Although health insurance premiums are slated to increase in New Jersey next year, they will increase by less than half the amount they would have gone up without recent state policy reforms that were implemented to guard against the impact of federal changes to the Affordable Care Act, state officials said.
And the Garden State may see among the lowest percentage increases nationwide for plans sold on the individual market compared to other areas; recent analyses of preliminary data show customers in some states may see rates soar as much as six times more than in New Jersey. One study by the progressive Center for American Progress suggests that, based on estimated increases nationwide, a 40-year-old man will need to pay an average additional annual cost of nearly $1,000 for coverage next year.
The state Department of Banking and Insurance released details of the proposed rate hikes for 2019 that show plans on the individual market are expected to go up 5.8 percent here, on average; the state must still approve these increases. These marketplace, or exchange, plans cover nearly 300,000 working-class New Jerseyans through coverage created as part of the ACA, or Obamacare.
But insurance providers would have requested a 12.6 percent increase on average for these markets if New Jersey had not adopted laws earlier this year to create a state-based insurance mandate and a reinsurance program to offset the highest claims, the DOBI noted. Last year, individual market-plan rates rose more than 20 percent on average here, more than half of which insurance providers blamed on federal instability related healthcare laws.
“New Jersey is working aggressively to ensure that residents have access to affordable quality coverage, and actions taken by the state to improve the market are reflected in the rates submitted,” said DOBI commissioner Marlene Caride, whose team is now reviewing the submissions regarding rates for 2019 policies, which will be on sale later this year. “We are pleased that the initial rate filings demonstrate concrete results from state efforts,” Caride said.
The Trump effects
Led by President Donald Trump, Republicans in Washington, D.C. have championed efforts to repeal or replace the ACA, which extended coverage to more than 800,000 New Jersey residents and created more robust coverage for millions more. Federal officials have cut funding for program outreach (a more than 90 percent loss for New Jersey), premium support and other elements of the program; Trump’s late-2017 tax-reform law also eliminated the federal tax penalty for not having insurance coverage, a change that will take effect in 2019.
Since then, New Jersey has become the second state to adopt its own, state-based individual insurance mandate, joining Massachusetts, which implemented the policy several years before the ACA took effect in 2014. Several other states are also considering such legislation.
Signed by Democratic Gov. Phil Murphy in May, the law created an income-tax penalty for those who do not obtain healthcare coverage, a mechanism designed to encourage healthy people to join insurance pools, which helps spread the cost of care for sicker individuals.
The reinsurance law — which still requires federal permission and funding — creates a funding pool to help insurance companies defray extreme costs related to certain treatments.
In addition, under Murphy, New Jersey also took more control from the federal government when it comes to reviewing marketplace policies. This move gives the DOBI better control over the rates and products sold here, officials said.
Trying to combat ‘uncertainty created by Washington’
U.S. Sens. Robert Menendez and Cory Booker, (both D-NJ), and state Health Commissioner Dr. Shereef Elnahal praised Murphy for protecting ACA coverage during a healthcare forum Booker’s office organized at Capital Healthcare in Hopewell.
“Under the leadership of Governor Murphy, New Jersey is leading the nation in its efforts to create stability in the market and to combat the uncertainty created by Washington,” Caride said. “Carriers were clear that without state action, the average increase requested in the individual market would have more than doubled.”
According to information that DOBI released in late July, based on preliminary filings from the four health insurance companies doing business on the exchange, average rates for individual policies are likely to increase from less than 1 percent (for AmeriHealth’s EPO plan) to just over 9 percent (for Horizon’s EPO policy.) Without the state-level policies in place to help control these hikes, costs could have gone up somewhere between 6.5 percent (for Horizon’s HMO plan) to 15.4 percent (for Horizon’s EPO policy.)
Plans for small employers — sold by the same four companies but not impacted by the ACA reforms — are slated to go up in price an average of 5.2 percent, DOBI said. These range from a decrease of 3.7 percent for plans sold by Oscar — the health insurance company co-founded by Joshua Kushner, whose brother Jared is a Trump adviser and married to daughter Ivanka Trump — to an increase of 8.8 percent for AmeriHealth.
Bigger hikes in other states
Not all states chose to expand ACA coverage through the individual market, and information from other states is incomplete and preliminary, policy experts note. But the Center for American Progress survey of available data, released in late July, suggests consumers in other states will face more serious hikes. The average rate hike in Maryland is expected to top 30 percent and New Yorkers are likely to see prices increase 24 percent in 2019, it found. (CAP did not include New Jersey’s data.)
“Most insurers have specifically cited the repeal of the individual mandate in their actuarial memorandums,” the CAP report notes. “In the two states that have enacted coverage mandates and banned short-term plans, New Jersey and Massachusetts, it’s estimated that the change in respective federal policies will not generate any excess premium costs.”
The Kaiser Family Foundation, a nonprofit health policy organization that closely tracks premium data, reported earlier this month on the projected increases in the cost of individual health insurance plans in 15 major cities; it noted that the cost was set to increase by as much as 41 percent in Baltimore, MD and 32 percent in Seattle, WA. Denver, CO, on the other hand, could see costs decrease 6 percent next year, based on the predicted cost of a bronze, or low-cost plan, for a 40-year-old nonsmoker. KFF did not include Garden State data in its latest analysis.