N.J. Health Reform update - 2019

1. New Jersey Health Reform
for better or worse
John J. Sarno
Employers Association of New Jersey
www.eanj.org
1

2. Affordable Care Act
March 23, 2010

3. Follow the Money
6 lobbyists for every member of Congress
Insurance Industry - $100 million
Pharma - $110 million
Providers - $80 million
Hospitals - $90 million
Medical Device - $30 million
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4. 4
Estimated 46 million Americans lack health
care insurance (15% of U.S. population)
The Uninsured

5. U.S. Health Care Spending
About 18% of the U.S. economy (in 1950, 5%)
Estimated $2.90 trillion in 2013
Most health care spending per capita in the world
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6. 6
Health Care Outcomes – U.S.
 33rd among developed nations in infant mortality
(6.3/1,000)
 50th in life-expectancy (78-years)

7. 7

8. 8
In 2013, N.J. hospitals delivered more than
$1.3 billion in care to the state’s uninsured
residents. They were reimbursed about
$675 million

9. 9
Employer-Plan Crisis
 3 of 4 residents are covered by an
employer-sponsored plan
 Premiums grew 4-times faster than wages
since 1999.
Average employee contribution went up
200% since 2000.
Out-of-pocket and co-payments went up
115% since 2000.

10. 10
1992 N.J. Health Reform
• Guaranteed coverage and renewability for all
eligible people regardless of their health
status.
• Guaranteed renewal of policies
• Community rating of the premiums
• Standardized insurance plans
• Mandated coverages

11. 11
N.J. Health Market “Death Spiral”
• Second highest premiums is the country
• Third highest percentage of uninsured
• Employers dropping coverage
• Insurance companies leaving the state
Read Summary on EANJ Blog
New Jersey Acts to Save the Affordable Care Act
https://www.eanj.org/blog/new-jersey-acts-save-affordable-care-act

12. Significant ACA Reforms
Essential Coverages
Consumer Protections
Personal Mandate
Subsidized Coverage
Health Insurance Marketplace (Exchange)
Expansion of Medicaid
Protection of insurance industry
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13. Insurance Reform
 High-risk pool created (2010)
 Dependent coverage to age 26 (2010)
 Children with pre-existing conditions cannot be denied coverage (2010)
 No denial for pre-existing conditions eliminated (2014)
 No Charge for annual wellness visit (2014)
 Guaranteed issue policy (2014)
 Modified community ratio (2014)
 80 – 85% medical loss ratio (2014)
 Long-term insurance program (2014)
 No pre-existing condition exclusions (2014)
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14. All Plans Must Provide
Essential Health Benefits
“Essential Health Benefits” requires minimum set of
benefits, with no lifetime of annual coverage limits
 Ambulatory patient services
 Emergency services
 Hospitalization
 Maternity and newborn care
 Mental health and substance abuse coverage
 Prescription drugs
 Rehab services and medical devices
 Preventative and wellness/chronic disease management
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15. “Free” Preventive Care
No Co-Pays
No Out-Of-Pockets
No Deductibles
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16. 16
Protecting the Commercial
Insurance Industry
Risk sharing program redistributes money from
insurers with healthier than average patient
populations to those with sicker patients.
Re-insurance program pays carriers back a
percentage of claims’ costs over a certain
threshold.

17. Health Delivery Reforms
 Research on best provider practices
 Research on comparative evidence outcomes
 Pilot program that pays for outcomes on flat fee
basis rather than fee for service for treatments
 Medical IT
 Standards for extended living arrangements
 Hospice, home-health reimbursement
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18. 18
Community Investment
 Health Care Clinics
 Primary Care Training
 Grants to States
 Diversity and Cultural Competency
 Education Curricula Development in Health Sciences
 Food Labeling

19. 19
Minimum Essential Coverage
Requirement
(the Personal Mandate)
A federal requirement that individuals purchase
health care insurance or pay penalty up to 2.5%
of income

20. “Large” Employer Penalty
Employers with 100 or more “full-time” employees will be
penalized for not offering coverage or coverage that does not
meet standards.
All employees counted in a calendar month (part-time,
temporary, seasonal).
“Full-time” employee is someone who is employed to perform
services on average of 30-hrs per week or 120 hrs/month.
Part-time employees are grouped together to create “full-time”
equivalents.
Aggregate number of hours worked by part-time workers in any
month and divide by 120 to determine number of full-time
equivalents.
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21. Penalty for not offering insurance or to
less than 70% of full-time employees and
at least one FTE receives a subsidy to pay
for insurance on the Exchange
 $2,000 per full-time employee after first 80 employees
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22. The Health Insurance Exchange
Healthcare.gov
Uninsured individuals not eligible for Medicare or
Medicaid are permitted to purchase insurance
through state Exchanges (purchasing pools).
Individuals are eligible for subsidies.
Employers with fewer than 50 employees will be
permitted to enroll.
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23. 23

