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New Jersey Businesses See Sharp Increase in Family Health-Insurance Premiums

One-year bump in workers covered through employers bucks national, long-term trends

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While the average health insurance premium for employees of private-sector businesses rose an estimated 10 percent last year in New Jersey, the share of New Jersey workers who received coverage through their employers rose from 55.3 percent in 2013 to 58.6 percent last year, according to recently published federal survey.

Total yearly insurance costs are up to more than $19,000 for a family, but costs for single workers are far lower, and increased by only 4 percent. And New Jersey’s recent premium price hike for family coverage outpaced the national number.

It may sound counterintuitive but business advocates and an insurance broker said they weren’t surprised by the increase in premiums, which matches the concerns they’re hearing from employers. They offered different explanations for why the share of workers covered by employer plans increased at the same time that prices rose, saying that it may be due to the requirement under the Affordable Care Act that every American get health insurance or pay a penalty. It also could be a statistical fluke.

But a healthcare policy expert said that the increase in the number of workers covered is a positive sign, potentially reflecting the effect of the ACA as well as growth in the state’s economy.

It appears that more employees are taking advantage of the insurance that had already been offered to them. The medical-expenditure panel survey by the Agency for Healthcare Research and Quality found that the share of New Jersey employers offering coverage was essentially flat, falling from 85.8 percent in 2013 to 85.6 percent in 2014.

Rutgers Center for State Health Policy Director Joel Cantor offered a possible explanation for why the increase in employer-covered workers is occurring: Workers are choosing to accept employer coverage that they may have turned down previously, because they were concerned with the ACA mandate that every American have health insurance or pay a penalty.

“People have a preference for complying” with the law, Cantor said.

The increase in family premiums, from $17,393 in 2013 to $19,143 in 2014, outpaced the increase in premiums for single workers. They only rose 4 percent, from $6,200 in 2013 to $6,447 in 2014. These premiums reflect the total amount paid by both the employer and the employee. Employees paid 20.1 percent of the 2014 cost of single-coverage plans, essentially flat from the 20.2 percent they paid the previous year.

The 10-percent increase in family insurance premiums was also larger than the national increase of 3.9 percent.

Matthew Malat, director of government relations for the New Jersey Chamber of Commerce, said the increase in family coverage might reflect the fact that older workers with families are more likely to go to the doctor. He noted that the Affordable Care Act was primarily focused on increasing access to healthcare, not on making insurance more affordable.

“Healthcare costs are still a paramount issue for employers,” he said.

Family premiums in employer health plans in New Jersey have risen faster than the national average since the ACA was enacted in 2010, growing 36.2 percent through 2014 compared with 20.1 percent nationally, according to the survey.

Insurance broker David Oscar said he suspected that the relatively large increase in the share of workers enrolled in insurance is largely due to the statistical margin of error in the survey. The margin of error was 2.66 percent, only slightly less than the 3.3 percent increase.

“I’m not seeing any increase in coverage in more traditional plans, because health insurance is just expensive at this point in time,” said Oscar of Fairfield-based firm Altigro Financial Group. He also is a member of the New Jersey Association of Health Underwriters, a trade group representing brokers.

Oscar attributed much of the increase in premiums to ACA mandates, including the requiring that employer plans allow parents to cover their children until their 26th birthday, as well as the addition of pediatric dental coverage in many plans.

As far as the increase in the share of workers who are insured by employer plans, Cantor said that while it’s too soon to say if the survey results showing an increase in employer coverage will hold it, “it’s certainly encouraging.”

“It looks like it’s going up, but it doesn’t look like the sample is big enough to say so definitively,” Cantor said.

Cantor added that if the increase holds up, New Jersey’s economic recovery might be another factor.

“There’s a chance that some of this is employers feeling that they have to make coverage more attractive to their workers to attract workers,” Cantor said, adding that it will be clearer over the coming years whether this is occurring.

Cantor also said that the margin of error in the survey might also have led it to overstate the size of the increase in family premiums, since it’s unlikely that the increase would be so different from the rise in single coverage.

The survey results paralleled an earlier survey by the New Jersey Business and Industry Association.

Mary Beaumont, NJBIA’s new vice president for health and legal affairs, noted that employers make providing health insurance a priority, even when rising premiums cut into their bottom lines.

“They’ll lower their own profit,” among other steps to accommodate rising health costs, Beaumont said.

Beaumont said the concern over rising costs is why the association supports changes to state law governing billing for healthcare that’s provided outside of a resident’s health insurance network. A bill intended to curb out-of-network insurance costs is advancing in the Legislature.

The bill would require arbitration to resolve payment disputes between out-of-network providers and those paying the bills. It also would build a statewide database of in-network healthcare payments that could be used to determine arbitration awards. Further, the bill would require providers to disclose to consumers the cost of a procedure before it is undertaken, as well as prevent them from waiving copayments as a way of attracting out-of-network patients.

“Anything that can be done to keep those costs in check is good,” Beaumont said.

Cantor and other researchers projected in 2011 that the number of state residents covered by employer-sponsored plans would decline by 151,000 as the ACA went into effect. The survey estimates make it appear that this is not happening. But the full picture of employer-provided insurance coverage will be clearer this fall, when the Census Bureau releases a pair of estimates about insurance coverage, Cantor said.

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