June 26, 2008
Another Possible Blue Cross Conversion to For-Profit Status
The Newark Star Ledger reports that New Jersey's largest health insurer is seriously considering converting to for-profit status. Although Horizon Blue Cross Blue Shield of New Jersey twice before considered but then rejected converting to for-profit status during the past ten years, the political climate may be more favorable now because New Jersey is looking for funding to help it implement universal health insurance. The conversion would result in payments to the state of $1 billion to $3 billion over five years as compensation for the tax breaks Horizon had previously enjoyed. The incentive on Horizon's part for converting appears to be a desire to reduce the level of public scrutiny it faces, particularly with respect to executive compensation and the size of its reserves. Horizon currently covers approximately 3.6 million individuals, including more than million Medicaid participants.
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Who benefits at the expense of the public: BCBS executives in New Jersey; just like their counterparts in other states that converted, stand to make hundreds of millions of dollars in stock options, pensions, salary increases, bonuses, and severance pay. Also the politicians who receive millions in campaign contributions from BCBS executives, lobbyists, and the insurance industry.
Posted by: Gayle | Jul 31, 2008 5:25:46 PM