Friday, June 15, 2018

New Jersey's individual market needs some off-exchange discounts in 2019

Trump's cutoff of federal reimbursement to insurers for Cost Sharing Reduction (CSR) subsidies last fall turbo-charged premium hikes in the individual market in 2018.  Those hikes hit unsubsidized enrollees directly. Yet states that allowed insurers to load the cost of CSR onto on-exchange silver plans only, allowing cheaper silver plans to be sold off-exchange, provided a measure of effective relief to the unsubsidized.

In Philadelphia, an unsubsidized 50 year-old could get the cheapest off-exchange silver plan for $153 per month less ($498/month) than the cheapest on-exchange silver plan (for more closely comparable plans, the spread was $94).  In Baltimore, the cheapest silver plan offered on-exchange for a 50 year-old was $88/month more than the same plan off-exchange ($610 vs. $522).

Not so in New Jersey, where individual market premiums rose a weighted average of 22% in 2018, and still more steeply on market hegemon Horizon Blue Cross's most popular silver plans.* New Jersey did allow "silver loading" -- that is, concentrating the cost of CSR in silver plans only, since CSR is only available in silver plans. But none of the three insurers participating in the state's ACA marketplace offered cheaper silver plans off-exchange, as insurers did in many other states.

In fact, none of the three (Horizon, AmeriHealth, Oscar) sold off-exchange plans that differed in any way from their on-exchange offerings.**

Since the only gold plans offered on- or off-exchange were astronomically expensive, unsubsidized New Jersey buyers mostly opted for three choices: downsize to bronze; downsize their provider network by choosing relatively cheap narrow network AmeriHealth plans; or eat a huge premium increase.  Data is not yet available as to whether off-exchange enrollment shrunk significantly in response to premium increases  -- though oddly, unsubsidized on-exchange enrollment shrunk less in 2018 than subsidized enrollment, down 2% vs. 9% for subsidized.

Will New Jersey's marketplace insurers provide some relief to unsubsidized buyers in 2019 by offering cheaper off-exchange silver plans?  As noted in a Health Affairs blog post I co-authored with David Anderson, Charles Gaba and Louise Norris, a CMS rule change effective in 2019 could ease the way. CMS eliminated a requirement that different plans sold by the same insurer in a given rating area be "meaningfully different" in specific ways. That could theoretically enable state insurance departments to allow insurers to sell the same silver plan on- and off-exchange at different prices.

Since none of New Jersey's marketplace insurers offered different silver plans off-exchange last year, such a rule change might make a difference, easing the path to offering discounted silver plans to the unsubsidized.  I have a query in to the NJ Dept. of Banking and Insurance as to whether essentially identical on- and off-exchange plans may be offered at different prices.

New Jersey's health insurers were well-served by the state legislature and Governor Murphy this year, with bills that restore a state individual mandate, pursue federal funding for a reinsurance program, and increase insurer leverage (while protecting consumers) in balance billing disputes. Rate filings are due July 11; the reinsurance waiver application is due to CMS on July 2. Insurers have cause to compete enthusiastically in the state individual market in 2019. Providing off-exchange discounts would be one way to do that.

* Horizon had 72% on-exchange market share in 2017.

** Cigna and Oxford sold very expensive off-exchange silver plans in NJ in 2018. They did not offer plans on-exchange.

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