N.J. joins states launching reinsurance programs to shore up Obamacare plans

(Photo courtesy of Healthcare.gov)

(Photo courtesy of Healthcare.gov)

New Jersey residents who buy health insurance available under the Affordable Care Act could be paying lower premiums next year thanks to a new reinsurance program recently approved by the federal government.

The Affordable Care Act allows states to apply for a waiver to use federal funds to implement programs like these that reimburse some of the cost of covering sicker or older patients who rack up big medical bills. It’s one way states are trying to keep costs down on the marketplaces set up by the health care law, said Scott Harrington, a professor of health care management at the University of Pennsylvania’s Wharton School.

Harrington said recent moves in Washington to weaken provisions of the Affordable Care Act have driven states to find creative ways to keep the insurance plans prices from escalating.

Republicans in Congress eliminated the financial penalty for individuals who go without health insurance as part of the tax overhaul passed last year. Harrington said that, as a result, more healthy people could leave insurance plans, leaving more sicker and older people in the “risk pool.”

“That puts upward pressure on premiums,” he said.

The Trump administration last year also stopped making payments to insurers that help them keep out-of-pocket costs down for low-income consumers, resulting in large premium increases for 2018.

Harrington said states have been able to shield some of those subscribers from the higher premiums by ensuring they got bigger subsidies. But things haven’t worked out as well for people making middle incomes who are looking to buy insurance on the exchanges.

“There’s a lot of concern that remains about people that aren’t subsidy eligible that may be facing high premiums, and the reinsurance mechanism is one way to try to address that,” he said.

New Jersey projects its reinsurance program will cut premiums by 15 percent.

According to the Kaiser Family Foundation, seven states have adopted reinsurance programs so far.

Pennsylvania does not currently have plans to pursue a reinsurance program.

“The individual health insurance market here in Pennsylvania is, in fact, stabilizing despite the numerous and continued efforts from Washington to destabilize that market,” said Ron Ruman, a spokesman for the state Department of Insurance.

Insurers in Pennsylvania’s individual marketplace have requested an average rate increase of just 0.7 percent for plans to be offered in 2019.

In Delaware, people shopping for individual plans will see an average rate increase of 3 percent next year.

Ruman said Pennsylvanians would have more choices in the exchange next year, with new insurers entering the market and others expanding to new areas of coverage.

He also said state Insurance Commissioner Jessica Altman holds the view that funding for reinsurance programs should come from the federal government, not state coffers. New Jersey is paying for its program through a combination of state and federal funds.

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