A "premium alignment" bill advances in NJ legislature

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Will NJ's ACA marketplace glow as goldenly as its rest areas?

In June, I flagged a bill introduced in the New Jersey legislature this past spring, S3896/A5626, that would require silver plans in the state’s ACA marketplace to be priced roughly on par with gold plans in year 1 and on par with platinum plans in year two — reshaping a market in which gold plans have been priced out of reach for more than 98% of enrollees.

The bill’s logic is simple (though it has a complicated back story): On average, silver plans have a higher actuarial value than gold plans, since most silver plan enrollees qualify for the Cost Sharing Reduction (CSR) that attaches only to silver plans.

The bill was abruptly posted early this month for a December 11 hearing in the Assembly Financial Institutions and Insurance Committee, a committee chaired by one of the bill’s lead sponsors, John McKeon. The bill passed out of committee with no amendments on an 11-0 vote with one abstention. That’s first step in a gauntlet of three Assembly and two Senate committees’ consideration.

I testified in favor on behalf of BlueWave New Jersey, a progressive state advocacy group, along with Laura Waddell of New Jersey Citizen Action. My testimony is below.

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TESTIMONY BEFORE SENATE BUDGET AND APPROPRIATIONS COMMITTEE
December 11, 2023

A5626/S3896 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.

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 2023, just 1.5% of on-exchange enrollees selected gold plans, versus a national average of 11.9% (see CMS Public Use Files, Note 3).  Nationally, according to tables published by the Kaiser Family Foundation, the lowest-cost gold plan premium in each state market is 4% higher than the lowest-cost silver premium in 2024. In New Jersey, the lowest-cost gold premium is priced 37% above the lowest-cost silver plan.

Update: Ending presumed Medicare eligibility for New Jersey's elder ACA marketplace enrollees

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I’d like to provide a couple of updates regarding an abuse in New Jersey’s individual market that I wrote about in September (here and here). the issue in brief: in 2023, the state’s standard individual health plan contract stipulated that insurers could presume that enrollees over age 65 were eligible for Medicare unless they provide written proof otherwise. Failing that proof, the insurer would assume Medicare eligibility and act as a secondary payer to Medicare — paying only a small fraction of the enrollee’s bills while collecting a full premium. In 2023, about 9,000 enrollees via GetCoveredNJ, the state’s ACA exchange, were over age 65.

As I reported, in May 2023 CMS issued guidance that unambiguously stated that this practice — presuming Medicare eligibility for senior enrollees and acting as a secondary payer — violated ACA requirements. While New Jersey’s Department of Banking and Insurance did not respond to my queries about the New Jersey policy and the CMS guidance, they did respond to the same queries from an nj.com reporter, Karin Price Mueller, whom I approached about the issue. As they told Mueller, on September 27 DOBI issued a directive (described in Mueller’s paywalled article and in my followup post) to insurers in New Jersey’s individual market instructing them to comply with DOBI’s guidance — that is, cease presuming Medicare eligibility and acting as a secondary to Medicare simply because an enrollee was over age 65.

New Jersey's Department of Banking and Insurance lays a trap for elderly enrollees in the state's ACA marketplace

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Filling out an application for subsidized health insurance in the ACA marketplace can be straightforward — or not so straightforward. If the exchange’s “trusted sources” of information do not readily identify you, uploading proof of identity nd getting it accepted can be a…process (especially in a family with mixed immigration status). If you are self-employed and your income is not obviously reflected in regular monthly payments, documenting your claimed income and having the documentation accepted can also be a multi-stage process.

That said, once your documentation is accepted and your monthly subsidy is assessed, you are good to go, right?

Not always. Not in New Jersey, anyway, where the insurer can come after you for additional documentation — and potentially reduce your coverage to a shadow.

In New Jersey's ACA marketplace, a "premium alignment" bill would turn gold plan pricing on its head

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Gold skies, but almost no gold Obamacare, in New Jersey

On May 22, New Jersey state Senator Joseph Vitale, chair of the Health, Human Services, and Seniors Committee, introduced a bill (S3896) that mandates “premium alignment” — a.k.a. strict silver loading — in the state’s individual and small group health insurance markets. That is, insurers would be required to comply with the letter of the ACA statute that requires them to price plans at different metal levels in strict proportion to the actuarial value of each metal level. (Actuarial value refers to the percentage of the average enrollee’s costs the plan is designed to pay for, according to a formula promulgated by CMS.)

