Latest New Jersey exchange updates
- Open enrollment for 2019 coverage in New Jersey ended on December 15.
- Enrollment is still possible for New Jersey residents with qualifying events.
- Premiums decreased for 2019, thanks to an individual mandate, reinsurance program.
- Individual mandate, reinsurance, and surprise billing protections signed into law.
- Enrollment fell 7% for 2018 plans.
New Jersey exchange overview
New Jersey uses the federally run exchange, which means residents enroll in exchange plans through Healthcare.gov. Five carriers offered plans in the New Jersey exchange in 2016, but three of them exited the exchange at the end of 2016, leaving two carriers that are continuing to offer plans for 2017.
For 2018, Oscar Health – one of the insurers that had exited at the end of 2016 – returned to the exchange, bringing the total number of carriers to three. Oscar’s coverage area in 2018 is larger than it was when they offered exchange plans in the state previously.
All three insurers will continue to offer coverage in New Jersey’s exchange in 2019, and average rates are decreasing by 9.3 percent in 2019, due to the state’s new individual mandate and reinsurance program. New Jersey is thus-far the only state to implement both of those market stabilization tools.
HHS estimated that there were 44,000 people who had off-exchange coverage in New Jersey in 2016 but who would be eligible for subsidies if they switched to the on-exchange market. Open enrollment for 2017 has ended, but coverage is still available for people who experience a qualifying event (note that HealthCare.gov has stepped up enforcement of eligibility verification for qualifying events, so applicants should be prepared to provide proof of a qualifying event).
Rates are decreasing in 2019, thanks to state individual mandate reinsurance program
All three insurers that offer plans in the New Jersey exchange in 2018 will continue to do so in 2019:
- Horizon BCBS
- Oscar Health
Oxford (UnitedHealthcare) also offers an off-exchange EPO in New Jersey, and will continue to offer it in 2019.
New Jersey regulators announced in late July that the average proposed 2019 rate increase for individual market plans was 5.8 percent. At that point, the proposed rate increase would have been more than twice that much (12.6 percent) if the state hadn’t enacted legislation to create its own individual mandate starting in 2019.
The loss of the federal individual mandate penalty is driving premiums up all across the country for 2019, but New Jersey has insulated itself from that by implementing its own mandate (when there’s no mandate, healthy people are less likely to maintain coverage, which results in a less healthy risk pool and higher premiums for everyone who remains insured).
In addition, New Jersey had submitted a 1332 waiver proposal, seeking federal pass-through funding for a reinsurance program. CMS was still reviewing that proposal when rates were being filed, so the 5.8 percent average proposed rate increase for New Jersey plans does not account for the reinsurance program. Federal approval for the state’s 1332 waiver came in mid-August. State regulators had already noted that the rates would be revised if and when the reinsurance program was approved, and they expected the 2019 rates to be 15 percent lower with reinsurance than they would otherwise have been.
Sure enough, Governor Murphy’s office announced in early September that average rates in the individual market would decline by 9.3 percent in 2019, after accounting for the impact of the reinsurance program. So if New Jersey hadn’t done anything at all, rates would have increased by an average of nearly 13 percent. But instead, because the state is implementing an individual mandate and a reinsurance program, the average rates are decreasing by more than 9 percent.
The approved base rates for each plan, as well as the applicable age-based multipliers, are available here.
2018 enrollment: 7 percent lower than 2017
274,782 people bought coverage in the New Jersey exchange during open enrollment for 2018 coverage. That was nearly 7 percent lower than the total number of enrollees the year before, when 295,067 people signed up. But open enrollment for 2018 coverage was only half as long as it had been for 2017, running from November 1 to December 15, rather than continuing through January as it had in prior years.
In addition, the Trump Administration sharply reduced funding for Navigators and exchange marketing in the weeks leading up to open enrollment. Indeed, average enrollment for 2018 was lower than it had been in 2017 across most of the states that use HealthCare.gov.
2018 health care legislation in New Jersey: Reinsurance, individual mandate, and surprise billing protections
Lawmakers in New Jersey have considered a variety of health care reform bills in the 2018 session. Two vitally important bills – to create an individual mandate and a reinsurance program, passed and were signed into law by Governor Murphy in 2018.
New Jersey will join Massachusetts in having an individual mandate in 2019, and will join Alaska, Minnesota, and Oregon in having a reinsurance program, assuming the state’s 1332 waiver proposal is approved by the federal government. Vermont is the only other state that has enacted an individual mandate, but Vermont’s won’t take effect until 2020.
In addition, Governor Murphy signed legislation to protect consumers from surprise balance billing Here’s a summary of the health care reform legislation New Jersey lawmakers have considered in 2018:
- A.3380 – PASSED AND SIGNED INTO LAW. The legislation will implement a state-based individual mandate in New Jersey, effective in 2019. It passed 23-13 in the Senate, and 50-23 in the Assembly, and Gov. Murphy signed it into law in late May, 2018. The ACA’s individual mandate penalty will disappear after 2018, under the terms of the GOP tax bill that was enacted in late 2017. New Jersey’s mandate will take effect seamlessly, as of 2019. It will be structured in much the same way as the ACA’s individual mandate penalty, although the maximum penalty will be tied to the average cost of a bronze plan in NJ, rather than the national average cost. The penalty will be assessed on state tax returns, rather than federal tax returns. For the 2015 tax year, the ACA’s individual mandate penalty was assessed on 188,750 federal tax returns filed by New Jersey residents, with total penalties of $93.3 million. The revenue collected by the state under the mandate penalty will be used to provide state funding for the reinsurance program called for in S.1878 (discussed below).
