Extending Insurance May Help Small Businesses, But Not Most Individual Plans

Andrew Kitchenman | November 27, 2013 | Health Care, Planning
Horizon indicates that remaining federal regulations still make bare-bones health coverage plans nonviable

Credit: NJTV
Banking and Insurance Commissioner Kenneth Kobylowski.
While state officials agreed yesterday to allow recently cancelled health insurance plans to be extended for a year, the move may not make much difference to most individual plan holders.

A spokesman for Horizon Blue Cross Blue Shield of New Jersey, the state’s largest individual plan insurer, said that extending the most popular individual plans won’t be “viable” because they would still have to be altered to comply with other requirements of the Affordable Care Act.

As a result, it appears likely that most individual plan holders will still have to pay higher monthly premiums starting in January.

President Obama said on November 14 that states could extend plans that were scheduled to be cancelled for one more year until 2014. The decision was left to each state’s insurance commissioner.

While state Banking and Insurance Commissioner Kenneth Kobylowski announced yesterday that the state would allow insurers to extend cancelled plans, he noted that several new ACA provisions would still apply to existing health plans, including removing annual limits on insurance benefits for individual and small-group plans

Horizon spokesman Thomas Vincz said company executives were reviewing the state decision, but their initial sense was that the coverage extensions “could provide some relief for our small employer customers,” but not to individuals with bare-bones health plans, known as “basic and essential” plans.

Horizon doesn’t think modifying those plans, which currently have annual limits on benefits, will be “a viable option for our individual members,” Vincz said.

Executives with AmeriHealth New Jersey, the second-largest individual plan insurer, were evaluating information provided by state officials about the decision, according to company spokeswoman Jill Roman.

Of the roughly 800,000 state residents who recently were notified that their plans would be cancelled, most were covered by small-group plans offered by employers. Roughly 110,000 have individual plans, but about half of those will receive subsidies that may offset the premium increases.

Colin Reed, spokesman for Gov. Chris Christie, released a statement criticizing the impact of Obama’s policies on the individual and small-group markets.

“Now, almost two months after the catastrophic rollout of this program, there’s even less reason than before to believe any so-called ‘fix’ from the federal government will do anything but hurt,” Reed said in the statement. “Thus, New Jersey has decided to let the free market dictate the way forward, which is the situation we should have had all along.”

Using AmeriHealth plans as an example, it appears as though young men will see the largest premium increases when they change their individual insurance plans to ACA-compliant plans.

On the other hand, families will see smaller increases. And young women will see reduced premiums. Everyone will receive expanded benefits, including coverage for prescriptions, ambulance service and chemotherapy, which aren’t covered by the most popular bare-bones plan.

Christie noted in an appearance on “CBS This Morning” earlier this month that Obama had promised that Americans who were happy with their plans could keep them. Obama has since apologized to those who have received cancellations due to the ACA.

The launch of the new federal insurance marketplace, which is intended to allow individuals and small businesses to buy insurance, has been marred by the poor performance of its website, healthcare.gov.

Federal officials have noted, however, that the site’s performance has improved continuously. In addition, progress has been made in enrolling residents in New Jersey FamilyCare, the state Medicaid program that covers low-income residents.