24. 24
Subsidies – NJ
85% of 233,750 consumers eligible for subsidies
$306 – average tax credit
$780 million in total subsidies

25. Types of Plans
Bronze 60% of costs
Silver 70% of costs
Gold 80% of costs
Platinum 90% of costs
Most popular in NJ – Silver, mid-level
80% of enrollees pay $100 or less per
month
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26. New Jersey Expands Medicaid
566,655 more residents covered
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27. FamilyCare (Medicaid) – NJ
 1,690,853 enrollment (includes
children)
 $2.5 billion in Federal Funds
 State contribution is about 25% of
budget
 Only 40% of NJ doctors participate in
the program
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28. Where are we now?
 Percentage of uninsured is 7.9% down from 14.9% in 2010
 Fifth highest per-person spending nationwide
 Fifth highest monthly premiums
 Sixth nationwide in terms of Medicare spending per
enrollee.
 Employers moving to high-deductible plans
 Share of adults that skipped treatment, because of cost,
climbed 2 percentage points or more between 2016 and
2017
Commonwealth Fund ranks New Jersey’s healthcare system
performance 20th nationwide
United Health Foundation ranks the state as the 11th
healthiest state in the nation
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29. 29
Hospital and Provider Mergers
higher prices with worse outcomes
“Markets for both hospital and physicians have
become more concentrated in recent years.
Although higher prices are the consequences most often
discussed such consolidation can also result in worse
health care. Studies show that rates of mortality and of
major health setbacks grow when competition falls.”
New York Times
February 11, 2019

30. 30
N.J. Health Reform – 2019
“At a time when the Affordable Care Act is under constant attack in
Washington, we have a responsibility to provide access to high-quality,
affordable health care coverage for all New Jersey residents” - Governor
Phil Murphy

31. 31
Follow the Money . . . again
The reform was pushed by both health advocates and
business groups, including Better Choices Better Care NJ,
whose members include the N.J. Chamber of Commerce
and the N.J. Business & Industry Association, and is
funded by Horizon Blue Cross Blue Shield, the state’s
largest insurance company.

32. 32
The New Jersey Insurance Market
Preservation Act
 Beginning January 1, 2019, New Jersey requires its residents to maintain
health insurance.
 The law requires minimum essential health coverage unless there is an
exemption.
 Tax penalty for non-compliance $695 per adult
In 2015, 189,000 residents paid the ACA tax penalties, which are no longer
collected
Penalties will be used to offset costs to insurers for high risk claims

33. 33
Reinsurance to Insurance Companies
Pays carriers back a percentage of claims’
costs over a certain threshold.
Dependent on Federal approval

34. 34
Minimum Essential Coverage (Same as the ACA)
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance abuse
coverage
Prescription drugs
Rehab services and medical devices
Preventative and wellness/chronic
disease management

35. 35
Employer Reporting
No later than February 15, 2020, employers that sponsor healthcare
plans are required file information with the N.J. Department of
Treasury.
 Identifying employee
 Type of coverage
Will be modeled after IRS Form 1095

36. 36
N.J. Health Insurance Exchange
• Merges individual and small group markets
• Tax commercial policies 5% to raise $55
million a year
• Supervised by the state Department of
Banking and Insurance
AmeriHealth, Horizon BCBS, Oscar

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Challenges Ahead
Escalating Health Spending
“The data show that health care spending in New Jersey rose faster
than the national average even while utilization for certain types of
services decreased over the same period. While health care spending
jumped 15 percent nationally, the jump was 18 percent in New Jersey.”
Network for Regional Healthcare Improvement, Oct. 2018
Inpatient utilization decreased 19 percent but inpatient spending went
up 12 percent overall because inpatient prices went up to 38 percent.

38. 38
Danger of “Cherry Picking”
Stop loss insurance for small employers
Form of re-insurance used for self-insurance that permits medical underwriting
- “cherry picking” - among sellers and brokers that sell self-insurance to small
employers.
Drains off “good risk” leaving high risk claims for the exchange. Small group
participation has declined from 800,000 to 300,000 within the last decade.
Pool gets smaller but risk gets bigger – death spiral

39. 39
New Jersey’s ACA
• Preserves essential coverages
• Protects commercial insurance industry
• Dependent on Federal subsidies
• Does nothing to control spending
• Does nothing to moderate prices
• Does nothing to prevent “cherry picking”

40. Thank you
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John J. Sarno
www.eanj.org