- S.1878 – PASSED AND SIGNED INTO LAW. The legislation directed the state to apply for a 1332 waiver in order to obtain federal funding for a state-based reinsurance program. It passed 22-14 in the Senate, and 46-22 in the Assembly, and Governor Murphy signed it into law in late May, 2018. New Jersey submitted a 1332 waiver proposal for the reinsurance program to CMS on July 2, 2018, and it was approved by CMS the following month, granting federal pss-through funding that the state will use to operate the reinsurance program. Before the reinsurance program had received federal approval, insurers in the state had proposed an average rate increase of 5.8 percent for 2019. But rates were revised once the reinsurance program waiver was approved, resulting in an average decrease of more than 9 percent. New Jersey’s reinsurance program will reimburse insurers for 60 percent of the cost of claims that exceed $40,000, until the claims reach $215,000. Several states have either implemented reinsurance programs already, or will do so in 2019. And those states are showing improved market stability and premiums that have either declined or been limited to very modest increases. Alaska established a reinsurance program in 2016, and it has been credited with keeping premiums increases much lower than most states in 2017, and sharp premium decreases for 2018. Minnesota and Oregon implemented reinsurance programs for 2018, with average premiums declining in Minnesota and increasing by only single-digit percentages in Oregon.
- A.2039 – PASSED AND SIGNED INTO LAW. The legislation will protect consumers from surprise balance bills from out-of-network providers who perform services at in-network facilities. It will also require medical facilities to clearly explain to patients whether the facility is in or out of network with the patient’s insurer, and will require insurers and out-of-network providers to enter binding arbitration when billing disputes arise. Self-insured health plans are not subject to state law (they’re governed instead by federal law, under ERISA), but self-insured plans would be able to opt in to the provisions of the state’s surprise billing protections. Several states have addressed the surprise billing issue, but New Jersey’s new legislation is considered the strongest in the country. A.2039 passed 21-13 in the Senate, and 48-21 in the Assembly, and was signed into law on June 1, 2018. Similar measures have been debated in New Jersey for the last decade. Specialists in New Jersey remain opposed to the legislation, and are considering the possibility of a legal challenge to the new law.
- A.377 – PASSED THE ASSEMBLY, CURRENTLY WITH THE SENATE. The legislation would require hospitals to assist uninsured patients with the process of creating an account with the exchange (HealthCare.gov). If it’s during open enrollment or the person has a special enrollment period, the hospital employee would (if properly trained) assist the patient with the enrollment process if the patient chooses to enroll.
Several other health care reform measures were considered in New Jersey in 2018, but have not advanced. But New Jersey is one of a handful of states where the legislative session continues throughout the year.
- S.564 – would prevent any health insurance policy from being sold in New Jersey unless it meets NJ statutes. The summary of the legislation notes that the bill is a response to Executive Order 13831, which was signed by President Trump in October 2017, in an effort to expand access to short-term health insurance plans and association health plans (New Jersey already prohibits short-term health insurance plans). But conversely, A.283 would allow the opposite: if enacted, it would allow insurers domiciled in other states to offer plans for sale in New Jersey without necessarily having to comply with all of New Jersey’s regulations.
- A.352 – if an insurer withdraws from the exchange in New Jersey, that insurer would be prevented from entering into a contract with the state to offer Medicaid managed care plans. This is an effort to ensure that the exchange market remains robust, as insurers generally find the Medicaid managed care market to be fairly attractive.
- A.469 – would allow sole proprietors to join a small employer health benefits purchasing alliance in New Jersey. Under current rules, sole proprietors are not considered small employers, and can only buy insurance in the individual market. The New Jersey Small Employer Health Benefits Program currently defines eligible members as businesses with at least two employees, but A.469 would expand that definition so that a sole proprietor could join the program. Eligible sole proprietors would have to either be engaged in the same line of business as the other members of the alliance, or located in the same geographic area. It’s noteworthy that this mirrors what the Trump Administration has proposed (and is expected to finalize) at the federal level.
- A.1343 / S.561 – would create a public health insurance option in New Jersey that would compete alongside the options available in the private market (something similar was initially considered at the federal level when the ACA was being debated, but was ultimately abandoned and replaced with the CO-OP program).
- S.924 – would allow insureds to continue to receive in-network coverage for up to 12 months for a primary care physician who leaves or is terminated from an insurer’s network.
- A.710 – would require Medicaid, CHIP, and private insurers in New Jersey to cover out-of-network care as if it were in-network care in the case of a child with a catastrophic illness who has been referred to the out-of-network provider by an in-network provider.
- A.5310 (introduced in December 2017) – would direct the state to work with the federal government to expand Medicare (a federal program) to cover everyone in New Jersey. The federal government would determine the necessary premiums, and the state would then prohibit the sale of any other health insurance in the state that would duplicate the benefits offered by Medicare, so Medicare would essentially be the only option available. A bill like this is a very long shot, especially as the federal government would have to agree to expand Medicare to allow everyone in New Jersey to buy into it.
