NJ Blue's change to for-profit could prompt many followers

Right now, executives with Horizon Blue Cross Blue Shield of New Jersey are nervously waiting to find out whether the state attorney general and insurance commissioner will let it convert from a not-for-profit entity to a for-profit. At the moment, however, no one knows whether the health plan will succeed in getting regulatory permission to do so. If it does get such permission, however, the conversion is likely to have an impact on the health insurance industry as a whole, experts say.

If Horizon succeeds, observers say, it could lead to the start of a new wave of not-for-profit to for-profit Blue conversions. Many other Blue plans have publicly complained that they don't have the scope of operations, local competitive position and capital to compete with national giants like Aetna and UnitedHealth Group, and are likely to try again if Horizon wins the day.

WellPoint is a likely candidate to consolidate such companies once they go private, and is almost certainly going to snap up Horizon if it converts itself, they suggest. They note that in 1997, Anthem (now WellPoint) attempted to acquire Horizon, but couldn't get state court permission. More significantly, WellPoint currently owns every one of the 14 for-profit Blues plans in the continental U.S.

Horizon tried to make the same switch in the mid-1990s by merging with another Blue plan, but couldn't get permission from the state. This time around, it's prepared to buy its transformation by giving the state $1 billion, under the terms of a 2001 law authorizing such health plan conversions, which has to be attractive in a state with a big budget deficit. On the other hand, the deal has some enemies, including most of the state's other health plans.

To learn more about this trend:
- read this AMNews piece

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