Even as Phil Murphy jumped feet first into the leadership battle tonight with a stand against a GN3-Chris Christie raid of Horizon, the pairing of state Senator Joseph F. Vitale (D-19) and Assemblywoman Eliana Pintor Marin (D-29)signaled a new domino dropping against Speaker Vincent Prieto (D-32).

Targeting Horizon, Vitale and Pintor Marin announced today their legislation to ensure that health service corporations in New Jersey uphold a commitment to what they called “their charitable mission.”

In the is case, that mission appeared to include toppling Prieto.

InsiderNJ earlier this year reported that Pintor Marin represented a lawmaker teetering at the edge of outright opposing a Prieto re-upping as speaker. Her alliance with Vitale – a backer of slate mate Assemblyman Craig Coughlin (D-19) as Prieto’s replacement – suggested a new Essex player in the game against the sitting speaker, who is playing for his own life in leadership against the backdrop of his position in the budget fight.

Vitale placed the face of good government on the newly burnished alliance.

“Our bill creates a system to ensure Horizon is upholding its commitment to its charitable mission and it provides greater transparency so that consumers know exactly how much their insurer spends and where.  Additionally, it creates greater public oversight by allowing policyholders to elect three members of the Horizon BCBSNJ Board,” said the senator.

Horizon would be given an opportunity to develop a process by which three members of their Board will be elected by policyholders. This will make the Board more representative of its policyholders and create a new dynamic by which the Board operates, while still leaving the make-up of the Board a majority of Horizon BCBSNJ appointees. Going forward, four members would continue to be appointed by the Governor with the advice and consent of the Senate, eight members would be elected by Horizon and three members would be elected by Horizon policyholders. This plan does not add new members to the Board.

“This plan creates a fair process both for Horizon and for their policyholders. If an excess surplus exists, Horizon will be given every opportunity to control how that surplus is spent and where it will go.  Horizon has a charitable mission within the State of New Jersey and this plan allows them to continue that charitable mission while also lending support, when it is possible, to programs that promote public health,” said Pintor Marin.

The process used in this bill to develop an efficient surplus range for a health service corporation’s surplus is modeled after Pennsylvania. As long as Horizon operates within that range, they will not be able to increase premium for the purpose of building a higher surplus, which will protect premium payers.

“I commend Senator Vitale and Assemblywoman Pintor Marin for their work on this issue. If a future Governor’s administration says an organization with a charitable purpose is sitting on excess surplus, that will warrant us taking a closer look at how it is operating. The legislation sets up a process to allow for that. I asked Senator Vitale to take the lead because I knew anything he put his name to would be in the best interest of the people of New Jersey and especially the people that pay premiums to Horizon,” said Senate President Steve Sweeney.

If Horizon’s surplus exceeds the upper limit of the efficient surplus range, their surplus will be deemed to have reached an inefficient level. This means the surplus has grown to such a point where adding additional dollars to the surplus no longer derives value for premium payers. At this point Horizon would be directed to develop a plan on how they will spend down their excess reserve to benefit policyholders and fulfill their charitable mission. They may also make a case justifying a need to maintain excess reserves above the efficient surplus range. At this time, the public would also be given an opportunity to weigh in on the spending of excess reserves. Following this, the Department of Banking and Insurance, in consultation with the Department of Health, would review the plan and approve it or work with Horizon to modify the plan.

If Horizon and the State are unable to come to agreement on a plan for Horizon to spend down their excess reserves, the funds will be transferred to a fund in the Department of Health.  The Department would then convene an open public process and take recommendations from the public on how the funds should be spent consistent with criteria established by this legislation. The Governor will then make a recommendation to the Legislature, and the Legislature will certify the spending plan.

“This legislation sets up an open public process to develop an appropriate, efficient surplus range within which a Horizon should aim to operate,” said Senator Vitale. “I hope members of the Legislature will see that this is a rational, reasonable approach to current concerns about whether or not there truly is an excessive surplus.  This is not a money-grab, it does not create a slush fund, and it does not put any undue operating costs upon Horizon that would drive up premiums.  It simply creates an equitable system that will benefit both Horizon and their premium payers.”

This legislation, S-4, with amendments, is scheduled for a vote in the Senate Budget and Appropriations Committee on Monday, June 26th. Should it pass in both houses and be signed into law, Sections 1 and 7 – which address transparency – would take effect immediately, with the rest of the bill going into effect starting February 1, 2018.