We got an email with the subject “Quit the Crap” from a viewer who was upset about legislation that would let the state of New Jersey enforce Obamacare’s so-called “individual mandate” after the federal regulation expires this year. Republicans in Congress repealed it, and our viewer wrote: “Now the New Jersey governor is going to attempt to try to compel people who reside in his state [to] purchase health insurance or face a state fine? I am well beyond sick and tired of this.”
“You know, people think, ‘if I don’t use it, it’s not costing anything.’ That’s not the case, right?” said Maura Collinsgru, health care program director with New Jersey Citizen Action.
Advocates like Collinsgru call such consumers “free-riders.” Angry Affordable Care Act holdouts argue it’s not free — about 200,000 of them in New Jersey pay penalties averaging $500 for going uninsured. But Collinsgru notes, all New Jersey taxpayers end up footing hospital bills when those uninsured people get sick. That’s why she supports the bill to let New Jersey enforce the individual mandate.
“We are going to incentivize people who are healthy to buy into the market,” Collinsgru said. “The market doesn’t work if only people who are sick purchase the insurance.”
“If you only have unhealthy individuals, then premiums are going to skyrocket,” added New Jersey Policy Perspective Health Care Director Ray Castro.
Castro says they did skyrocket. Jersey’s health insurers hiked premiums 17 to 24 percent in 2018 in anticipation that their own costs would spike in such a volatile, politicized marketplace. That pushed premiums way up to $23,000 for a middle class family of four, which doesn’t qualify for federal subsidies. But, will a state-run individual mandate push those premiums back down? Castro says yes.
“You have the individual mandate, which we know would reduce premiums by about 10 percent. And then in New Jersey what we are proposing is that those funds be reinvested in reinsurance to help consumers even more. So the goal there is to reduce it by another 10 or 20 percent,” Castro said.
How would reinsurance work? Lawmakers passed a second bill that aims to eventually set up a reinsurance pool of money. Insurance companies hit by very expensive health care cases say an $800,000 liver transplant could dip into the pool to defray costs, instead of passing it along as higher premiums. Several states already have reinsurance pools, and a bill headed to Gov. Phil Murphy would request a federal waiver to set one up here. The New Jersey Business and Industry Association backs the bill.
“Net-net, the reinsurance plan is a win for the state and will be a good cost-containment measure for the State of New Jersey,” said NJBIA President Michele Siekerka.
Industry experts believe both bills could push health care costs down.
“The Congressional Budget Office has said that without an individual mandate, probably health insurance premiums will increase by at least 10 percent,” said Linda Schwimmer, who heads the New Jersey Health Care Quality Institute. “It’s an opportunity for New Jersey and for Gov. Murphy to continue on a path of creating a health insurance market that works better and starts working towards universal coverage for everyone.”
Murphy is widely anticipated to sign both bills, but the impact on premiums probably won’t be felt before 2019 — and that’s probably cold comfort for the viewer who emailed us.