In effect, mandating that strict proportionality means pricing gold plans below silver plans with the same network (or, in New Jersey in the first year after enactment, roughly at par with silver plans, as explained below). That’s been the case since 2018, the first plan year after Trump cut off direct reimbursement of insurers for the value of Cost Sharing Reduction (CSR) subsidies, which attach to silver plans only. The cutoff induced most states to direct insurers to price CSR into silver plan premiums only, a practice that came to be known as silver loading. CSR raises the actuarial value of a silver plan to a roughly platinum level** for enrollees with income up to 200% of the Federal Poverty Level — — that is, for about 80% of on-exchange silver plan enrollees nationally (though far less in New Jersey, as discussed below). In 2023, the average actuarial value among silver plan enrollees on all ACA exchanges was about 87%, compared to 80% for gold plans.*

Income up, premium down? Shopping the ACA marketplace in New Jersey

 

Garden State, from certain angles

New Jersey is one of 8 states* that supplement federal premium subsidies in the ACA marketplace with state-funded "wraparound" subsidies that further reduce enrollees' costs. New Jersey's supplementary subsidies are funded by a state tax on health insurers implemented in July 2020 after Congress repealed a similar tax assessed nationally.

New Jersey's state subsidies rise with income. That works well in the era of the enhanced federal subsidies created by the American Rescue Plan ACA in March 2020 and extended through 2025 by the Inflation Reduction Act, enacted this past summer.  ARPA rendered benchmark silver coverage free at incomes up to 150% FPL and rising to just 2% of income at 200% FPL (for a single person, about $45/month at an income of $27,180). New Jersey's wraparound subsidies all but zero out premiums for benchmark silver up to 200% FPL, as they add $40 per month for an individual and twice that for a family with income in the 150-200% FPL range. (You can explore plans and prices at different incomes and ages with the plan preview tool at GetCoveredNJ, the state exchange.)

The break points between the state subsidy levels do create some odd effects, however. They run as follows for an individual, with twice as much allocated for a family of two or more.

New Jersey enacts an easy enrollment program for the uninsured

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New Jersey Governor Phil Murphy today signed a bill  (A674/S1646) establishing an "easy enrollment" program for health insurance, the New Jersey Department of Banking and Insurance announced this afternoon (a press release just arrived by email; I can't find it online yet). Update! - here it is.

Maryland pioneered "check the box" programs like this, in which the state prompts uninsured residents to indicate an interest in getting insured and provides help (to the extent creaky state bureaucracies can manage it) with getting an application started. Here is the guts of the initiative in New Jersey:

Through this program, uninsured and underinsured residents can indicate their interest in coverage for themselves or a household member on their tax return or through unemployment insurance benefit claims, which will be shared with the New Jersey Department of Banking and Insurance.    

As required by the legislation, the department will create a system to analyze the data collected through tax returns and unemployment benefit claims to determine a resident’s eligibility for health insurance coverage and ability to receive financial help through Get Covered New Jersey and proactively connect with qualifying residents to help them enroll. The law also permits the department to work with the Department of Human Services to determine an individual’s eligibility for NJ FamilyCare and share data with the agency for that assessment.       

Several things to note here. First, the prompt to seek health insurance will appear not only on the tax return but on an unemployment benefit claim. The latter is very important, as it comes at a moment when the applicant's income has dropped dramatically, qualifying many for Medicaid. In states that have enacted the ACA Medicaid expansion (e.g., New Jersey), eligibility is based on monthly income (currently $1563 for an individual, $3,191 for a family of four). During the pandemic, Kentucky had the Dept. of uninsurance pass applicant data to the state Medicaid agency, helping to drive a 14% increase in Medicaid enrollment from February to July 2020.

