Now is not the time to drain funding from the state’s largest insurer

Editor’s note: Senators Anthony Bucco (R-25) and Gerry Cardinale (R-39), members of the Senate Commerce Committee, and Senate Republican Budget Officer Steven Oroho (R-24) sent the following letter to Gov. Phil Murphy on Dec. 12 expressing concerns for taxpayers and ratepayers and seeking information related to legislation that would restructure Horizon Blue Cross Shield of New Jersey, the largest health insurer in the state.

Dear Governor Murphy,

We are writing you to express our fundamental concerns with, and many questions about, legislation that, among other provisions, will quickly drain $600 million in reserves from the state’s largest health insurer to prop up the State’s upcoming election year budget. This legislation will have significant impacts on the care provided to, and premiums charged on behalf of, millions of New Jersey citizens that receive health benefits through local governments, small businesses, and other employers struggling through the COVID-19 pandemic.

It has been reported that your office has been intricately involved in drafting the legislation and amendments reportedly being advanced next week. Therefore, it is imperative that your administration respond to our concerns and address the questions that pertain to how your administration will implement the bill, prior to scheduled committee votes Monday and Tuesday — despite no legislators having seen the final version of what will be considered. Fundamental concern one: This legislation will require Horizon Blue Cross Blue Shield to transfer $600 million to the State’s General Fund in the next budget. This drain of funding from the state’s largest insurer is at the inopportune time when the health care system is facing the greatest health crisis and potential costs in a century.

It has been suggested that the $600 million is not needed by Horizon Blue Cross Blue Shield to ensure quality health care and the payment can be sustained. The amount is obviously arbitrary and has not been built up as a reserve without reason. We are concerned about supporting legislation that drains these funds without assurances that local property taxpayers and small businesses will not see increase in their premiums to rebuild reserves in the future.

We have requested financial information from Horizon Blue Cross Blue shield demonstrating the future impact to ratepayers and on their reserves due to the one-time payment, but they have provided limited information. Your administration has the ability to review their reserves and the impact of this $600 million dollar drain that we do not have. We request that you use that ability and provide public guidance on the impacts before this bill is considered further. We want assurances from you that this drain of funds will not put added costs on already struggling property taxpayers and small businesses.

Fundamental concern 2: If it is determined that there is some amount of funding — whether it be $600 million or some other amount — that can be drained from Horizon Blue Cross Blue Shield, we believe strongly that these funds should not simply be diverted to the state’s General Fund to prop up a structurally unsound state budget. We feel strongly that these funds should be placed in a segregated account and that they should be used for the purpose of improving the quality and efficiency of health care — especially for those people in our state who have been denied quality and efficient health care in the past.

It is fundamentally unfair to take money from people who have paid high premiums to prop up the state budget when those funds were paid for a reason — to receive quality health care for consumers. In addition to these two fundamental concerns that we want addressed prior to voting on this legislation, we have many questions about the impacts that this legislation will have on the risks, business practices, and financial investments by our state’s largest insurer. We do not doubt that some advocates of this legislation sincerely believe that these changes will allow our largest insurer more flexibility to appropriately deliver a quality and more efficient product. And we may agree with that position if we receive additional information. In fact, the health insurer has asked for these changes and has explicitly stated that they will provide for better and more efficient health care. And they have stated that there will be adequate state oversight through the Department of Banking and Insurance that will protect consumers from unnecessary risks or self-interest.

Due to the complex nature of this legislation and your administration’s responsibility under its provisions to provide the regulatory framework to make it work, we want to receive answers from your administration about how you intend to enforce its provisions and whether the representations made by our state’s largest insurer are accurate. To that end we are attaching a list of questions that we want answers to prior to voting on this legislation. We understand the long history of governors rarely discussing pending legislation. However, in this case your administration has reportedly helped draft this bill and yet there have been little to no public comments by your administration about it. That is unacceptable to us. It is unacceptable to the public.

We look forward to receiving your comments about our two fundamental concerns and the many questions we have shared. Thank you for your time and consideration of this matter.

Senator Anthony Bucco, Member, Commerce Committee

Senator Steven Oroho, Republican Budget Officer

Senator Gerald Cardinale Member, Commerce Committee