State’s Hybrid Health Insurance Exchange Ready to Launch

Lilo H. Stainton | October 9, 2019 | Health Care
A joint federal-state system, the first phase in New Jersey’s assertion of control over health insurance sold on the individual market, is just weeks away
Credit: CFS
Certified marketplace navigator Pamela Gray of Camden’s Center for Family Services

The Trump administration has given New Jersey officials formal approval to create a hybrid federal-state health insurance exchange for the hundreds of thousands of individual market consumers expected to seek coverage for next year — and it is scheduled to open for business in less than a month.

The hybrid model is a first step in the state’s multiyear process to assert greater control over this system; under the plan, New Jersey will take full charge of the exchange and launch its own website in order to sell policies for 2021.

For the 2020 plans — on sale from Nov. 1 through Dec. 15 — the Trump administration’s approval gives the Garden State greater control over the enrollment process and plan design; the state has already committed to spend more than twice what it did last year on public outreach and sign-up assistance. But consumers will still need to purchase products through the federal healthcare.gov website and depend on officials in Washington, D.C. to approve their application.

Individual market policies cover roughly 300,000 New Jersey residents who do not have insurance through their jobs and earn too much to qualify for Medicaid. Approximately two-thirds of these consumers have incomes that qualify them for discounted plans sold through the exchange — a system established through the federal Affordable Care Act — and most are also eligible for federal subsidies to help with monthly premiums or out-of-pocket costs. The remaining one-third purchase individual market plans directly from one of the four insurance companies doing business in the Garden State.

The rising cost of medical care and other factors will drive up the cost of these individual market policies for next year, state officials said Monday. On average, the premium price of 2020 plans will be 8.7% higher than this year’s; however, that is still 1.4 % lower than what consumers paid on average in 2018, they noted, and with other assistance available, some people may not see any increase at all.

Stabilizing the market

Prices for individual market policies declined 9.3% on average between 2018 and 2019, which many credit to laws Gov. Phil Murphy signed to create an individual mandate, or penalty, for not having insurance and to establish a federally funded reinsurance program. Both measures were seen to stabilize the market and enabled insurance companies to charge less.

But while New Jersey has explored a variety of measures to hold down premium prices, the overall cost of accessing care continues to take a greater toll on residents here and across the nation. Research published in JAMA Network in 2017 showed that the percentage of household earnings spent on health insurance premiums alone more than doubled between 1999 and 2016 — from under 15% to more than 30%. (JAMA is the Journal of the American Medical Association.) Recent studies show that, in some states, out-of-pocket spending is also rising faster than inflation and wages.

“We are continuing the work to improve access to quality affordable coverage and establishing our own health insurance exchange is a major part of that effort,” said New Jersey Department of Banking and Insurance Commissioner Marlene Caride. “Transitioning to a State-Based Exchange will give the state greater control over our health insurance market and the ability to take additional actions to ensure New Jersey families get the care that is critical to their health and wellbeing.”

Dozens of states have left their exchange operations in the federal government’s hands, but a law Murphy signed in June will make New Jersey the 12th jurisdiction to take full control of the system, with its own website launched in time for 2021 and the power to shape coverage and determine the enrollment period. In August, DOBI announced it would roll out some of these changes earlier, through the interim, hybrid federal-state model that will be in place for 2020 policies.

The reform was designed to increase the state’s control over the system and make that system more flexible — and additionally to better insulate New Jersey consumers from potentially harmful changes made by the federal government. Two years ago, President Trump cut in half the annual enrollment period — from three months to six weeks — and has since reduced by as much as 90% the funding for local groups who help people to find the right plan and to sign up. (Several states that run their own exchanges, including New York, chose to run longer enrollment periods last year.)

Extra funds for ‘navigators’

Last week, DOBI announced the state would follow through on its promise made in August to distribute $2 million to support local enrollment “navigator” groups, which are considered particularly important in reaching vulnerable families, including non-English speakers, who might not otherwise sign up.

The funding is more than twice what the state invested in this process last year. The new hybrid format means the state no longer has access to the $300,000 the federal government pledged this year for enrollment assistance in New Jersey, out of $10 million to be distributed for this work nationwide.

So far, DOBI has enlisted just one navigator group, the Camden-based Center for Family Services, which has already received $300,000 in state funding. The state is looking to engage other groups as well and is urging interested organizations to get certified and fill out a funding application.