Friday, April 06, 2018

New Jersey can sabotage-proof its ACA marketplace next week

Update, 4/12/18: All three bills discussed below passed in both houses of the New Jersey legislature today (info below via the legislature's bill lookup feature). On to Governor Murphy!

1. Individual mandate bill
A3380 Aca (1R) "New Jersey Health Insurance Market Preservation Act." 
Passed both Houses  

2. Reinsurance bill
S1878 ScaScaScs (SCS) "New Jersey Health Insurance Premium Security Act;" establishes health insurance reinsurance plan. 
Passed both Houses  

3. Out-of-network bill
A2039 Aca (1R) "Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act." Passed both Houses 

Original post, 4/6:
Amid all the worry about the effects on the ACA marketplace of individual mandate repeal and administrative rules fostering an ACA-noncompliant market, some really good news is pending in New Jersey.

Bills to establish a state individual mandate (S1877/A3380) and to start the process of seeking a waiver to obtain federal funding for a reinsurance program have passed through committee and are scheduled for floor votes on Thursday, April 12.  The mandate bill would dedicate the revenue collected to the reinsurance program.

While both bills are expected to pass, it's not a sure thing. All Republicans are opposed to the mandate. Governor Murphy has been quiet about it. Mandates are a heavy lift even in blue states. But New Jersey is close, and that's very good news.

I wrote in support of these measures back in January, before the bills were introduced, and submitted testimony in support of the bills on behalf of BlueWaveNJ on March 5, posted here. That testimony includes stories from a half dozen people paying full freight for individual market coverage in New Jersey (or, in one case, from a broker working with many people in that situation). As the testimony highlights:
These are individuals in their fifties and sixties now facing premiums in the $600-1000/month range and family premiums north of $2000.  They describe tough choices between narrow network coverage and still-higher premiums, or between narrow networks and down-sizing to bronze plans that offer basically catastrophic coverage. Subsidized members are faced with a similar choice between ultra-narrow networks and steep premium increases or reduced coverage.
New Jersey is one of a handful of states that bans short-term health plans, so the state is protected from the Trump administration's pending rule that would create a parallel market to the ACA-compliant one by enabling those lightly regulated, medically underwritten short-term plans to be offered for year-long terms (and possibly renewal). The mandate bill, moreover, includes a blocking maneuver against the administration's efforts to promote Association Health Plans, another attempt to punch a hole in the ACA-compliant risk pool.

While shutting off those alternative avenues protects the state from even more extensive harm to the ACA-compliant individual and small group markets, it also creates an imperative to provide better forms of relief to people who have to rely on that market. So our testimony argues:
When the market gets unaffordable enough, people seek alternatives, even if these alternatives limit access to comprehensive care. New Jersey shuts out the alternatives promoted by the Trump administration -- banning short-term policies and tightly regulating association health plans. That's good policy --  but it creates an obligation to foster a market that's affordable to the unsubsidized and offers robust choices to all. An individual mandate paired with reinsurance is the most cost-effective way to do that.
New Jersey could also consider an administrative measure that could make coverage more affordable for many: confining "silver loading" to on-exchange plans only. When the Trump administration cut off federal reimbursement last October for the Cost Sharing Reduction (CSR) subsidies that insurers in the marketplace are obligated to provide to low income enrollees who buy silver plans, New Jersey instructed insurers to concentrate the cost of CSR in silver plans only. Other states went further and confined "silver loading" to plans offered on the exchange, which protected off-exchange (unsubsidized) buyers who wanted silver plans. In New Jersey, the most popular silver plan from Horizon Blue Cross went up 28% -- and as the BlueWave testimony demonstrates, that pushed many people either into bronze plans or into AmeriHealth plans with an inferior provider network. Others simply paid through the nose to maintain their then-current silver coverage. (Gold plans remained out of reach for most in Jersey.)

Concentrating the cost of CSR in on-exchange silver premiums has two beneficial effects for enrollees. For the subsidized, it creates discounts in bronze and gold, since premium subsidies are income-adjusted and keyed to the cost of a benchmark (second cheapest) silver plan. For the unsubsidized, it preserves the silver option (the most popular), because off-exchange silver plans don't bear the added cost of CSR (which is available only to lower income subsidized enrollees). By switching to on-exchange silver loading, New Jersey could hold state residents harmless from Trump's CSR sabotage,as it's doing from Trump's short-term and association plan sabotage, and (if the mandate/reinsurance bills pass) from Congressional Republicans' mandate repeal sabotage.

So, fingers crossed. And if you live in Jersey, locate your assembly members and senator here and tell them you support the mandate and reinsurance bills. Please.

And while you're at it, tell them you support The Out-of-Network Consumer Protection Act (A2039/S485), an excellent balancing billing protection bill, also up for a vote next Thursday.


  1. Thanks for your thoughtful comments, and for your persistent good efforts in the public sphere.

    You conclude that "individual mandates plus reinsurance will lead to more affordable coverage."

    I will give that a kind of weak 'maybe.' Let me be more specific:

    today a 55 year old making $50,000 a year in Princeton NJ is facing premiums of $700 a month for really awful coverage -- $5000 deductible, and then doctor visits and generic drugs covered at just 50% after the deductible. (see Health Sherpa for details)

    If he makes $50,000 a year, which is not rich in NJ, then his after tax income will be about $3000 a month. $700 a month for health insurance is about 23% of his real income.

    So far I have said nothing new. My question is this:

    will a mandate and reinsurance get his premium for decent coverage down to $300 a month, which is ten per cent of his real income?

    They won't. To me the only answer is to extend the ACA subsidies to all income.

    Your solutions though meaning well are what I call aspirational solutions....they hope to lead insurance companies to charge lower premiums. My solution (more subsidies) kind of gives up on trying to nudge insurance companies into lower premiums. I would let them charge what they have to and then subsidize the buyers.

    Finally let me thank you for supporting the Out of Network bill. New York and California have led the way, but other states and NJ are catching up. Why this has to move sluggishly from state to state is for conservatives the majesty of our federalist system...but to me it is just stupid delaying.

    1. Bob, I don't mean to suggest that arresting and partially reversing the steep premium hikes of the last two years is a sufficient solution. It's just what's possible on a state level now, particularly in NJ which is in dire financial condition. To stave off the premium hikes expected as a result of the mandate repeal, and possibly peel back premiums up to 10% via reinsurance, would be a major win. Also, you're citing worst case. For older buyers just over the subsidy line, insurance is unaffordable. For a lot of people over 400% FPL, it's an outsized but manageable burden. Finally, modest improvements would improve the risk pool and so might bolster competition in the state, which would benefit subsidy-eligible people.

  2. Good points......
    I think we are near (or past!) the point where the private insurance industry cannot provide affordable comprehensive products for persons over 50 or 55.

    Funny, we had a national response to that when the age was 65.
    Tom Bodenheimer had a piece in Health Affairs about expanding Medicare downwards in age. This might be the long range national solution.