Oscar Health rejoined New Jersey exchange for 2018
Oscar Health offered coverage in the New Jersey exchange in 2015 and 2016, but did not offer coverage for 2017. They’ve rejoined the exchange, however, and are offering coverage for 2018.
In 2015 and 2016, Oscar offered coverage in nine of New Jersey’s 21 counties. For 2018, they’re offering coverage in 14 counties: Bergen, Essex, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Warren, and Union.
2018 rates and plans
Three insurers are offering New Jersey exchange plans in 2018 with the following average rate increases:
- AmeriHealth: 17.1 percent increase (AmeriHealth had initially proposed an average increase of 6.42 percent for their HMO (14,277 members), and 9.62 percent for AmeriHealth Insurance Company (83,775 members). The average rate increases varied considerably by plan, ranging from 9 percent to 53 percent.
- Horizon BCBS: 24 percent (about 235,000 members). Horizon explained that the majority of their proposed rate increase for 2018 is due to the uncertainty caused by the Trump Administration and the GOP efforts to repeal the ACA. The rate increases varied by plan, from 16 percent to 28 percent.
- Oscar Health: New to the exchange for 2018, so no applicable rate increases
The rate filings indicated that uncertainty at the federal level was a significant factor in the rate increases for 2018. As described below, the average rate increases would have been much lower if cost-sharing reduction (CSR) funding had not been eliminated by the Trump Administration.
Cost of CSR has been added to silver exchange plans in New Jersey
Throughout 2017, the uncertainty surrounding CSR funding loomed large in the rate-setting process for 2018 plans. States and insurers took varying approaches to dealing with the uncertainty, and some changed their approach in last-minute rate revisions after the Trump Administration announced on October 12 that CSR funding would end immediately.
In mid-October, the New Jersey Department of Banking and Insurance published the base rates that had been finalized for 2018 coverage in the individual market, including on and off-exchange. That document didn’t have overall percentage increases, but the NJ DOBI confirmed by phone that the cost of CSR had been incorporated in the on-exchange silver plan rates for 2018.
For insurers that sell the same plan both on and off-exchange, the added cost of CSR applies to both the on and off-exchange versions of the plan, since the premium has to be identical for identical plans, regardless of whether they’re on or off-exchange. But silver plans that are only offered off-exchange do not include the cost of CSR (note that at the gold and bronze level, there are significantly fewer plans available in 2018 than there were for 2017, but at the silver level, there are almost as many plans available).
Adding the cost of CSR to silver plan premiums ends up protecting the majority of enrollees. Premium subsidies are larger than they would otherwise have been, since the subsidies are based on the cost of the second-lowest-cost silver plan. 79 percent of New Jersey exchange enrollees receive premium subsidies, and those enrollees will be well protected from the brunt of the rate increases. Premium subsidy recipients who picked bronze or gold plans likely found that their net premiums decreased for 2018, as the larger subsidies based on higher silver plan premiums can be applied to plans at other metal levels, despite the fact that the other metal levels don’t have the cost of CSR added to their premiums.
Off-exchange enrollees and unsubsidized exchange enrollees had to pay close attention to their plan choices for 2018, however. If they wanted a silver plan, the best bet may have been an off-exchange-only silver plan, in order to avoid the CSR cost that was added to on-exchange silver plans. Otherwise, bronze and gold plans could also be a good choice. As always, it was important to comparison shop during open enrollment before settling on a plan for the coming year.
Will New Jersey cap prescription drug costs?
A 2016/2017 bill in the New Jersey Senate, S.814, which would cap enrollees’ costs for prescriptions at $100 per month for a single prescription if the enrollee is in silver, gold, or platinum plan, and $200 per month if the enrollee has a bronze plan (catastrophic plans would not have to cap the monthly cost for prescriptions, but they would still have to conform to the normal maximum out-of-pocket costs that apply to all plans under the ACA.
The legislation passed unanimously in the Senate in June 2017, but did not advance in the Assembly in 2017. It could be refiled in 2018, however, under the rules of the state’s legislature.
Under the legislation, HSA-qualified plans would have to count prescription costs towards the deductible, as required by HSA rules. But after the deductible is met (and before the maximum out-of-pocket is met), copays would not be allowed to exceed $100 or $200 per month, per drug, depending on the metal level of the plan.
Several states have already implemented caps on prescription drug costs, but most have not. Although advocates worry that patients who need specialty drugs are facing insurmountable prescription bills, there are also concerns that capping prescription costs ends up driving up insurance costs for everyone.
Regardless of whether legislation is implemented to cap prescription costs on a monthly basis, the ACA’s out-of-pocket maximum applies to all plans, unless they’re grandfathered or grandmothered. And since prescription drugs are one of the ACA’s essential health benefits, they’re required to be covered on all non-grandfathered, non-grandmothered plans. So even if a patient needs very costly specialty drugs, his total out-of-pocket for in-network care in 2018 – including prescriptions – won’t exceed $7,350. Health plans each set their own formulary (covered drug list), but they have an appeals process that patients and doctors can use if a patient has to have a specific drug that’s not included in the formulary.
