Michael Kornett, CEO of the Medical Society, in his piece entitled “Horizon should be more clear about possible conversion,” between attacks on Horizon Blue Cross Blue Shield of New Jersey argues that Horizon BCBSNJ is not being “transparent” during the conversion process.  Mr. Kornett is wrong and his continued misrepresentation of facts undermines his credibility.

Let’s just take the issues of taxes and our reserves.  Mr. Kornett, yet again, leads readers to believe Horizon BCBSNJ has not paid taxes for “75-plus years.”  This is false and he knows it because we’ve corrected him before.  Horizon BCBSNJ paid over $143 million in 2008 federal and state taxes and assessments. 

As to our reserves, at the end of 2008 Horizon BCBSNJ had $1.45 billion in reserves not $2 billion.  Unfortunately, Mr. Kornett doesn’t let the facts get in his way.

Reserves, mandated by state law, are a safety net to protect policyholders and ensure claims can be paid despite unexpected future events, including epidemics, natural disasters, or even terrorist attacks.  Mr. Kornett, however, believes we can just use them for any investments.  An odd position since the physicians he represents would be paid from those reserves for services rendered to our members in a time of crisis. 

Moreover, Horizon BCBSNJ has been transparent in its application to convert from a health service corporation to for profit health insurer.  In fact, the statutory provision governing conversion requires a rigorous public process that will include public hearings.  Horizon BCBSNJ has filed numerous documents with the State of New Jersey.  Most of these filings and other conversion information can be found on www.HorizonBlue.com/conversion. 

Horizon BCBSNJ continues to provide information and answer questions posed by the Commissioner of the Department of Banking and Insurance (DOBI) and the Attorney General, both of whom are entrusted with determining whether or not our company’s conversion is in the public’s best interest.  Unlike Mr. Kornett, we believe both public officials are taking this obligation seriously.

Mr. Kornett seems to be upset that certain proprietary documents are deemed confidential.  Such confidentiality, however, is expressly contemplated by the law governing conversion to protect proprietary information that would benefit our competitors and hurt the company if made public. 

More importantly, everyone should understand that conversion unlocks the value of Horizon BCBSNJ for the benefit of the people of New Jersey.  We believe conversion will generate more than one billion dollars for New Jersey’s health care system without the need for raising state taxes.  All of the money raised from stock sales – the full market value of Horizon BCBSNJ – will go to an independent foundation for the benefit of the people of New Jersey. 

By law, the conversion proceeds must be used by an independent foundation for the “purposes of expanding access to affordable, quality health care for underserved individuals and promoting fundamental improvements in the health status of all New Jerseyans."  This is a significant public benefit.

Horizon BCBSNJ will not determine its value, the market will.  We do know, however, that whatever the ultimate value of the company is, it will only be available for our state’s health care system if Horizon BCBSNJ converts.

Mr. Kornett’s conspiracy theory that Horizon BCBSNJ executives can determine the company’s value on their own is just absurd.  It’s just not how the market works and he should know that having successfully sold a managed care company which he owned.

Conversion will also benefit the people of New Jersey by strengthening its oldest and largest health insurer by giving Horizon BCBSNJ the full range of financial options available to its competitors, which it does not have today.  In particular, Horizon BCBSNJ will gain access to the capital markets and be better able to make prudent investments in capabilities essential to serving its customers and responding to expected health care reform, while maintaining its financial stability. 

Finally, Mr. Kornett questions whether Horizon Blue Cross Blue Shield of New Jersey’s conversion is a great deal for New Jersey because, as he writes, “I don’t see it.”  Considering that Mr. Kornett’s eyes, and mind, are closed to even the possibility that conversion could be beneficial to New Jersey, we are not surprised his ability to see is quite limited.

Thomas W. Rubino, Esq. is Director of Public Affairs for Horizon Blue Cross Blue Shield of New Jersey