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I delivered this testimony today to the NJ Senate Commerce Committee in favor a bill that would put gold and silver plan pricing roughly on a par in year one and price silver at a 90% AV in year 2. Laura Waddell of New Jersey Citizen Action also testified in favor. The bill passed out of Committee on a 5-0 vote.
TESTIMONY
BEFORE SENATE COMMERCE COMMITTEE
March 24, 2025
Statement by Andrew Sprung
Health Care Committee Co-chair, BlueWaveNJ
Re: S1971 - An Act imposing certain rate filing
requirements concerning certain health benefits plans available on the state-based
exchange.
Chair Lagana, Vice Chair Cryan, and members of the Committee:
S1971 would correct a severe pricing imbalance in New
Jersey’s ACA marketplace that weakens coverage for middle-income enrollees in health
plans offered on GetCoveredNJ.
At a time when the fate of the enhanced premium subsidies
established by the American Rescue Plan Act is uncertain, as under current law they
are funded only through 2025, S1971 would also increase federal premium
subsidies at no cost to the state and so partially offset the rising costs to
enrollees that would result from expiration of the ARPA subsidy enhancements.
The imbalance: New Jersey is unique among U.S. state
marketplaces in that in New Jersey gold-level plans – the metal choice that
offers a coverage level closest to the average employer-sponsored plans – are
priced out of reach for almost all enrollees. In New Jersey in 2024, just 1.4% of
on-exchange enrollees selected gold plans, versus a national average of 12.5%. Nationally,
the lowest-cost gold plan premium in each state market is 4% higher than the
lowest-cost silver premium in 2024. In New Jersey in 2025, the lowest-cost gold
premium is priced 41% above the lowest-cost silver plan.
In Pennsylvania and Texas, two states that have taken measures similar to S1971, lowest-cost gold plans are priced well below lowest-cost silver plans, as shown below, and bronze plans are also a relative bargain.
S1971 would follow several state governments (e.g., Pennsylvania,
Maryland, Virginia, New Mexico, Colorado, and believe it or not, Texas) in
making gold plans more affordable than the national average.
Average Marketplace Premiums by Metal Tier, 2025 - KFF[1]
Unsubsidized premiums for a 40 year-old
Gold plans (and bronze plans) matter most for middle-income
enrollees – those with income above 200% of the Federal Poverty Level (in 2025,
that’s $30,120 for an individual. Below the 200% FPL threshold, silver plans
(and only silver plans) come with Cost Sharing Reduction (CSR), which raises them
to an effectively platinum coverage level. Silver plans are usually the best
choice up to that income threshold.
Above the 200% FPL level, however, there is a benefit cliff.
Silver plans with weak CSR or no CSR expose enrollees to much higher out-of-pocket
costs than the average employer-sponsored plan.
In states that have taken measures similar to S1971, enrollees
with income above 200% FPL have the
opportunity to reduce their out-of-pocket costs by choosing affordable gold
plans. Those states include Pennsylvania and Texas. Compare the premium for the
lowest-cost gold plan available in 2023 in three mid-size cities: Newark,
Pittsburgh, PA, and Corpus Christi, TX:
Lowest-Cost Gold Plan in three Mid-Sized Cities, 2025
Premium (after subsidy) for single 43 year-old, income $38,000/year
|
City/State |
Monthly premium – lowest-cost
gold |
|
Newark, NJ |
$225 |
|
Pittsburgh,
PA |
$ 43 |
|
Corpus
Christi, TX |
$ 43 |
Sources: GetCoveredNJ, Pennie, HealthCare.gov[2]
Next, consider the effect on metal level choice in these
three states:
Effects of Strictly Aligning Premiums with Actuarial
Value – Or Not
ACA Marketplace, 2024
Gold Plan Selection at Incomes Above 200% of Federal
Poverty Level, 2023
|
State |
Enrollment
> 200% FPL |
Gold
enrollment > 200% FPL |
Percent gold plan selection,
> 200% FPL |
|
New Jersey |
200,776 |
5,605 |
2% |
|
Pennsylvania |
212,626 |
138,207 |
65% |
|
Texas |
743,041 |
404,515 |
54% |
Source: CMS Public
Use Files[3]
for the ACA marketplace. Excluded: enrollees with income unknown.
S1971 would pull off a trifecta: It would align plan pricing
more strictly with the value each plan offers to enrollees; it would make gold
and bronze plans much cheaper for New Jersey enrollees; and it would
effectively charge this benefit boost to the federal government. It would do
this by ensuring that the full value of Cost Sharing Reduction, which most
silver plan enrollees receive, is reflected in silver plan premiums.
In the first year of enactment, S1971 would require that
silver plans be priced at the average actuarial value obtained by all silver
plan enrollees in the state, including the majority for whom CSR boosts the silver
AV to 87%, or 94%, well above the gold
80% level. In New Jersey, that means pricing silver plans roughly on par with
gold plans. In the second year, insurers
would be required to price silver plans as if all enrollees obtained strong CSR
– that is, to price silver as if the average AV were 90%, or platinum level.
That’s meant to be a self-fulfilling prophecy: If gold plans are cheaper than
silver, then no one with an income above 200% FPL should buy silver
plans, because gold AV is higher than silver AV at incomes above 200% FPL.
When silver plan premiums rise, so do premium subsidies,
rendering gold and bronze plans cheaper for enrollees. Those subsidies are
funded entirely by the federal government. Higher benchmark silver premiums
also mean more money for New Jersey’s reinsurance program, which reduced
premiums for unsubsidized enrollees.
For those who are ineligible for subsidies, New Jersey
offers silver plans off-exchange that do not price in the value of CSR.
Thus the premium alignment mandated by S1971 is win-win-win for New Jersey
enrollees, insurers, and the state budget.
Thank you for the opportunity to offer testimony
BlueWaveNJ is a grassroots group committed to helping secure economic justice
and equal opportunity for all Americans and all New Jerseyans. We look forward
to working with you to make health coverage more affordable for hundreds of
thousands of New Jerseyans by passing S1971 into law.
Notes
[1] KFF,
Average Marketplace Premiums by Metal Tier, 2018-2025, https://www.kff.org/health-reform/state-indicator/average-marketplace-premiums-by-metal-tier/?currentTimeframe=0&selectedRows=%7B%22wrapups%22:%7B%22united-states%22:%7B%7D%7D,%22states%22:%7B%22new-jersey%22:%7B%7D,%22texas%22:%7B%7D,%22pennsylvania%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
[2] See
the plan-shopping tools offered by each exchange:
https://www.nj.gov/getcoverednj/getstarted/compare/
https://enroll.pennie.com/hix/preeligibility#/
https://www.healthcare.gov/see-plans/#/
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