2017 enrollment: 2% higher than 2016
295,067 people enrolled in private plans through the New Jersey exchange during the 2017 open enrollment period. For perspective, 288,573 people enrolled in coverage through New Jersey’s exchange during the 2016 open enrollment period, so enrollment grew by a little more than 2 percent in 2017. That’s notable, as there was an overall average decrease in enrollment across all the states that use HealthCare.gov; New Jersey bucked that trend).
Of the people who enrolled during the 2016 open enrollment period, 78 percent are receiving premium subsidies (slightly lower than the 83 percent nationwide). The average full-price premium in New Jersey’s exchange in 2017 is $479/month, but the average after-subsidy premium drops to $206/month.
New Jersey lawmaker introduced AHCA amendment to weaken ACA provisions, garner Freedom Caucus support
Tom MacArthur, a Republican who represents New Jersey’s 3rd Congressional District in the U.S. House of Representatives, introduced an amendment to the American Health Care Act (AHCA) that would allow states to use waivers to change a variety of ACA provisions, including the definition of essential health benefits and the law’s guaranteed issue rule.
MacArthur was one of just nine Republicans in the House who voted against S.Con.Res.3 in January 2017 (the measure that got the ball rolling on creating a reconciliation bill to repeal spending-related provisions of the ACA). But he’s one of the moderate Republicans in the House who has been instrumental in trying to work out a compromise with conservative Republicans in an effort to pass the AHCA.
Ultimately, MacArthur’s amendment was enough to get the conservative Freedom Caucus to support the AHCA, and the bill passed in early May. House lawmakers didn’t wait for the CBO to score the bill before passing it, however. But when the CBO score came out three weeks after the bill passed, Freedom Caucus chairman Mark Meadows (NC, 11th District) expressed dismay when shown a section of the CBO report indicating that people with pre-existing conditions in states that seek MacArthur Amendment waivers would potentially be priced out of the insurance market.
Ultimately, the bill died in the Senate, where several versions of the legislation failed to garner enough Republican support to pass (the Better Care Reconciliation Act, “skinny” repeal, the Obamacare Repeal Reconciliation Act, and the Graham-Cassidy-Heller-Johnson amendment). The clock ran out on reconciliation for 2017 on September 30, but Republican lawmakers have vowed to try again to repeal the ACA at their earliest opportunity.
How would ACA repeal impact New Jersey?
In December 2016, HHS reported that 398,000 people had gained health insurance coverage in New Jersey between 2010 and 2015, as a result of the ACA. And by late 2016, the Rutgers Center for State Health Policy reported that 670,000 people in New Jersey had gained coverage under the ACA. If the law is repealed and not replaced with something equally robust, many of them would lose their coverage.
A November 2016 New Jersey Policy Perspective report noted that more than half a million New Jersey residents would lose their health insurance based solely on repeal of the ACA’s Medicaid expansion. That’s in addition to the people who would lose individual market coverage if ACA subsidies were stripped away.
The version of the AHCA that the House passed in early May would roll back the enhanced federal funding for new Medicaid expansion enrollees after the end of 2019, but more importantly, it would also cut overall federal funding for Medicaid, including traditional Medicaid coverage for low-income pregnant women, children, and seniors. Nearly 1.8 million New Jersey residents are covered by Medicaid or CHIP, and funding for their coverage would be reduced if legislation similar to the AHCA were to be enacted. All of the measures that Republican Senators considered in 2017 would have made similar cuts to Medicaid.
CO-OP closed at the end of 2016, liquidation underway
Health Republic Insurance of New Jersey was one of the ACA-created CO-OPs, most of which have not survived. In September 2016, Health Republic was placed into rehabilitation by the NJ Department of Banking and Securities. As a result, the CO-OP stopped selling new policies, and existing policies terminated at the end of 2016.
The CO-OP noted that their financial collapse stemmed in large part from the risk adjustment program, under which they had to pay $46.3 million ($38.6 million for individual market plans, and $7.7 million for small group plans). The CO-OP had been told by CMS at the end of 2015 that their projected liability was about $17 million, and that still appeared to be the case as recently as April 2016, but when the final numbers came out in June, the carrier owed more than two and a half times that much.
In total, including on and off-exchange members in the individual and small group markets, there were nearly 35,000 people in New Jersey who needed to secure new coverage for 2017 due to the CO-OP policies terminating at the end of 2016.
Unlike the other CO-OPs that had already closed around the country, state regulators were initially working under the assumption that it might have been possible to stabilize the company enough for it to return to the marketplace in 2018. But that hope was short-lived. On December 15, the NJ Commissioner of Banking and Insurance submitted a recommendation that Health Republic Insurance of New Jersey be liquidated.
And on February 3, 2017, the order of liquidation was filed. The New Jersey Commissioner of Banking and Insurance is serving as Liquidator, and all Health Republic assets are being liquidated to repay creditors as much as possible.
UnitedHealthcare (Oxford HMO) exited exchange
UnitedHealthcare discontinued their individual market HMO plans in New Jersey (sold under the name Oxford) at the end of 2016. According to a May 17, 2016 letter from UnitedHealthcare, the exit applied both on and off-exchange, and mirrors the action the carrier took in most of the states where they sold exchange plans in 2016.
