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New Jerseyans Paying More For Less Health Coverage, Report Reveals

NJ one of 10 states to see price of premiums skyrocket since enactment of Affordable Care Act

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New Jersey residents are paying more than twice as much for health insurance premiums and deductibles as they were a decade ago, according to a new national report.

In addition, New Jersey is one of several states that saw insurance premiums for family coverage rise faster in the three years after the Affordable Care Act was enacted than in the seven years before.

That’s according to a report by the Commonwealth Fund, a New York City-based foundation that promotes a high-performing healthcare system that achieves better access, improved quality, and greater efficiency, particularly for more vulnerable residents.

While New Jersey was one of only 10 states to see premiums grow by an average of more than 6 percent a year from 2010 to 2013 -- the first three years after the ACA -- most states saw premium growth slow during that period. In 31 states, the growth rate slowed after federal healthcare reform was put in place.

The report didn’t speculate on why some states have seen more cost increases in recent years. Still, New Jersey providers tend to charge more; residents use a greater number of services; and policy experts are increasingly looking toward growth in out-of-network costs as a problem in the state.

The ACA includes provisions intended to rein in the growth of healthcare costs, such as better coordination of care for Medicare recipients through the use of accountable care organizations. The report said there are early indications that premium growth continued to slow nationally in 2014 and will continue to moderate in 2015. However, growth will pick up again, averaging 4.7 percent increases over the next decade, according to federal forecasts.

“Securing slow cost growth for workers, families, and employers will likely require action to address rising costs of medical care services,” indicated the report.

While employers are paying more than they were a decade ago, the growth in employees’ contributions has outpaced those of their employers, increasing workers’ share of total health costs. “Workers are paying more but getting less protective benefits,” wrote authors Cathy Schoen, David Radley, and Sara R. Collins. New Jerseyans saw their average annual employee contribution for family coverage rise from $2,007 in 2003 to $4,486 in 2013, a 124 percent increase.

The total average premium for family plans -- including the employer’s contribution -- rose from $10,168 in 2003 to $17,396 in 2013. This was the fourth-highest average in the country, behind Alaska, New York, and Massachusetts.

But the burden on New Jersey residents was offset by their relatively high household incomes. The average total New Jersey employee healthcare spending -- including both premiums and deductibles -- as a share of household income was 7.9 percent in 2013, tied for the ninth lowest in the country. That percentage rose from 3.6 percent of income in 2003. The national average rose from 5.3 percent of income in 2003 to 9.6 percent in 2013.

The growth rate in insurance premiums and deductibles outpaced income growth in all 50 states, according to the report.

In addition, the percentage of workers whose plan includes a deductible -- which is an amount that must be paid out-of-pocket before insurance kicks in -- increased in New Jersey and every other state. In New Jersey, it rose from 48 percent in 2003 to 69 percent in 2010, before leveling off at 68 percent in 2013.

The average deductible for a single New Jerseyan rose from $538 in 2003 to $1,311 in 2013. Deductibles are higher for businesses with fewer than 50 workers.

The report focused on how the national slowdown in premium growth contradicted concerns raised by critics of the ACA that the law’s provisions would lead to premium increases. Some parts of the law -- such as allowing young adults to remain on their parents’ plans until they turn 26 -- went into effect in 2010, but the main ACA provisions didn’t start until 2014.

The report said that a dip in healthcare spending that began in the 2007-2009 has continued since then, as consumers reduced their use of healthcare services, including hospital visits and elective surgery. But the ACA may also have contributed to slower growth through initiatives targeting waste and duplication, as well as improving the way care is delivered. The slowdown in Medicare spending has been particularly dramatic and spending on Medicare recipients is expected to grow less than privately insured Americans through 2023.

The report noted that developing initiatives to push down health costs are needed to realize more affordable healthcare, adding that higher prices contribute to the United States spending more than other countries for healthcare. The U.S. leads the world in the share of gross domestic product spent on healthcare, at 17.9 percent from 2010 to 2014, according to the World Bank. The next-highest developed country, the Netherlands, spends 12.4 percent.

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