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 are exiting the exchange at the end of 2016, leaving two carriers that will still offer plans during the 2017 open enrollment period that begins November 1, 2016.
As of March 2016, there were about 250,000 with effectuated coverage through the New Jersey exchange, which was almost 20 percent higher than the 208,467 people who had effectuated coverage through the exchange a year earlier.
HHS has estimated that there are 44,000 people with off-exchange coverage in New Jersey who would be eligible for subsidies if they switched to the on-exchange market. Open enrollment is the chance to do that; it runs from November 1, 2016 to January 31, 2017.
CO-OP closing at the end of 2016, possibility of reopening remains
Health Republic Insurance of New Jersey is one of the seven CO-OPs still in operation, out of 23 that began offering coverage across the country in 2014. But in September 2016, Health Republic was placed into rehabilitation by the NJ Department of Banking and Securities. As a result, the CO-OP is no longer selling new policies, and existing policies will terminate 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 have 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, 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 are nearly 35,000 people in New Jersey who will need to secure new coverage for 2017 due to the CO-OP policies terminating at the end of 2016.
Unlike the other CO-OPs that have closed thus far, state regulators were working under the assumption that it may still be possible to stabilize the company enough for it to return to the marketplace in 2018.
UnitedHealthcare (Oxford HMO) exiting exchange
UnitedHealthcare will discontinue 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 applies both on and off-exchange, and mirrors the action the carrier has taken in most of the states where they currently sell plans in the exchanges.
But Oxford/UnitedHealthcare sells covered under two different entities in New Jersey. Only Oxford HMO is exiting 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 that Oxford Insurance Company will still have an off-exchange EPO available in 2017.
According to a Kaiser Family Foundation analysis, Oxford offers exchange plans in all 21 counties in New Jersey in 2016, but United does not have either of the two lowest-cost silver plans in any area of New Jersey.
The impact of United’s exit is likely to be modest, since low-cost silver plans tend to be the most popular (73 percent of New Jersey exchange enrollees picked silver plans during the 2016 open enrollment period).
Oscar also exiting exchange
In August 2016, Oscar Insurance Corp. announced that they would exit the New Jersey market, as well as the Dallas area, although they will remain in a few other locations around the country where their position is stronger. Oscar has 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 is not a narrow network. This is one of the reasons they are exiting the state. 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 will not have an exchange presence in New Jersey in 2017.
The two carriers (AmeriHealth includes two entities) that will offer plans in the New Jersey exchange for 2017 have 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 woud have much lower average rate increases: 6.19 percent for Bronze, 5.37 percent for Silver, and 5.4 percent for Silver a HSA-qualified plan. 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 have Silver or Bronze plans, with single-digit rate increases for 2017.
Average rate hikes in New Jersey are 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 increases are tied to the increase in the benchmark plans, so premiums will only be modestly higher in 2017. For enrollees whose premium is increasing sharply, it will be essential 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 indicates 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 occured, 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