But Oxford/UnitedHealthcare sold coverage in 2016 under two different entities in New Jersey. Only Oxford HMO exited the market. Oxford Health Insurance Company is the other entity that offers non-HMO plans, and the NJ Department of Banking and Insurance confirmed in August 2016 that Oxford Insurance Company would still have an off-exchange EPO available in 2017.
According to a Kaiser Family Foundation analysis, Oxford offered exchange plans in all 21 counties in New Jersey in 2016, but did not have either of the two lowest-cost silver plans in any area of New Jersey.
Oscar also exited exchange
In August 2016, Oscar Insurance Corp. announced that they would exit the New Jersey market, as well as the Dallas, Texas area, although they continue to offer coverage in a few other locations around the country where their position is stronger. Oscar had about 26,000 enrollees in New Jersey.
The company noted that narrow networks are one of their strengths, but that their network in New Jersey was not a narrow network. This was one of the reasons they opted to exit the state. They noted that they also want to start getting into the employer-sponsored insurance market, rather than just focusing on individual coverage.
2017 rates and carriers
There are no platinum plans available in New Jersey’s exchange for 2017; this is common in many states, as carriers have been shying away from the high-cost plans that tend to attract enrollees with the highest healthcare needs.
According to Aetna’s rate filing for 2017, Aetna had been considering offering plans in the New Jersey exchange for 2017. But as of early August 2016, Aetna announced that they were dropping their plans to expand into any new exchanges, so they do not have an exchange presence in New Jersey in 2017.
The two carriers (AmeriHealth includes two entities) that are still offering plans in the New Jersey exchange had the following average rate changes for 2017:
- AmeriHealth HMO: Average increase of 26.3 percent
- AmeriHealth Insurance Company: Rate changes vary from a decrease of 9.7 percent to an increase of 54 percent. Average increase of 18.3 percent
- Horizon BCBS: Average rate increase of 6.83 percent for EPOs, 4.5 percent for catastrophic plans, and 24.25 percent for OMNIA Alliance Gold plans (details below).
Despite the 24 percent rate increase for Horizon’s OMNIA Gold plans, the OMNIA plans are still the least-expensive Gold plans in the exchange for 2017, as the 54 percent increases for AmeriHealth apply to Gold plans.
And Horizon BCBS noted in a press release that their other OMNIA Alliance plans would have much lower average rate increases: 6.19 percent for Bronze, 5.37 percent for Silver, and 5.4 percent for Silver HSA-qualified plans. Of the 163,000+ enrollees who had OMNIA Alliance coverage in the individual market as of October 2016, only about 10 percent were covered under a Gold plan. The other 90 percent had Silver or Bronze plans, with single-digit rate increases for 2017.
Average rate hikes in New Jersey were much more muted than in other parts of the country. HHS announced in October that average benchmark (second-lowest-cost silver) plan premiums would only be 5 percent higher in New Jersey in 2017 than they were in 2016. Premium subsidy increases are tied to the increase in the benchmark plans, so premium subsidies are only modestly larger in 2017. For enrollees whose premium increased sharply, it may be useful to shop around during open enrollment and consider the possibility of switching to a different plan.
Oxford Health Insurance Company requested a 32.3 percent average rate increase for EPO plans sold outside the exchange in 2017, which was approved.
Aetna filed an average rate increase of 19.4 percent in New Jersey, which was approved. Their rate proposal indicated that the plans would be sold both on and off the exchange, but they announced in August 2016 that they would not be expanding onto the exchange after all. This is the second time that Aetna has nearly entered the exchange in New Jersey and then reversed course. They had planned to join the exchange in the fall of 2013, but backed out in September of that year.
Cigna has also filed rates for their off-exchange plans, with a 13 percent increase for 2017, which was approved. But the carrier only had 51 people enrolled in the impacted plans as of early 2016.
During the 2016 open enrollment period, 288,573 people in New Jersey enrolled in private plans through the exchange, including renewals and new enrollees.
As expected, some enrollees didn’t pay their initial premiums, or cancelled their coverage early in the year. By March 31, 2016, effectuated enrollment in the New Jersey exchange stood at 249,395. Of those enrollees, 82.3 percent were receiving premium subsidies that averaged $322 per month.
Open enrollment ended on January 31. Coverage for 2016 is now only available to people who have a qualifying event, although Native Americans can enroll year-round, as can anyone eligible for Medicaid or CHIP. Open enrollment for 2017 coverage will begin November 1, 2016.
For people who don’t have insurance in 2016 and aren’t exempt from the ACA’s penalty, the penalty will be significantly higher than it was in 2014 and 2015. The penalty will be the greater of $695 per uninsured adult (half that amount for a child) up to $2,085 per household, OR 2.5 percent of household income above the tax filing threshold. For tax filers who owe a penalty, the average penalty is expected to be almost $1,000 in 2016 – about five times what it was for 2014.
80 percent of New Jersey exchange enrollees are receiving premium subsidies. For those enrollees, the average pre-subsidy premium is $484/month. After subsidies, their average premium is $161/month. That’s a substantial decrease from the unsubsidized premium, but it’s also considerably higher than the average after-subsidy premium across the 38 states that use Healthcare.gov. That’s due however, to enrollees’ average income and the plans they end up choosing. If enrollees with the same subsidy-eligible income pick the benchmark plan in any given state, their after-subsidy premium will be the same (unless the premium is so low that subsidies don’t apply).
