Let Freedom Ring Must Reads

Christie’s Insurance Shakedown
By WSJ Opinion

New Jersey Gov. Chris Christie speaks in Trenton, N.J., June 27.

 New Jersey Gov. Chris Christie speaks in Trenton, N.J., June 27. PHOTO: SETH WENIG/ASSOCIATED PRESS


New Jersey Governor Chris Christie made his reputation prosecuting political corruption, but he now sees nothing unseemly about shaking down the state’s largest health insurer to backfill the budget and fund new anti-opioid spending.

The lame-duck Governor has given up fixing New Jersey’s tax-and-spend culture, but he still hopes to achieve some success rehabilitating drug addicts. That’s laudable. But since the state is short on cash, he’s bludgeoning the not-for-profit Horizon Blue Cross Blue Shield to pay the bill.

Horizon is the state’s sole health services corporation, meaning it pays state and federal taxes—$543 million last year—but doesn’t make distributions to shareholders. The insurer covers about 3.8 million Garden State residents including 900,000 Medicaid recipients and controls about 55% of the individual market.

 In February Mr. Christie demanded that Horizon hand over $300 million annually of its $2.4 billion reserve to expand addiction treatment. Many states are expanding rehab programs with Medicaid funds and taxpayer dollars, and the Republican U.S. Senate health-care reform includes an additional $2 billion for opioid treatment.

Mr. Christie accuses Horizon of maintaining an excessive surplus—in New Jersey, any surplus appears excessive—but Horizon’s reserve hews to industry standards and is smaller on a risk-adjusted basis than those maintained by most state Blue Cross Blue Shield affiliates. A healthy cushion is particularly critical amid ObamaCare uncertainty. If the federal individual mandate is lifted while New Jersey maintains a guaranteed-coverage requirement, the reserve could prevent premiums from soaring.

When Horizon undershot the Governor’s bid by offering $135 million, Mr. Christie began targeting the insurer in terms that recall Barack Obama’s tirade against Wellpoint for raising premiums after ObamaCare passed. Last week the state Department of Human Services, which answers to the Governor, slapped Horizon with a $15.5 million fine for mishandling Medicaid claims and misreporting its finances. Horizon disputes the charges.

Now Mr. Christie is offering schools a $125 million boost if Democrats turn Horizon into a public charity. The state Senate this week is debating legislation that would give the Department of Banking and Insurance wide latitude to determine if Horizon has breached its “charitable commitment.” If the state insurance commissioner deems that its reserve is “inefficient,” Horizon would be required to produce a plan to “improve the overall health status of all New Jersey residents” that would include “responding to emerging health care issues in New Jersey” like substance abuse.

To add injury to insult, Democrats are also proposing to deem Horizon “an insurer of last resort.” The designation would require the insurer to cover the state’s sickest patients without compensation from other insurers or the state. Horizon would have no choice but to increase premiums to comply.

Mr. Christie’s raid is a tax and regulatory mugging masked as public charity. If this succeeds, is any business or nonprofit—perhaps Princeton’s $22 billion endowment is also excessive—safe in New Jersey?

Appeared in the June 28, 2017, print edition.

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