Monday, August 12, 2019

New Jersey individual market premiums set to rise, bucking national trend

Surprise...while individual market premiums for 2020 are up an average of just 0.7% in the 40-odd states tracked so far* by Charles Gaba, requested rates are up a weighted average of 8.6% in New Jersey -- after a 9% drop last year, the product mainly of a new reinsurance program and a state-enacted individual mandate.

AmeriHealth, which gained market share this year and currently enrolls 41% of the total NJ individual market, is requesting increases averaging 11%. Horizon Blue Cross, with 62% market share, is requesting increases averaging 6.2%. Oscar, with 4.4% market share, is requesting a 16.3% average increase.

Here are the rate requests (from Enrollment is negligible in Horizon Health of New Jersey, Horizon's HMO. AmeriHealth HMO accounts for 11.4% of AmeriHealth's Q1 2019 enrollment. Oxford Health enrollment is negligible.

Some context, presented without attempt at causal explanation:

1. On-exchange enrollment was down 7% in New Jersey this year, while off-exchange enrollment increased 3%, for a net drop of 4%. The on-exchange total was disappointing in light of the 9% premium drop, but not surprising in that offerings for subsidized enrollees actually degraded slightly in 2019 as spreads between the benchmark and cheaper plans narrowed. While the state's on-exchange drop exceeded the 4% average for the 39 states using the federal platform, it was dead-center for states on the platform that have expanded Medicaid. Those states on average get less benefit from silver loading* than nonexpansion states, since they have fewer low income enrollees in high-AV silver.

2. AmeriHealth dropped premiums most aggressively in 2019 and gained market share, rising from 35.3% of the total individual market in 2018 to 41.1% this year.  Notwithstanding the overall enrollment drop in 2019, AmeriHealth's covered lives total rose 11.7%,  from 116,044 in Q1 2018 to 129,594 in Q1 2019.

3. Below are the "key cost drivers" according to the actuarial memo for AHIC, which accounts for almost 90% of AmeriHealth individual market enrollment.

While actual experience in 2018 was better than expected, estimated medical trend -- accounting for factors including providers' charges, enrollees' utilization, network changes, and "modifications in cost sharing to ensure that plans comply with Actuarial Value requirements" -- is up 10%. Exactly how utilization could be up while "actual experience" is down, I don't know.

4. Horizon's and AmeriHealth's rate requests in the small group market contrast dramatically with the individual market requests. AHIC is up just 1.6%, while Horizon Healthcare Services is down 4.0%. Oxford is a significant presence in this market, with 23% of the market. Horizon has 66% of the market; AmeriHealth, 10%. marginal improvement in small group.

5.  Contrast AHIC's cost driver summary for small group with its indie market summary:

In both cases, actual experience is considerably better than expected, but the anticipated cost trend in the individual market is much higher, and the reported demographic change shows a sicker risk pool in the individual market, as opposed to a marginally improved one in the small business market.

Rate requests are not final rates; NJ's Dept. of Banking and Insurance has yet to weigh in.

More from Charles Gaba on NJ rate requests (e.g., that it's too early to assess individual mandate impact)  here. And from Louise Norris, NJ's rate increase history, along with a complete history of marketplace developments in the state.


Silver loading is the byproduct of Trump's October 2017 cutoff of direct federal reimbursement to insurers for the Cost Sharing Reduction (CSR) subsidies they are required to provide to low income marketplace enrollees who select silver plans. Faced with the cutoff at the brink of open enrollment for 2018, most state insurance departments allowed or encouraged insurers to price CSR into silver premiums only. Since premium subsidies, designed so that the enrollee pays a fixed percentage of income, are set to a silver plan benchmark, inflated silver premiums create discounts for subsidized buyers in bronze and gold plans.

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