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."
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