A budget passed Monday by New Jersey lawmakers includes a reserve cap for Newark-based Horizon Blue Cross Blue Shield of New Jersey, Politico reports.
The reserve cap is based on a risk-based capital ratio measure. Under the measure, insurers are required to retain a specific level of reverses to offset future expenses, like claims and market changes.
The budget capped the insurer's surplus to a 550 percent to 725 percent range, the report states. Should Horizon's reserves surpass 725 percent, it will have to send rebates to its policyholders. Last year Horizon held a reserve ratio of 618 percent.
Under the legislation, a state actuary paid for by Horizon will calculate the payer's risk-based capital ratio. In addition, Horizon will be required to provide the state Department of Banking and Insurance executive compensation and financial information to post on its website.
Republican New Jersey Gov. Chris Christie originally proposed the state pass legislation allowing it to use $300 million of Horizon's reserves to fund public health initiatives like extending opioid abuse treatment. Disagreements over the proposal contributed to a three-day partial government shutdown ahead of the Independence Day holiday, Politico reports.
For the full report, click here.