks. 

 
Horizon's market share will make it a likely acquisition target for out-of-state insurance companies. What would the impact of such an acquisition be on competition, access to care and premium rates? 
 
Answer: Horizon BCBSNJ is not in discussion with any company seeking to merge or be acquired. 

 
What can be done to insure that "insiders" to the conversion process don't reap windfall benefits from the new for-profit company? 
 
Answer: State law prohibits Horizon BCBSNJ management and the company’s Board of Directors from obtaining any stock in the company for 12 months after the conversion. 

 
What will come of the charitable asset generated by the conversion? Will it be devoted to ensuring expanded access to health care, as the statute requires, or will the state do an "end-run" and divert the funds to non-health purposes? 
 
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.
 
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." 

State law requires the proceeds of conversion be used for health care. 

After similar review, regulators in Washington, Maryland, Alaska and Kansas all rejected conversions of their Blue Cross Blue Shield plans to for-profit companies. New Jersey regulators need to scrutinize the Horizon application with the same level of detail and openness in determining whether approving it would truly serve the public interest in New Jersey. 
 
Answer: There have been 13 states where Blue plans have successfully converted to for-profit health insurers.