State lawmakers have approved legislation to give New Jersey Blue Cross and Blue Shield the right to become a for-profit, mutual insurance company.
The bill has been sent to Gov. Christine Todd Whitman for her signature.
Mutual insurance companies are directed by boards that are elected by policyholders and whose ownership and control is vested in the policyholders.
Converting to for-profit mutual status would open access to the capital markets. The Newark-based Blues plan expects to incur "significant costs" in the next few years as it seeks to create an integrated, regional healthcare delivery system, according to Fred Hillmann, a spokesman for the plan.
To proceed with the conversion, the bill requires a two-thirds vote by the insurer's 15-member board. The board would then file a plan with the Department of Insurance, which would hold public hearings. Officials hope the conversion would begin Jan. 1, 1996.
Most likely, the insurer would raise capital in the next few years through an initial public offering by its HMO Blue subsidiary, Hillmann said.