U.S. News & World Report

In New Jersey, A Move To Improve Access To Health Insurance

After establishing its own reinsurance program, premiums in the Garden State are set to drop by about 22 percent for 2019.

U.S. News & World Report — November 30, 2018

By Susan Milligan, Senior Writer

New Jerseyans undertaking the dreaded task of choosing — and paying for — a health insurance plan through the individual marketplace this enrollment season will discover a stunning new reality: Their premiums for 2019 will be an average of 22 percent less than they were for 2018.

Yes, less. While many health care consumers have had to accept premium price hikes in the double digits every year, the Garden State is moving in the other direction. Major reforms made earlier this year, including an unpopular state mandate to obtain insurance, will save individuals an average of $1,600 in 2019, according to an analysis by New Jersey Policy Perspective, a social policy think tank. The package was the product of state legislators, citizen advocates, health care specialists and the insurance industry.

"It shows that when government and the private sector work together, they can make meaningful changes in the health care community," says Raymond Castro, NJPP's director of health policy.

Under the new approach, New Jersey is orchestrating a "reinsurance" program, defraying the cost of high-risk patients to insurers, which then helps insurers lower premiums for everyone. The money comes from three sources: penalties paid by people who defy the requirement to buy insurance, federal funds previously assigned to lower premium costs, and some state funds.

"This is a really creative notion that had buy-in from all sectors in New Jersey," says Wardell Sanders, president of the New Jersey Association of Health Plans, a nonprofit health care insurers group. The approach allows insurers to maintain the same coverage even with the lower premiums, he says.

The biggest winner, Castro says, will be a group that got shortchanged in the Affordable Care Act: middle-class residents who make too much to qualify for federal health insurance premium subsidies, but not enough to afford the cost of insurance on their own. This year, even the least expensive of the mid-level or "Silver" plans under the ACA ran more than $15,000 for a family of four.

The new structure, achieved through state legislation and a special waiver from the federal government, will save that family $3,264 for the same plan, according to projections by the New Jersey Department of Banking and Insurance. The 140,000 middle-class New Jerseyans now in the market will save a total of $3.3 billion over the next decade.

Overall, New Jersey — which ranked as the ninth-most expensive state (if you include D.C.) in which to buy health insurance in 2014 — will be the fourth-least expensive state in 2019, experts say. The deadline for buying insurance on the marketplaces is Dec. 15.

Maura Collinsgru, director of health programs at New Jersey Citizen Action, says the New Jersey initiative was a reaction to moves by Congress and the Trump administration to weaken the Affordable Care Act, also known as Obamacare, both by holding up certain financial support to insurers to help cover low-income patients and by effectively killing the individual mandate. (The mandate is still in the books, but the new tax law eliminates the financial penalty for failing to acquire insurance.)

"The ACA really got us far down the road, in terms of increasing access to coverage. It wasn't perfect — there were more things to do," Collinsgru says. "As the Trump administration began to peel away the layers of protection and the access, people were really suffering here in New Jersey. So the state took the bold step of actually implementing our own protective devices against the sabotage."

The Garden State's new policy reflects a dramatic change in the ways states are responding to the Obama administration's politically divisive health insurance law. Initially, after the Affordable Care Act was signed in 2010, some states impeded the law, either by refusing to expand Medicaid or by balking at setting up their own health insurance marketplaces. (Consumers in those states were sent to federally run health care exchanges.)

But now, as the GOP-controlled Congress has weakened and sought to kill the law, states are instating their own Obamacare-like rules and establishing their own coverage and access requirements.

Several states have made no co-pay birth control part of their law, thwarting Trump administration rules weakening the Obamacare requirement that birth control be covered as part of preventive care. Oregon has gone furthest, requiring that the whole gamut of reproductive costs - from birth control to vasectomies and abortion - be covered by insurers at no cost to the patient.

Three conservative states — Utah, Nebraska and Idaho — passed referenda in the midterm elections to expand Medicaid, leaving just 14 states that have not adopted expansion of the program to provide medical care to the poor and disabled.

New Jersey this year joined Massachusetts and Vermont in passing a statewide individual insurance mandate, an idea that was unpopular with voters but critical, health care experts say, to making the plan workable.

A poll taken two months before the individual mandate law was passed showed that while two-thirds of New Jerseyans wanted the Affordable Care Act to remain in place, just 40 percent approved of the requirement that individuals acquire insurance.

That's a common contradiction, says Joel Cantor, director of the Center for State Health Policy at Rutgers University, which conducted the poll. "It's a negative feeling about the role of government, and the words 'requirement' or 'mandate' don't feel right to people," Cantor says. But without the mandate, insurers don't have the varied risk pool they need to spread out the cost of coverage, experts note.

"The people who can afford to pay for health care and choose not to are deadbeats. They are forcing responsible people who do choose to pay to pick up their costs," says New Jersey state Sen. Declan O'Scanlon, a Republican who voted for the mandate. Otherwise, he says, "we'd (have to) exhaust their assets, wheel them to the curb and have them die. If you don't have the guts to admit that is a consequence of what you are advocating" by opposing the mandate, "you need to shut up," O'Scanlon says.

Several states have considered passing their own mandates; the Commonwealth Fund projects that insurance premiums would drop by 11.8 percent in 2019 if all states took that approach. Proponents of the New Jersey law, meanwhile, point to their package as a model. "Our premiums are already going down," Castro says. "It might help other states even more."

Top Top | NJCA Homepage | NJCA in the News