Second, the department collecting the data will share the data with the Dept. of Banking and Insurance, which runs the state ACA exchange (GetCoveredNJ), and with the Dept. of Human Services, which runs NJ FamilyCare, the state Medicaid program. The departments can determine eligibility for NJ FamilyCare or for subsidized marketplace coverage, if the enrollee gives permission for the various departments to share information. The bill statement emphasizes interagency coordination:

The bill requires the Commissioner of Banking and Insurance, in coordination with the Commissioner of Human Services, the Commissioner of Labor and Workforce Development, and the State Treasurer to develop and implement systems, policies, and practices that encourage, facilitate, and streamline determination of eligibility for insurance affordability assistance and enrollment in minimum essential coverage to achieve the purposes of the program.

Finally, because New Jersey (unlike Maryland) is one of a handful of states that implemented a state individual mandate to obtain insurance after the federal mandate penalty was zeroed out, the uninsured tax filer has a strong incentive to check the box, as obtaining insurance will get the penalty for going uninsured waived. For most respondents, obtaining coverage should be either free or very low-cost. In New Jersey's ACA marketplace, supplemental state subsidies, in concert with the major federal boosts to marketplace subsidies provided by the American Rescue Plan Act (which will expire at the end of this year unless Democrats manage to extend them, benchmark silver coverage with strong Cost Sharing Reduction is effectively free, or very close to it, at incomes up to 200% of the Federal Poverty Level ($25,760 for an individual, $53,000 for a family of four). 

This is a good strong bill that should reduce the uninsured population in New Jersey, currently just shy of 700,000. Its impact will be blunted somewhat if Democrats fail to extend the ARPA marketplace subsidies. But its chief impact will probably be in Medicaid in any case, which is unaffected by the level of marketplace subsidization.

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New Jersey launches year-round marketplace enrollment at incomes below 200% FPL

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My last post delved into CMS's motives and goals in establishing continuous year-round enrollment for ACA marketplace enrollees with income up to 150% FPL, as long as benchmark silver coverage remains free to that income level.

New Jersey has gone the feds one better, today announcing year-round enrollment on GetCoveredNJ, the state exchange, for enrollees with income up to 200% FPL ($25,760 annually for an individual; $53,000 for a family of four). 

Various state-specific conditions suggest motives for going that high:

1. Supplemental state subsidies provided in New Jersey make silver coverage free all the way to the 200% FPL threshold. In finalizing its rule establishing continuous enrollment to 150% FPL, CMS suggested (pp. 91-92 here) that limiting the open enrollment to those for whom benchmark coverage is free limits the risk of adverse selection. For that reason, CMS conditions extending the continuous SEP beyond this year on extension of the enhanced subsidies provided through 2022 by the American Rescue Plan.

2. New Jersey is one of a handful of states that imposed a state-level individual mandate after the Republican Congress zeroed out the penalty for the federal mandate. There has been a degree of buyer's remorse about the mandate among progressive groups. It was enacted in 2018 to partly fund a state reinsurance program (about two thirds-funded by the federal government), which reduced premiums for unsubsidized (i.e., mostly affluent) enrollees. Most people who pay the mandate penalty are low income. Continuous enrollment, along with the targeting of uninsured taxpayers described below, would reduce low-income exposure to the mandate.

Is enrollment surge on GetCoveredNJ driven by off-exchange migration? Maybe not.

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Liberty State Park, Jersey City, NJ

New Jersey's Department of Banking and Insurance (DOBI) reports that enrollment in health plans on GetCoveredNJ, the state's ACA exchange, was up more than 25% as of December 5 compared to the same time last year. That may be the largest one-state year-over-year surge during an Open Enrollment season in which enrollment was up about 9% nationally as of Dec. 8. 

New Jersey has a large off-exchange individual market, which in 2020 accounted for 30% of enrollment in ACA-compliant plans (94,885 out of 316,580 total enrollments as of Q1 2020). The surge in on-exchange enrollment may provide a hint as to the extent of migration from off-exchange to on-exchange driven by the American Rescue Plan Act's removal of the income cap on subsidy eligibility. Since April of this year, premiums for the benchmark (second cheapest) silver plan have been capped at 8.5% of income, regardless of how high the income is. New Jersey, moreover, layers its own supplemental subsidy on top of the federal APTC. At high incomes, NJ kicks in $100/month per person, up to an income of 600% FPL. This subsidy, like the federal one, is only available on-exchange.

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In NJ Spotlight News: "Affordable Care or a Loan?"

