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New Jersey health insurance marketplace

Amid controversy, Horizon BCBS will introduce tiered network plans

  • By
  • contributor
  • October 12, 2015

Horizon BCBS to roll out new plans amid controversy

Horizon Blue Cross Blue Shield – New Jersey’s largest health insurer – has announced that they will offer new health plans in 2016 that appear to be the solution enrollees across the country are looking for: premiums about 15 percent lower than current plans, in addition to lower copays and deductibles. Not surprisingly, residents who were polled about the plans expressed support for the concept.

But two New Jersey senators, both Democrats (Nia Gill and Joseph Vitale), have 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.

Horizon’s new plans were created under the OMNIA Alliance partnership with 22 hospitals, plus an additional 14 hospitals that will be designated “Tier 1.” These 36 hospitals have agreed to lower reimbursements but 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.

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.

Targeting Northern New Jersey

HHS announced in September that Northern New Jersey is one of five areas nationwide that have 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.

2016 rates

Rates for 2016 have not yet been finalized in New Jersey, but at ACAsignups, Charles Gaba has projected a likely average rate increase of 10.2 percent in the individual market, and a worst-case-scenario of 11.7 percent – which is below the national average for 2016.’s rate review tool allows consumers to see proposed rate increases of ten percent or more, although single-digit proposed rate hikes don’t show up on the list.  In New Jersey, three individual market exchange plans have requested rate increases of at least ten percent: Horizon Blue Cross Blue Shield, Oxford Health Plans, and Freelancer’s CO-OP.  The highest among them is a proposed 18 percent increase for the CO-OP.

Although Horizon BCBS has requested a double-digit rate increase for three of its EPO plans, another EPO – expected to cover two-thirds of the company’s Advantage EPO enrollees by the end of this year – will see a rate increase of less than ten percent in 2016. And as described above, Horizon is also planning to introduce new plans for 2016 that will have lower premiums than the rest of their plans.

The other two exchange carriers, AmeriHealth and Oscar, did not request double digit rate hikes for 2016.

If regulators approve the rates as-proposed, the double digit rate increases will apply to about half of the current exchange population, although enrollees will be able to switch to a different plan during open enrollment in order to avoid rate increases.

Open enrollment begins again on November 1, for coverage effective January 1, 2016.  Open enrollment will once again be three months long, ending on January 31.

How many people have enrolled?

254,316 people enrolled in the New Jersey exchange during the second open enrollment period, from November 15 to February 22, 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. Enrollment will climb again once open enrollment begins in November for 2016 coverage.

Another 60,757 New Jersey exchange enrollees were eligible for Medicaid or CHIP between November 15 and February 22.

Two new carriers in 2015 brings 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.

What about premiums?

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 still has to be approved by regulators.  If approved, Hackensack Meridian Health will 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.

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 194,194 people who had in-force private plan coverage through the New Jersey exchange in mid-2015, Medicaid/CHIP enrollment grew by 36 percent from 2013 to July 2015, reaching 1,749,110 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.

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