“Horizon would be run as an arm of DOBI and the State of New Jersey”

In a letter sent this morning to Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto, Scott P. Serota, President and CEO of the Blue Cross Blue Shield Association (BCBSA), raised several objections to Governor Christie’s proposal to raid Horizon’s reserves, stack Horizon’s board with political appointees and give the Commissioner of the Department of Banking and Insurance (DOBI) so much authority and discretion that it would result in Horizon being “run as an arm of DOBI and the State of New Jersey."

Serota said the bill’s approach “goes significantly beyond what is typically required by other states” and creates “the precise type of situation the license agreements prohibit to safeguard licensees’ independence and ability to compete in the marketplace.”

"The proposed bill could jeopardize Horizon's ability to meet its claim obligations to its members and threaten payments to providers” wrote Serota. He added the bill does, “not specify definitive standards to objectively determine whether or not they have been met and could result in subjective, politically driven determinations. Such vague language would create an extremely uncertain regulatory environment for Horizon to which no other competitor would be subject.”

“This is further confirmation that the Governor’s proposal amounts to a state takeover of Horizon that would amount to a government takeover that puts politicians in charge of the insurance that protects the health of 3.8 million New Jerseyans,” said Kevin McArdle, Horizon spokesman. “This isn’t about transparency, this is about giving politicians and political bosses a new piggybank and patronage pit. It is an unprecedented power grab that will hurt the very consumers Horizon has worked to serve for 85 years.”

BCBSA owns and licenses the Blue Cross and Blue Shield trademark and establishes and enforces the rules governing the conduct of the independent licensees. Serota He also warned the leaders that the Commissioner’s wide discretion to revoke the State Certificate of Authority would, if exercised, “automatically terminate” Horizon’s BSBSA license rights with devastating consequences to Horizon policyholders and network providers and require Horizon to pay a termination fee “exceeding $400 million” to the BCBSA. “A termination would immediately result in the loss of Horizon's right to use the BCBS Brand.”