Five health plans are offering individual coverage in New Jersey’s exchange for 2016. Final approved rate changes for 2016 varied considerably from one carrier to another:
- AmeriHealth: Rate changes varied from a 1.88 percent decrease to an 8.65 percent increase.
- Freelancers CO-OP (Health Republic Insurance of NJ): average rate increases of 9 percent to 18 percent.
- Horizon BCBS: Average rate increases are 5.26 percent for HMOs, 10.81 percent for EPOs, and 14.4 percent for catastrophic plans; Horizon’s OMNIA Alliance plans (details below) are new, but are priced lower than existing plans.
- Oscar Insurance Corp. of NJ: rate decreases on most plans, with average rates ranging about 5 percent to 7 percent lower than 2015 prices. Oscar Secure plans had an average rate increase of less than one percent.
- UnitedHealthcare (Oxford): average rate increases were 9.8 percent for PPOs and 11.2 percent for HMOs (Oxford is exiting the state’s individual market at the end of 2016; all current members will have to enroll in coverage from a different carrier during open enrollment).
State-wide, the average benchmark (second-lowest-cost Silver) premiums increased by 5 percent in 2016. Benchmark premium changes are important in terms of their impact on subsidies, but they don’t tell us much in terms of how overall rates have changed.
Horizon BCBS offering new tiered network plans amid controversy
Horizon Blue Cross Blue Shield – New Jersey’s largest health insurer – began offering new health plans in 2016 that appear to be the solution enrollees across the country are looking for: premiums about 15 percent lower than the carrier’s 2015 rates, in addition to lower copays and deductibles in exchange for using specified hospitals and providers. Not surprisingly, residents who were polled about the plans expressed support for the concept.
By late February 2016, Horizon reported that 188,995 people had enrolled in OMNIA plans in the individual market, including more than 45,000 people who were previously uninsured. The carrier also reported more than 41,000 people had enrolled in OMNIA plans in the group market. By October 2016, total individual market enrollment in OMNIA plans stood at more than 163,000 (attrition is to be expected over the course of the year, as the majority of enrollments happen during open enrollment).
Horizon’s new plans were created under the OMNIA Alliance partnership with 22 hospitals, plus an additional 14 hospitals that are designated “Tier 1.” These 36 hospitals have agreed to accept lower reimbursements in trade for higher volume (since insureds will have to use one of those hospitals in order to get the lower copays and deductibles), and have also agreed to reimbursement based on quality of care and patient outcomes, rather than fee-for-service reimbursement.
But the other 36 hospitals in New Jersey have been designated “Tier 2” under the new plans, and insureds who use those hospitals will pay higher copays and deductibles (although insureds will still have access to those hospitals, and the hospitals will continue to receive their current reimbursement rate if insureds choose to use them). Those hospitals are upset that they were left out, and say they were caught off guard by the new Horizon plans.
There is concern that some of the Tier 2 hospitals – particularly those in disadvantaged areas of the state – will suffer significant financial losses as a result of the new plans. And among the hospitals in Tier 2 are two that have highly acclaimed neonatal intensive care units; going forward, fewer women will give birth at those hospitals if Horizon’s OMNIA Alliance plans garner a significant share of the market.
Nationwide, insurers who offer the lowest premiums have tended to see upticks in market share during the past two open enrollment periods. Narrow networks are much more common than they were a few years ago; when given the choice between a narrow network with a low premium and a broad network with a high premium, consumers tend to choose the former. Gill and Vitale have expressed concerns that Horizon’s new tiered network plan could dominate the market in the coming years.
Horizon’s approach in New Jersey still has to stand the test of time, but it’s a compromise between truly narrow network HMO plans (where enrollees only have coverage at designated facilities) and the broad network PPO plans that dominated the pre-ACA market. Horizon’s CEO has defended the new plans, and noted that in a state where healthcare costs are the second-highest in the country, innovation to lower them is necessary.
Horizon has also come under fire from the Medical Society of New Jersey (a physician lobbying group) for the carrier’s requirement that physicians must discuss the “cost sharing implications” of using providers in Tier 1 or Tier 2 when they treat OMNIA members. Doctors must document in patient notes that the conversation has occurred, and doctors who fail to discuss cost sharing implications with OMNIA members could be subject to termination from the Horizon BCBSNJ network. Although there is controversy surrounding this issue, the carrier notes that no doctors have actually been terminated from the network for non-compliance.
Legislation aimed at halting/studying new Horizon plans
Two New Jersey senators, both Democrats (Nia Gill and Joseph Vitale), asked the New Jersey attorney general and federal regulators to delay the implementation of the plans, amid fears that the new plan structure could lead to financial crisis for some hospitals, and limited access to care for some patients. The lawmakers want the state to determine whether Horizon violated any anti-trust and false-advertising laws in the creation of their new plan. They also want a more transparent system for oversight over the metrics health plans use when they determine which providers will be included when tiered provider networks are used.
But despite the controversy, the new Horizon plans became available for purchase on November 1, with coverage effective January 1, 2016. As of late January, Horizon officials said it was too early to release enrollment figures, but noted that there had been a “positive consumer response” to the tiered-network plans.
