Blue Cross in crosshairs as Christie and lawmakers wrangle over budget issues

TRENTON — New Jersey lawmakers plan this week to take up a budget for the fiscal year that begins Saturday, but looming over the $36 billion spending proposal is a heated debate over the state's largest health insurance company.

Gov. Christie last week renewed his push for Horizon Blue Cross Blue Shield of New Jersey to set aside some of its surplus for drug treatment of the poor and uninsured. On Sunday, lawmakers announced legislation that would establish a process for Horizon to dedicate its "excess" surplus to benefit policyholders and the public. It would take effect in February, after Christie leaves office.

The bill "would impose sweeping new mandates upon Horizon alone that would fundamentally alter the way the company operates and would significantly disrupt the health-insurance coverage of 3.8 million residents as well as the health-care delivery systems across the state," Michele S. Jaker, the company's director of government affairs, told the Senate Budget Committee on Monday.

This disruption "would only serve to compound the already chaotic legislative and regulatory environment enveloping the health-care industry due to 'repeal and replace' activities going on in Washington, D.C., today," she said.

Rates would go up for policyholders in 2018, Jaker said, because the company would have to account for its new status as a charitable organization and the state's insurer of last resort. And the Blue Cross Blue Shield Association said the bill could threaten Horizon's Blue Cross license, hurting policyholders, as they would lose access to its national network of doctors.

The Senate Budget Committee voted, 11-1, with one abstention, in favor of the legislation Monday night, even as a separate panel voted to approve the nominations of two new members to Horizon's board, including Michele Brown, a longtime Christie ally. The nominations head to the full Senate for a confirmation vote.

The legislation does not include Christie's proposal to add new political appointees to the nonprofit insurer's board, but it does call for three members to be elected by policyholders, instead of by Horizon's 15-member board. It would also require the state to make public Horizon's annual financial statements.

Some Democrats want to appease Christie, a Republican, so that he signs off on their legislative priorities, most notably a school-funding deal that would give $146 million to underfunded school districts, in part by redistributing aid from other districts that receive more aid than New Jersey's funding formula says they should. In addition to Horizon, Christie's other chief priority is transferring the state lottery to the pension system — a proposal that has more support in the Legislature.

Christie leaves office in January. With a gubernatorial election and all 120 seats in the Legislature up for election in November, the governor will be a lame duck after the budget is signed. That makes this week perhaps the last consequential days of his governorship; the constitution requires the state pass a balanced budget by the end of the fiscal year.

Senate President Stephen Sweeney (D., Gloucester) has said he would not pass a budget that does not include a school-funding revamp, raising the prospect of a government shutdown if Christie and the Democratic-controlled Legislature can't reach an accord. Speaker Vincent Prieto (D., Hudson) has said he opposes Christie's Horizon proposal.

Christie could also use his line-item veto authority to cut anything in the budget, including Democrats' pet projects. So the emerging question Monday was whether Democratic lawmakers were prepared to stomach potentially draconian cuts to their favorite programs, or instead give Christie a political win on the Horizon proposal.

The showdown has been coming for some time, as Christie, dogged by a dismal 15 percent approval rating, seeks to cement his legacy on fighting drug addiction.

In his February budget address, Christie called on Horizon to create a permanent public fund for the poor and uninsured so they could gain access to drug treatment services.

Since then, the governor, in keeping with his newfound populism, has painted Horizon as a corporate bogeyman that preys on the poor and doesn't recognize its civic duty.

"We should not permit a nonprofit insurer to profit from ignoring the poor and those who give them the life-enhancing and life-sustaining health care that they need at taxpayer expense," Christie said at a hastily arranged news conference last week. He noted that the state had fined Horizon twice in the past two years, including a $15.5 million sanction served last Monday.

Christie said his proposal would "ensure greater transparency and greater independent governance, so that [Horizon's] well-paid lobbyists and their high-paid executives will not go unchecked by a board that is under the thumb of the chairman and CEO."

Horizon has responded to Christie's attacks by unleashing a brigade of lobbyists on the Statehouse and coordinating a public-relations campaign to discredit his proposal.

As of 2016, It employed 10 lobbyists in Trenton and paid five other firms for lobbying activities, according to records filed with the Election Law Enforcement Commission.

On Monday, a group called Hands Off Healthcare NJ — which is funded in part by Horizon — convened a conference call with reporters and opponents of the legislation.

Business groups that typically side with the governor said the legislation could have unintended consequences and noted there was already uncertainty in health insurance markets given the GOP attempt in Washington to repeal the Affordable Care Act.

Michele Siekerka, president of the New Jersey Business and Industry Association, told reporters that her group opposes any attempt "to take funds from Horizon," which are "paid by the policyholders of Horizon and should be preserved as part of the appropriate surplus."

Steve Forbes, the publisher and a former Republican presidential candidate, said the Horizon raid was "the kind of thing you expect in a Third World dictatorship, not in a democracy."

Horizon says it had $2.4 billion in capital reserves at the end of 2016 and that raiding those reserves would force premium hikes.

State Sen. Joe Vitale (D., Middlesex), who wrote the bill, said he had conferred with Christie's chief of staff and chief counsel, and that they agreed with most of the changes he had proposed.

"My experience with large multimillion-dollar corporations in the Legislature is that they don't like being told what to do or how to do it," Vitale said. "I understand that. But we have a role to protect consumers, give them information, make sure that Horizon and every other health plan spends their money appropriately."

Asked about the bill on 101.5 FM's Ask the Governor Monday night, Christie declined to comment, citing ongoing negotiations.

Christie's main obstacle is persuading Prieto, who is facing a challenge for his speakership.

Prieto received a boost Sunday when Phil Murphy, the Democratic nominee for governor, said more time was needed "to give this policy a proper vetting."

Analilia Mejia, director of New Jersey Working Families Alliance, framed the issue in political terms. "I want to ask this question to legislators: Why capitulate to Gov. Chris Christie at the eleventh hour?" she said at a news conference outside the Statehouse Annex Monday morning.

"Why give in to this governor, the least popular governor in the nation, why capitulate to this man now — on Horizon, on school funding, on issue after issue? Why give in?"