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I have an op-ed in NJ Spotlight News in support of a pending bill, A1023/S885, that would end Medicaid Estate Recovery pursued against enrollees in NJ FamilyCare (the state Medicaid program) who do not receive long-term care. The problem:

Unfortunately, in New Jersey — as in 19 other states and Washington, D.C. — efforts to make affordable coverage available to all come with a giant asterisk.

Applicants seeking health coverage on GetCoveredNJ, the state ACA exchange launched last fall, are routed either to the private plan marketplace or, if their family income is below 138% of the FPL (federal poverty level) — which is $1,482 for an individual, $3,048 for a family of four — to NJ FamilyCare, the state Medicaid program. If income qualifies an applicant for the latter, she must sign off on this disclosure:

In New Jersey, silver plans are free or all but free up to 200% FPL

When New Jersey launched supplemental state premium subsidies along with the launch of its state-based ACA marketplace, GetCoveredNJ, in the fall of 2020, I was somewhat taken aback to note that the state subsidies were heavily weighted toward enrollees at higher incomes. 

The supplemental NJ subsidies ranged from $20/month at an income of 138% FPL ($17,609 for an individual) to $95/month, beginning at an income somewhere between 250% and 300% FPL (around $38,000 for 40 year-old individual, according to my price checks on GetCoveredNJ).

As I noted at the time,

The smaller subsidies at low incomes leave substantial premiums in place at incomes below 200% FPL for silver plans, which carry a strong CSR [Cost Sharing Reduction] benefit up to that income threshold.

For a 40 year-old with an income of $25,000 (just under 200% FPL), the lowest cost silver plan in most of the state will cost $86/month. The deductible is $800; the out-of-pocket maximum is $2,600. The lowest cost bronze plan is $17/month, with a deductible of $6,000 and an OOP max of $7,000. Last year, cheapest silver would have cost about $125/month. 

Well, the American Rescue Plan Act (ARPA), signed into law in March, with an extra boost from New Jersey, has solved that problem, at least through 2022 (and hopefully beyond, if Democrats make the new subsidy levels permanent as they intend).  New Jersey's income-weighted subsidies mesh quite well with the subsidy boosts provided by ARPA, which reduced premiums for a benchmark (second cheapest) silver plan with strong CSR to $0 at incomes up to 150% FPL and to 2% of income at 200% FPL.

The New Jersey supplemental subsidies all but wipe out premiums for a silver plan all the way to 200% FPL.  Here's what's available to a 40 year-old with an income of $25,500:

In NJ Spotlight News: "Happy Launch, GetCoveredNJ: Don’t Forget NJ FamilyCare"

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In New Jersey Spotlight News, I put in a plea that New Jersey's new state-based exchange GetCoveredNJ, and the coming "get covered" outreach during Open Enrollment, give due emphasis to Medicaid:

GetCoveredNJ and state officials should avoid repeating a mistake endemic to state exchanges: overemphasizing the private-plan marketplace at the expense of Medicaid (NJ FamilyCare)...

From the ACA’s passage in 2010 to the present, the private-plan marketplace has sucked up all the political passion. But the Medicaid expansion has insured far more people who would otherwise be uninsured. In New Jersey, as of September, 597,000 enrollees in NJ FamilyCare were rendered eligible by ACA criteria. About 175,000 New Jerseyans were subsidized in the private-plan marketplace...

Gov. Murphy and the state Legislature have used financial judo to fund improvements in the state’s health insurance marketplace, capturing funds that previously went to the federal government to finance enrollment assistance, advertising and supplementary subsidies. To best protect New Jerseyans from becoming uninsured during the current crisis, however, they need to focus equal energy on maximizing Medicaid enrollment.

We all have our hobbyhorses...  here again is the full article in NJ Spotlight News.

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New Jersey's new state-based ACA marketplace subsidies *rise* with income

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The "preview plans and prices" tool on New Jersey's spanking new state-based ACA exchange, GetCoveredNJ,  is live for 2021. The tool works well -- you can punch in ages and income and get results in short order. The results come with a surprise.

The new state-based supplemental premium subsidies (tacked onto federal subsidies for enrollees with incomes up to 400% of the Federal Poverty Level) average $578 per person per year ($48/month), as Governor Murphy announced this week. The key word here is "average." The new subsidies are not flat. In direct contrast to federal subsidies, they rise with income. 

