Regardless of what happens to a deal to shore up health insurance rates crafted by a bipartisan pair of U.S. Senators, hundreds of thousands of New Jerseyans who purchased their policies on the individual marketplace could see premium costs increase by up to 28 percent next year.
State officials posted the health insurance rates for 2018 on Tuesday, revealing double-digit price hikes on many plans in the individual and small business marketplace, increases that industry officials blamed largely on continuing federal efforts to undermine the Affordable Care Act. Prices for other products, like plans sold through the small group market, are also expected to rise, but by much less.
More than 70 percent of individual marketplace policies in New Jersey — some 369,000 as of early 2017 — were sold through the Affordable Care Act exchange, which gives qualified consumers access to federal subsidies to help offset the premium costs. But more than 100,000 residents purchased individual plans directly from carriers last year — without any public assistance — and if they re-enroll in 2018 they will bear the brunt of the price hikes.
Insurance experts have warned for months that ongoing efforts to repeal and replace the ACA, or Obamacare, would destabilize the insurance market and drive up prices for 2018. Another blow came last week, when President Donald Trump canceled a program that funneled $7 billion to insurance companies this year to offset discounts they gave to the poorest marketplace customers; Trump framed these payments as a bailout to the multi-billion-dollar insurance industry.
Withdrawal of federal funds
These “cost-sharing reduction” subsidies included $166 million provided to a handful of Garden State firms that sold marketplace polices, funding that was used to benefit some 145,000 residents. While the ACA requires insurance companies to continue to provide these discounts in 2018, the federal government will no longer fund the program, a decision that contributed to the rate increases. The higher rates will also cost taxpayers more in the long run, critics said, since the government is still subsidizing millions of premiums.
Trump’s decision sparked widespread concern among healthcare advocates and insurance industry leaders who fear the higher costs will make insurance too expensive for some customers and destabilize the market overall.
These fears prompted U.S. Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) to produce a compromise plan that would extend cost-sharing payments to insurance companies for two years in exchange for greater flexibility in plan design and state regulations. While Trump initially appeared to support the deal, he later suggested otherwise, and the agreement’s future in the House of Representatives remains uncertain.
Regardless of the deal’s fate, any payments to insurance companies would likely be too late to impact 2018 products. New Jersey’s Department of Banking and Insurance (DOBI) approved and posted the final rates on Tuesday and many plans have already printed public materials for next year.
Open enrollment for ACA coverage, including marketplace plans, begins November 1 and runs through December 15 this year — six weeks shorter than in the past. The process is also complicated by a loss of funding to support enrollment, although Horizon Blue Cross Blue Shield — the state’s largest insurance company — announced earlier this week it would help with the process, focusing on reaching Hispanic communities, in particular.
24% average increase in 2018 Horizon rates
For Horizon, which writes seven out of ten individual market policies, the end of the cost-sharing reduction funds added nearly four percent to 2018 rate increases that range from 16 percent to 28 percent. The company said on Tuesday that premiums would have increased less than 10 percent on average next year if it not for changes at the federal level, including weakened enforcement of the ACA’s individual mandate — which penalizes individuals who don’t have health insurance — and the reinstatement of a tax on health plans.
“The individual market has always been volatile and it has been especially so as of late,” said David Huber, Horizon’s senior vice president and CFO. “The Federal Government’s actions will drive costs higher and create additional uncertainty, making a volatile situation even worse.”
Horizon will offer more than a half-dozen policies on the individual marketplace next year, including options in each of the ACA’s categories of bronze, silver, and gold plans. For someone in their early 20s, the lowest-cost silver plan from Horizon will rise from nearly $276 a month this year to almost $347 next year, an increase of more than $70 or 26 percent. The cost of all plans will be higher for older customers.
“Horizon is doing everything possible to provide high quality and affordable health care throughout the state. Our hope is that federal policymakers will wake up and take actions to contain costs, promote stability and encourage more people to obtain health insurance,” Huber said.
AmeriHealth will offer ten marketplace plans in 2018, with options in each category, which will rise an average of 17 percent over this year’s rates, the company said. A customer in their early 20s who bought the lowest-cost silver plan would see the monthly cost rise from just over $264 to nearly $312, an increase of almost $48 or 18 percent.
Oscar Garden State Insurance Corp. is the only other company participating in the marketplace in 2018; Oscar left New Jersey in 2016 but has told DOBI it will return next year. The company’s lowest-cost silver plan will run just over $349 a month for someone in their early 20s.
“Today’s announcement confirms that Oscar plans are among the most affordable options New Jerseyans can choose for their individual and small business group health coverage next year,” said Louis DeStefano, the company’s VP of sales. “Oscar is extremely excited to return to New Jersey and deliver an easy, seamless health care experience with access to high quality hospitals for our members.”
Cigna Healthcare and Oxford Health Insurance also offer a handful of plans for individual market customers who do not qualify for the ACA marketplace; those plans, available directly from the companies, generally cost more than $700 a month for someone in their early 20s.