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Horizon Blue's Conversion to For-Profit Status May Alter Plan's Existing Pricing Strategy

Tuesday, September 23, 2008 General News J E 4
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NASHVILLE, Tenn., Sept. 23 HealthLeaders-InterStudy, a leading provider of managed care marketintelligence, reports that, if approved, conversion by Horizon Blue Cross BlueShield of New Jersey to for-profit status may prompt the plan to adopt a moreconservative approach to pricing. According to Blue Profiler: Horizon BlueCross Blue Shield of New Jersey, Horizon has successfully secured market sharefrom competitors over the past two years with aggressive pricing. Thisapproach will likely change with conversion as shareholders will demand bettermargins than the company's existing 2.1 percent return.

"Not-for-profit Blue plans have traditionally been successful in growingmarket share in regions where there is a large for-profit plan presence," saidRick Byrne, analyst with HealthLeaders-InterStudy. "Horizon is no exception,growing enrollment throughout all of its products with aggressive pricing andmarket strategy."

Horizon, New Jersey's largest insurer, currently serves 46 percent of theinsured lives in the state, and more than 33 percent of New Jersey'scommercial market. In general, states limit reserving capability of nonprofitinsurers, keeping their rates low. If the conversion is approved, Aetna andUnitedHealthcare -- the number two and three insurers in the state,respectively -- will likely feel less pressure from Horizon on price.

Horizon previously considered for-profit conversion, first filing and thenwithdrawing an application in 1996. In 2001, legislation passed in New Jerseyenabling Horizon to convert to for-profit status, and stipulating that allstock assets of the company be placed in an independent foundation dedicatedto expanding access to affordable coverage for the uninsured. According toHealthLeaders-InterStudy's Summer 2008 TriState Health Plan Analysis, momentumfor the conversion was established earlier this year when lawmakers ralliedbehind a phased approach to universal health care. The state estimates thatsubsidizing universal coverage will cost New Jersey around $1 billion.

"Horizon's conversion could be a source of funding for the state'suniversal coverage initiative," noted Byrne. "As this is an attractiveproposition for the state, the conversion effort will very likely be asuccess."

About Blue Profiler

Blue Profiler offers the most comprehensive analysis of the nonprofit BlueCross Blue Shield plans. Each report focuses on an individual nonprofit Blueplan and includes valuable analysis that will allow companies to moreeffectively partner with these dominant organizations. Each report includesinformation on:

About HealthLeaders-InterStudy

HealthLeaders-InterStudy, a Decision Resources, Inc. company, is theauthoritative source for managed care data, analysis and news. For moreinformation, please visit http://www.HealthLeaders-InterStudy.com.

About Decision Resources, Inc.

Decision Resources, Inc. is a cohesive portfolio of companies that offersbest-in-class, high-value information and insights on important sectors of thehealthcare industry. Clients rely on this analysis and data to make informeddecisions. Please visit Decision Resources, Inc. athttp://www.DecisionResourcesInc.com.

All company, brand or product names contained in this document may betrademarks or registered trademarks of their respective holders.-- Competitive analysis -- Enrollment trends -- Company-wide financials -- HMO financials -- Consumer-driven products -- Medicare strategy -- Pharmacy -- Disease management

SOURCE HealthLeaders-InterStudy
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