New Jersey's largest health insurance company announced Wednesday it will share some of the proceeds from the newly enacted federal tax cuts by returning $150 million to policyholders this year, and devoting another $125 million to expand community health services over the next five years.
Horizon Blue Cross Blue Shield of New Jersey is expected to receive $550 million over five years, the amount of money the Newark-based not-for-profit company paid under the Alternative Minimum Tax since 1986. The Tax Cut and Jobs Act of 2017 President Trump signed into law ended the tax.
"Horizon is entirely focused on serving our 3.8 million members. In keeping with our long-standing mission to operate for the benefit of our customers, this plan seeks to provide to them this year, in the most direct way possible, $150 million in relief," Horizon President and CEO Kevin P. Conlin said.
"Members will also benefit from the substantial investments this plan makes to expand access to care, improve health care quality and lower costs."
Horizon didn't say how customers would get the money. The auto insurance industry is permitted to give rebates when profits exceed losses.
The company must be careful it doesn't do something perceived as a scheme to attract more members, said Sen. Joseph Vitale, D-Middlesex, chairman of the Senate health committee. If state law doesn't permit Horizon to give out rebates, Vitale said he would work to change the law.
"It's a good thing Horizon has chosen to use the tax break in this way," Vitale said. "Some companies use it to buy more stock. I don't know what other plans will do; they are national and Horizon is based in New Jersey. But this could be a good model for them."
In a statement, Gov. Phil Murphy said he "commends Horizon Blue Cross Blue Shield for reinvesting these profits into New Jersey through efforts such as increasing access to primary care in underserved communities, more fully connecting their members to behavioral and mental health programs, and strengthening substance abuse prevention.
"They are setting the bar for how corporations can responsibly reinvest in our communities," Murphy's statement said.
It was only a year ago that Gov. Chris Christie issued a challenge to Horizon to share $300 million from its reserve fund to help pay for drug treatment programs as part of his campaign against opioid addiction.
Horizon executives refused, saying they money belonged to its policyholders. The fight led to a standoff with the Legislature that delayed the approval of the state budget, triggering a three-day government shutdown in July.
Horizon's generosity has nothing to do with Christie, company spokesman Kevin McArdle said.
"That debate appears to have been settled with the enactment of S2 (legislation that requires more financial transparency from Horizon)," McArdle said, "which affirmed that Horizon operates for the benefit of our policyholders."
As for the $125 million in expanded services over five years, Conlin's announcement outlined various strategies to spend the money, ranging from expanding primary care, substance abuse treatment, and outreach to connect more policy holders with mental health care.