Horizon Blue Cross Blue Shield of New Jersey CEO Robert Marino has been at the helm of the company since 2011. In that time, the company has weathered a bounceback from the economic recession, the changes and investments involved in the Affordable Care Act, Hurricane Sandy and the contentious OMNIA rollout.
This year, he’s faced a different battle.
Gov. Chris Christie has publicly called out Marino and Horizon on numerous issues, including the company’s surplus, the compensation of its top executives and its highly paid public-policy arm. He even has said the company has profited off of the sick and poor through managing Medicaid policyholders in the state.
In this excerpt from an exclusive interview with NJBIZ from his office in Newark, Marino talked about why the company took a more proactive stance on lobbying, and how it impacted the company’s OMNIA Alliance and health plan:
NJBIZ: There are those that wonder why Horizon needs so many expensive lobbyists — the highest-paid of which is making $1.3 million — when some other insurers in the state don't have in-house lobbyists.
RM: I think that's a fair point. Here's my response to that: About two years ago, I went to our board of directors and said one area of the company that I think we really needed to take a hard look at and strengthen — this is before OMNIA — was our public relations, government affairs and communications function. There really was not significant change in those three corporate functions for probably the past 10 years. And, if you look at the company, where we are today, and where we were 10 years ago, this is a very large organization.
This organization controls over $20 billion annually in health care spend in the state of New Jersey. The company grew from $5.5 billion over that period of time (10 years) to a $13.4 billion enterprise. We have a major stake in health care policy in the state. We have a major stake in driving the state towards a new paradigm called health care value. I felt strongly that this company needed a stronger voice than it previously had. Not to criticize the former staff and the former voice we had. That was the right voice at that time when this was a smaller company.
So, I suggested to the board that we needed to realign those three functions and needed to strengthen that and have a greater voice in policy. Particularly health care policy coming out of Trenton. That led to the hiring of Bill Castner and other folks in that area. This was well before OMNIA. It was just at a point where the company had grown, it had evolved, and that function was not at the level that I thought it should be.
I will tell you, in the past ... this company has been a pinata. I have spent 45 years in the Blues, with the exception of eight of that I worked for the Blues in New York, I've been here. At times, unfairly, this company has been a pinata. This company does great work and it believes and lives its mission every day.
NJBIZ: The lobbyists certainly came in handy in the past year, such as with the OMNIA issue. Any thoughts looking back?
RM: The OMNIA thing, there was conviction around why we did it. Strong conviction that the current system was not sustainable. Someone had to be a catalyst and start the change. Because of our mission … we decided to do OMNIA. We knew we were going to get blowback. Did we underestimate the blowback? Absolutely.
OMNIA … it wasn’t a pleasant experience. I sat in here with the senior staff and there was a point where we said, ‘Holy shit, what did we do? Should we open this thing up to more?’ I went home that weekend and thought about it and said, ‘Nope, no weak knees, we stay with the mission, we need to achieve what we wanted to achieve here.’ One of the proudest things I am proud of — 70,000 previously uninsured people now have access to coverage. I remember when (state Sens.) Joe Vitale and Nia Gill put me through the four hours (of testimony). I said, ‘We are going to have 40,000 people in the state of New Jersey,' and this is with the Affordable Care Act. These are people that even with the subsidies they were getting from the government couldn’t afford health insurance because they couldn’t pay for the deductibles and the co-insurance. We put a product out there that is 15 percent below a comparable product … 40,000 signed up in Year One and 30,000 last year because this company put out a product … because of the mission orientation.
Monday: Marino battles back — the Horizon CEO challenges the governor’s assertions
NJBIZ: Speaking of people who can’t afford health care: The governor has also called you out, saying you are profiteering off managed Medicaid.
RM: We have 900,000 managed Medicaid members. I think that’s about 52 percent market share. We are in all 21 counties, as opposed to our competitors, who are not. Our profit margin last year was 1.9 percent in Medicaid; our competitors’ average margin is close to 5 percent. We spend less on administrative costs and more on medical cost for our Medicaid members than any of our competitors — which is a good thing, because that is what you want. You want your dollar to be spent more on the medical cost than the cost of running a business.
Then, lastly, I think we have the highest-rated managed Medicaid program in the state of New Jersey, and if that doesn’t work for the governor, the last little factoid is, in the last seven years, for managed Medicaid, we have saved the state in our estimate $1.5 billion. So, if they had not moved the members and kept them in the traditional Medicaid system, their cost over the last seven years would have been $1.5 billion higher. I don’t think we are profiteering.