Horizon Blue Cross Blue Shield of New Jersey is considering converting to a for-profit company.
The not-for-profit health service corporation filed an application for conversion with the state of New Jersey late last week.
The state's only not-for-profit insurer with 3.6 million members said its board of directors decided to reconsider conversion because of the many changes occurring in the nation's healthcare system.
If Horizon follows through with the plan, it would be one of several Blues plans that have converted to for-profit status, sought to merge or opted for different management models. At one time, nearly 80 separate Blues plans operated under license arrangements from the Blue Cross and Blue Shield Association.
Horizon said it filed the application in accordance with a 2001 New Jersey law that permits a health service corporation to convert to a domestic stock insurer.
Officials said a successful conversion could bring as much as $1 billion into play in New Jersey to improve the state's healthcare system. Under the law, the fair market value of Horizon at the time of the conversion must go into an independent charitable foundation that must use the proceeds for the "purposes of expanding access to affordable, quality healthcare for underserved individuals and promoting fundamental improvements in the health status of all New Jerseyans."
A windfall of that amount could play a role in helping to support the state's hospitals, which have been particularly hard hit over the last 15 years. The state's governor recently signed a package of four bills aimed at providing assistance to hospitals. Some 23 hospitals in the state have closed since 1992, and five have filed for bankruptcy this year.
The Blues plan "filed an application with the state as a necessary step in exploring conversion," said William J. Marino, president and CEO of Horizon. "Through the application process, we will be able to determine whether conversion is practical and whether it can be accomplished on satisfactory terms for our members and our company."
Marino said the potential conversion could give the company more access to the capital markets, which potentially can give it more flexibility to invest in and acquire new capabilities and technologies.
"State law requires a rigorous public process to evaluate our conversion," he said. "We look forward to those public deliberations as a unique opportunity to objectively consider what is best for our best for our members, our healthcare system and the people of New Jersey."