A group of 17 Tier 2 hospitals filed a lawsuit in November to stop the OMNIA Alliance, and asked the New Jersey Department of Banking and Insurance (DOBI) to intervene. But the DOBI refused, noting that shuttering the new Horizon plans in the middle of open enrollment – once plans had already been purchased by consumers – would potentially “create significant upheaval and disruption to the New Jersey marketplace and its consumers.” In June 2016, an appeals court ruled against the hospitals, upholding the state’s decision to allow the tiered network plans to be sold.
On December 7, Gill and Vitale introduced three bills that address the Horizon Omnia situation. The bills would establish new standards for health plans with tiered networks (S.3286), require such plans to disclose how they create their networks (S.3287), and would require increased network adequacy standards for insurers in the state (S.3289).
None of those bills have advanced out of committee, but the 2016 legislative session – which began on January 12 in New Jersey – has seen the introduction of a slew of bills related to tiered networks, including: S1075, A2585, A2328, A1802, A1693, A888, A887, A886, S635, S634, and S296.
Most of those bills were still in committee as of late April, and Horizon’s Omnia plans are still for sale. But A888 was passed unanimously by the Assembly (73-0) in early April, and was referred to the Senate Commerce Committee in mid-April. The bill would create a task force to study the “recent trend towards tiered health insurance networks” and the impact they have on “consumers, hospitals, providers, and the health care delivery system.” The task force would also be responsible for making recommendations to the legislature in terms of regulatory actions necessary to ensure that “tiered networks operate in the public interest.” The bill ended up stalling in committee in the Senate however, and had not advanced by late July (New Jersey’s legislative session continues throughout the year).
Targeting Northern New Jersey
HHS announced in September 2015 that Northern New Jersey was one of five areas nationwide that had been identified as a target for increasing enrollment in 2016. The northern part of the state has a significant percentage of uninsured residents, and a variety of demographics that have presented challenges for enrollment assisters during the first two open enrollment periods.
Northern New Jersey has a significant population of “young invincibles,” low-income households, and immigrants. Many people in those demographics qualify for Medicaid or extensive premium subsidies, but outreach is crucial in making sure that they’re aware of the opportunity to enroll in coverage under the ACA. Northern New Jersey is home to several million Americans, and encompasses a significant portion of the New York City Metropolitan area.
2015 enrollment data
254,316 people enrolled in plans for 2015 through New Jersey exchange during the second open enrollment period, and 83 percent of them qualified for premium subsidies. The enrollment total includes 133,215 renewals from 2014, of which 75,712 were “active” renewals (as opposed to auto-renewals). Of the active renewals, 45,197 picked a new plan for 2015 rather than keeping their existing 2014 coverage for another year.
Joel Cantor, director of the Rutgers Center for State Health Policy, had estimated that total private plan enrollment in the New Jersey exchange could reach 250,000 people by the end of the 2015 open enrollment period, and it turns out that his prediction was pretty spot-on.
But by the end of June, 194,194 people had in-force private plan coverage through New Jersey’s health insurance exchange. That’s nearly 24 percent fewer than the total number who had enrolled in coverage by the end of open enrollment, but attrition is to be expected during the nine months of the year when enrollment is limited to people with qualifying events. Some enrollees never paid their initial premiums, others cancelled their coverage mid-year, and others lost their subsidies or their coverage due to lack of proper documentation for immigration and financial status.
Another 60,757 New Jersey exchange enrollees were eligible for Medicaid or CHIP during the 2015 open enrollment period; Medicaid and CHIP enrollment continue year-round but tend to spike during open enrollment as a result of outreach activities and advertising.
Two new carriers in 2015 bring exchange total to five
In 2014, only three carriers participated in the exchange in New Jersey: Horizon Blue Cross Blue Shield, AmeriHealth, and Health Republic of New Jersey (Freelancer’s CO-OP). For 2015, two more carriers joined them: UnitedHealthcare (Oxford Health Plans) and Oscar Health Insurance.
Health Republic is a new consumer oriented and operated plan, or co-op, created under a provision of the ACA, and Oscar Health Insurance is an innovative new carrier that started in New York in 2014 and expanded to New Jersey in 2015.
In the Newark area, the second-lowest-cost silver plan (the benchmark plan) was less expensive in 2015 than it was in 2014, but in most areas, staying with the benchmark plan involved switching carriers for 2015. According to data from the Kaiser Family Foundation, the average in 2014 for a 40 year old non-smoker was $322 per month, and that dropped to $316 per month for 2015.
In Bergen County, the carriers offering the lowest-cost silver and bronze plans, as well as the second lowest-cost silver plan, were all different from the carriers that offered those plans in 2014 – highlighting the importance of shopping around during open enrollment.
The New York Times Upshot created an interactive map that further detailed the importance of shopping around during open enrollment. For New Jersey residents (Newark area) who had the benchmark plan in 2014 and opted to simply renew that same plan, the average rate increase for 2015 was roughly 11 percent. But people who shopped around and switched to the new benchmark plan saw an average rate increase of just 2.2 percent.
And across all plans and metal levels in the exchange, an analysis from the Commonwealth Fund found an average 2015 premium increase of just 2 percent for a 40 year-old non-smoker.