For a single individual with an annual income of $19,000, a hair below 150% FPL, the state supplement is $20/month. At an income of $25,000 (just below 200% FPL), that rises to $30/month.  At $38,000 (just under 300% FPL), it's $95/month. That's the maximum, available at a solo income up to $51,040 (400% FPL).

That may seem counterintuitive, as enrollment losses in New Jersey's individual market, which have been steep, are especially concentrated at lower incomes, as illustrated below. 

New Jersey's "Get Covered" message submerges Medicaid

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New Jersey, a very blue state with a liberal governor and large Democratic majorities in both houses of the legislature, is committed to helping hundreds of thousands of residents newly uninsured in the Covid-19 pandemic to find subsidized coverage. The state has launched an information campaign to help people get covered.

But New Jersey's ACA marketplace is stuck in limbo during a tough time. The state is in the process of creating its own state-based exchange (SBE), scheduled to launch on November 1. In the meantime, it's technically an SBE, but still using the federal exchange, HealthCare.gov, for enrollment.

That creates a messaging problem. The state has created a website, Get Covered New Jersey, to help people find coverage. But it has to be a complex switching station. Those eligible for subsidized marketplace coverage need to enroll through HealthCare.gov. Those eligible for Medicaid -- probably the majority of the newly uninsured -- can also apply via HealthCare.gov but, for reasons explained below, are probably better off applying directly through the state's Medicaid program, New Jersey Family Care. Finally, those who earn too much to qualify for aid need to be aware of ACA-compliant plans offered off-exchange only, especially since these include the cheapest silver plan available.

Get Covered New Jersey tries, but in my view fails to help people figure out quickly what kind of help they're eligible for, and act accordingly.

The main problem is that the site doesn't foreground Medicaid or, most vitally, a Medicaid eligibility screener. According to an Urban Institute estimate, almost half of New Jersey's  newly uninsured residents (224,000 out of 489,000 by the study's more conservative of two estimates) should end up in Medicaid, while just under a quarter may enroll in marketplace coverage.

GetCoveredNJ hits cable TV with its first ad

This time last year, an email correspondent who closely watches the New Jersey ACA marketplace was tearing his hair out for the lack of TV advertising by state agencies working to boost enrollment. New York was flooding the airwaves with ads; NJ was invisible.*

The then-young Murphy administration entered Open Enrollment season flying high on a newly enacted reinsurance program and state-based individual mandate that together had reduced individual market premiums 9% below 2018 levels. While the Trump administration had gutted federal spending on enrollment assistance, from $1.9 million in 2016 to $300,000, the state was kicking in $800,000 for assistance and outreach.

Yet on-exchange enrollment lagged 2018 totals, finishing 7% down, compared to a 4% average drop in 39 states using the federal exchange, HealthCare.gov. By this point (week 5), it was down 14% year-over-year (in all 9 HealthCare.gov states, a calendar discrepancy between 2017 and 2018 led to a sharp closing of the apparent gap in the final week).

Slow start to Open Enrollment 2019

The Democrats' capture of the House of Representatives has saved the ACA's core programs and funding. Most fundamentally, Republicans have lost their chance to cut the trillion-plus dollars over ten years in federal healthcare spending that they tried to cut last year -- most of it in Medicaid. Instead, the ACA's expanded Medicaid eligibility may be available in seven more states by 2020 than in 2018.  And the ACA marketplace's income-adjusted and relatively generous subsidies (compared to proposed Republican replacements) remain intact.

That said, early reports from Open Enrollment for 2019 suggest that various forms of Republican sabotage -- massive cuts to advertising and enrollment assistance, creation of a medically underwritten market in conjunction with repeal of the individual mandate -- may be taking their toll.  Enrollment on HealthCare.gov, the federal exchange serving 39 states, was down about 13% in the first week (adjusted for a one day difference in days open) and 8% in week 2.

That could mean nothing, or it could mean a lot. Enrollment could catch up with last year's (which was down 5% in hc.gov states from 2017 and 9% from 2016), or fall further behind. Charles Gaba chalks the slow start up to election distraction -- in the media if not for the public at large -- although, weighing all factors pro and con, he'd previously predicted a 5% drop this year. Former HealthCare.gov chief marketing officer Joshua Peck is less sanguine: