TESTIMONY BEFORE SENATE BUDGET AND APPROPRIATIONS COMMITTEE
March 5, 2018
Statement by Andrew Sprung
Health Care Committee Co-chair, BlueWaveNJ
Re: S1877 - Restoring the recently repealed shared responsibility tax under the ACA
S1878 - Establishing a NJ health insurance reinsurance plan
Chairman Sarlo and Members of the Committee,
Thank you for the opportunity to testify here today on the need to stabilize the individual insurance market in New Jersey. BlueWaveNJ is a grassroots group committed to helping secure economic justice and equal opportunity for all Americans and all New Jerseyans.
Many of our members obtain their health insurance in the individual market, and many have been hit hard by this year's premium hikes in excess of 20 percent. Their testimony is below.
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.
These people cannot bear further rounds of double-digit premium increases. But that is what they will get if the legislature does not move swiftly to pass a state-based individual mandate, ideally paired with a reinsurance program.
The Urban Institute forecasts that repeal of the federal individual mandate alone will raise premiums in New Jersey's individual market by 10.9% and reduce enrollment by 106,000, or 23.2%. Nationally, Urban forecasts that two thirds of coverage losses stemming from mandate repeal will come from unsubsidized enrollees (3.7 million fewer unsubsidized enrollees; 1.8 million fewer subsidized).
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.
Here are some of the stories BlueWaveNJ members have contributed.
Lynda Feder, Feder Insurance Services LLC (Cranford): I am a health insurance broker representing clients seeking coverage primarily in the individual and small business markets. Most of my individual clients earn too much to qualify for ACA subsidies; many purchase insurance for families with children. My clients found the ACA marketplace relatively stable and reasonably responsive to their needs until 2017, when Horizon Blue Cross, largely in response to President Trump's cutoff of reimbursement for Cost Sharing Reduction subsidies, raised premiums on its plans for 2018 an average of 24%. Valuing Horizon's relatively extensive provider network, most clients stayed with the carrier but down-shifted to bronze plans, which carry a $3,000 individual and $6,000 family deductible. A family of four with an income of $100,000 -- hardly a fortune in northern New Jersey -- is frequently paying $2000 per month for such a plan. That is an outsized share of income for health insurance even assuming no major actual healthcare costs.
Many of my clients are wife-husband or other two-person proprietors of small businesses. Those who do not have a full-time non-owner employee who opts to obtain insurance through the business are shut out of the small business health insurance market, which offers a significant discount over the individual market.
All of these clients worry about future premium spikes on top of the unsustainable increases of 2018. The state needs to act aggressively to stabilize the market and get premiums under control. An individual mandate and reinsurance program could have a multiplier effect.
Dana Calitri, Bloomfield: I recently turned 60 years old. At the time the ACA was enacted I was receiving my pension from the Screen Actors Guild. As a “retiree” I was able to pay into the excellent SAG group insurance. SAG discontinued that policy when the ACA came into being because they assumed we would all be taken care of. My insurance costs nearly doubled ($550/mo to $900/mo). The premium has steadily increased since then. This year I decided to lessen my coverage because I refuse to pay $1,250/month, and I am fortunate enough to be in good health, but I worry for others who may not be so lucky.
Rhonda Allen, Ph.D., Harding: My husband and I are both self employed and have always had to purchase our own health insurance. Every year the premiums go up while the benefits we are purchasing decrease. In the past, we had always opted for a more expensive plan that included out of network benefits. New Jersey no longer offers any such plans.
Last fall, we received word that the premium on our plan would go up more than $400/month for two in 2018, and we had to switch plans. We're now paying over $1200/month for bronze coverage for the two of us -- $200 more than last year. Our copays went up as well.
Virginia: I've been self-insured since 2006 and, prior to Obamacare, had to scramble every year to keep my family's premiums manageable. Obamacare definitely dampened the increases, but I still had to change plans for 2017 because a carrier that came into NJ under Obamacare--Oscar Health--exited the market for 2017.
At the end of 2017, Horizon Blue notified me that my premium would be going up 28% to something in the neighborhood of $850 a month. That's just for me, because my older son is at college and covered by an excellent plan that costs me only $800 a semester.
With college tuition to pay, there was no way that I was going to accept a rate increase that large. So I went shopping again, and discovered that Oscar had returned to the NJ market. Its premium--$751 a month--was more than I had been paying before but less than Horizon in 2018. Luckily, my doctor's office is set up to accept a wide variety of insurers.
The therapist who I have used since my younger son's suicide is not in-network at either Horizon or Oscar. So my therapy must come all out of my own pocket.
Suzanne, Boonton: My premiums went way up in 2018! I am self employed and get my health insurance through the marketplace (no subsidies).
In 2017 I had a bronze plan with Horizon BCBS of NJ. My premium was $535 per month. This fall I got a letter from Horizon saying that they would need to increase the rates in anticipation of what the Trump White House would do -- to $695 per month. For 2018, I switched to AmeriHealth, paying $623 per month, first confirming that my doctors were participating. When I went to my ob/gyn for my annual exam I was notified that they in fact do NOT participate.
So now I will have to pay out of pocket for my annual for this year and switch back to Horizon for 2019. Who knows how expensive it will be then. The AmeriHealth plan has a lot fewer participating doctors in the plan and they are not close to where I live (Morris County).
Linda, Nutley: My spouse and I are 60 and 62. Because we are both self employed we have no option but to purchase health insurance on the open market -- without subsidy. Because of the complex laws surrounding health care, none of the multiple professional organizations we belong to is able to offer health insurance benefits, so we are unable to obtain reduced group rates. In 2018, our Horizon Omnia Silver HSA plan premium rose from $1,452 to $1,876, a 29% increase. Add in nearly $8,000 in HSA contributions and $5,000 in probable medical expenses, and our health insurance/medical outlays in 2018 are likely to top $35,000.
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Wisconsin, with an individual market approximately three quarters the size of New Jersey's has passed legislation to seek via ACA innovation waiver 75 percent federal funding for a reinsurance program that would pay 80% of costs for claims between $50,000 and $250,000 -- estimated to reduce premiums by 12-13% yearly for two years. Should New Jersey successfully pursue a proportionate waiver, revenue from the mandate would likely cover the state's entire share, rendering the paired bills S-1877 and S-1878 revenue-neutral.
A state mandate will shield New Jersey's individual market from a fresh round of unsustainable premium hikes. Reinsurance will partly undo the damage wrought this past year. We at BlueWaveNJ urge you to grasp the nettle and adopt these proven and prudent strategies.
 Linda J. Blumberg, et al. The Potential Impact of Short-Term Limited Duration Policies on Insurance Coverage,
Premiums, and Federal Spending, Urban Institute, Feb. 2018 (includes estimates for coverage losses from mandate repeal alone)