The relatively low level of competition in 2014 – just three carriers in the exchange – is one of the reasons for the higher-than-average premiums in New Jersey during the first open enrollment period. According to a report released by the U.S. Department of Health and Human Services (HHS), the average 2014 cost for a bronze plan – the lowest-cost option – in New Jersey was $332 in 2014, compared to a national average of $249 a month. But the entry of two new carriers has helped to hold down the average benchmark plan rates for 2015.
An HHS survey in June 2014 found that New Jersey had the highest average after-subsidy cost for health insurance among the 36 states where HHS ran the exchange in that year: $148 in New Jersey, compared with an average of $82 across all 36 states. This is indicative of not only higher unsubsidized premiums, but also higher average incomes in NJ, and perhaps an affinity for plans with higher metal levels. For people with the same income level (assuming they are subsidy-eligible), it doesn’t matter what state they live in or how expensive the unsubsidized premiums are – the subsidy amounts will differ, but the after subsidy premiums for silver plans will be the same, since the ACA sets net premiums as a percentage of income.
2014 enrollment data
For the 2014 open enrollment period, by April 19, 161,775 people had completed their enrollment in private plans through the New Jersey exchange. Private plan Obamacare enrollments in the New Jersey exchange were nearly 70 percent higher than HHS had predicted last year, prior to open enrollment (the projection was about 113,000 people in 2014). Every state saw a surge in enrollment in March and early April, but New Jersey’s was the seventh largest surge in the country.
The carriers in New Jersey have been forthcoming with their enrollment numbers though. AmeriHealth had 130,000 enrollees as of early September (up from about 10,000 at the end of 2013), and Horizon BCBS had 140,000 by mid-August. Health Republic had enrolled roughly 4,000 new members. These totals are for the carriers’ full book of business, including both on and off-exchange enrollments. But AmeriHealth reported that the majority of their new enrollments have been through the exchange.
More health plans on the horizon?
In October 2014, two NJ hospital systems – Hackensack University Health Network and Meridian Health – signed preliminary paperwork to begin a merger process, and in May 2015, the two parties agreed to the merger – although the deal had not yet been approved by regulators as of early 2016.
If approved, Hackensack Meridian Health would become the largest hospital system in NJ, and will include nine acute-care hospitals, two children’s hospitals, and numerous doctor’s offices, rehab centers, skilled nursing facilities, and assisted living centers. And that was before a merger between Meridian and Raritan Bay Medical Center was approved in January 2016.
Officials are predicting that the merger will lead to the creation of new provider-managed health insurance plans, which could bring more competition to the NJ health insurance market.
ACA’s impact on the uninsured rate
US census data put the uninsured rate in 2013 at 13.2 percent, and showed that it dropped to 10.9 percent in 2014. According to Gallup data, New Jersey’s uninsured rate in September 2013 was 14.9 percent, and they reported that by mid-2015, it had fallen to 9.7 percent.
In addition to the people who have gained coverage in the private individual market, Medicaid/CHIP enrollment in New Jersey grew by 34 percent from 2013 to November 2015, reaching 1,714,434 by July 2015.
History of the New Jersey exchange
The New Jersey Assembly passed two bills authorizing a state-run exchange in 2012, but both were vetoed by Gov. Christie. Those vetoes left the federal government to operate the health insurance marketplace in New Jersey. Governor Christie has taken a very hands-off approach to the ACA, and the state has done little to promote the HHS-run exchange, leaving most of the heavy lifting to brokers, navigators and HHS.
The state did opt to expand Medicaid however, making health insurance available to hundreds of thousands of low-income residents.
New Jersey Senator Nia Gill introduced the legislation again in 2015 to create a state-run exchange. But her bill, S540, but it didn’t advance out of committee during the 2015 session. Gill has been critical of Gov. Christie’s vetoes of the prior exchange-creation legislation, noting that New Jersey subsidies wouldn’t have been dependent on outcome of the King v. Burwell case if the state had created its own exchange.
In January 2014, U.S. Rep Bill Pascrell (D, NJ) introduced a bill that would allow HHS to recoup ACA outreach funding that remains unused by Republican governors like Chris Christie who refused to use the money in their states to promote the ACA and educate residents about its benefits. New Jersey officials were involved in lengthy discussions with HHS over the use of $7.67 million in federal funds that had been granted to NJ in 2012 to use for promoting the state’s health insurance exchange.
The money was intended for outreach, advertising and general promotion of the ACA and the exchange, although NJ officials wanted to use it to staff a call center for the state’s expanded Medicaid program. But HHS had made it clear last year that such a use was not permitted.
Ultimately, the state and HHS were not able to come to a compromise on the issue. New Jersey forfeited the money in February 2015 when the deadline passed, and HHS officially rescinded the funds in early May.
New Jersey health insurance exchange links
State Exchange Profile: New Jersey
The Henry J. Kaiser Family Foundation overview of New Jersey’s progress toward creating a state health insurance exchange.
NJ: New Jersey Health Insurance Exchange
An overview of health exchange issues from the consumer advocacy group New Jersey Citizen Action.
Principles for Establishing a Pro-Consumer NJ Health Insurance Exchange (PDF)
From NJ For Health Care
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.