On Friday, Horizon filed an application with the state to switch from its current status as a not-for-profit health service corporation to a for-profit company with publicly traded stock, William J. Marino, its president and chief executive officer, told reporters during a conference call.
Horizon has considered such a move before, most recently in 2005, but this is the first time it has filed an application with the state attorney general and commissioner of banking and insurance.
"We were not optimistic that we would be successful" previously, Marino said, but the company now believes approval is more likely.
Public hearings would be required as part of a complex approval process.
Marino said the switch is needed now because of changes in how health care is delivered and paid for in New Jersey, and in anticipation of changes at the federal level.
The 76-year-old insurer, which has 3.6 million members and an $8 billion operating budget, anticipates it will need to raise money for capital investments, particularly new technology to better serve its network hospitals and doctors, as a result of industry changes.
Under a 2001 state law, Horizon would have to compensate the state for years of tax breaks it received as a not-for-profit. As a result, Horizon estimates more than $1 billion would become available to improve the state's health care system. Other estimates have put the figure at up to $4 billion.
The money would come from an initial sale of stock shares to the public. A new foundation with a board of trustees would use the funds to help people who don't have access to health care or otherwise aren't getting needed services.
Horizon later could sell additional stock to raise money for improving its business, but its officers and directors would be barred for the first year of for-profit operations from benefiting financially from the conversion.
Consumer advocates, doctors and others worry that premiums and the number of uninsured people in New Jersey would increase if Horizon converts.
"The leading problem in health care today is that insurance coverage is way too expensive," Assembly Budget Committee Chairman Louis D. Greenwald said in a statement. He said the application must be reviewed thoroughly to see how it would impact consumer rates and services and "the heavy cost burden being carried by our hospitals."
The New Jersey Hospital Association said in a statement that "all New Jersey and should be concerned about the prospect of such a conversion."
The group noted that Horizon has long been the provider of last resort for people unable to get coverage from other health insurers and said the state must determine whether a conversion is in the public interest and whether it would give Horizon a "monopoly-like power in the New Jersey market."
Marino noted that more than a dozen other states already have approved such for-profit conversions; four other states have rejected them.
"We're optimistic this will be concluded in the second quarter of 2009," he said.
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On the Net:
Horizon site on conversion plans:
http://www.HorizonBlue.com/conversion
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