Rates filed by insurance carriers for health insurance premiums in the state’s small business health insurance market have good news for employers who shop there. Those shopping in the individual market aren’t quite as fortunate.
Approved premium rates for 2020 were released by the New Jersey Division of Banking and Insurance (DOBI) Monday indicating a modest 1.1% increase in rates in the Small Employer Health Benefits Program (SEH) marketplace, while those in the individual market will see an average 8.7% increase over 2019. Rates are still below 2018 levels.
The small employer market offers choices from four insurance carriers—AmeriHealth, Horizon, Oscar and Oxford. AmeriHealth and Horizon each offer 25 different plans, while Oscar offers only six and Oxford more than 50. All plans are categorized according to the Affordable Care Act (ACA) metallic coverage level designations: Platinum, which covers 90% of costs; Gold, which covers 80%; Silver, 70%; and Bronze, 60%.
Base rates for Gold plans for the first quarter of next year range from $344 to $534; for Silver plans, the rates vary from $282 to $474. Actual costs for individual employers will be determined by multiplying base rates by the appropriate territorial and age factors.
The two state-run marketplaces are just one source of health benefits for small employers. Members of NJBIA, for instance, have access to group health insurance benefits through Association Master Trust (go here for a free quote). The state is also creating a state-based exchange under the ACA. New Jersey had been one of several states that had used the federal exchange instead of creating its own.
“Because of the progress made in our state, rates on average in 2020 will remain lower than they were in 2018,” said DOBI Commissioner Marlene Caride. “We are continuing the work to improve access to quality affordable coverage and establishing our own health insurance exchange is a major part of that effort.”
While rates in the SEH are stable this year, the cost of providing health benefits has historically been the No. 1 obstacle to the success of NJBIA member companies.
No single cause drives increases in health insurance rates, but one of the cost drivers for the state-run plans is legislatively imposed mandates, which force insurance companies to provide coverage for specific conditions. While each mandate by itself may not seem like a big deal, collectively they are adding costs to health insurance policies in these state-run markets.
“Each coverage mandate comes with a price tag: Insurance companies have to pay for more procedures and medications, and will therefore have to increase their premiums to make up the difference,” explained NJBIA Chief Government Affairs Officer Chrissy Buteas. “In other words, these mandates effectively force consumers to purchase higher levels of coverage.”
Because mandates only apply to the state-run markets, they have contributed to a significant drop in businesses using them. The number of businesses purchasing coverage here has dropped from 900,000 to 325,000, as employers have turned to private insurance brokers or benefit providers like Association Master Trust.