The options for New Jersey consumers who buy health coverage through the Affordable Care Act will dwindle to two next year, from five in 2016, after state regulators take over Health Republic Insurance of New Jersey. The non-profit company, a start-up established through President Obama’s signature health law, has 35,000 members.
The state Department of Banking and Insurance moved Monday to take over Health Republic, a consumer-operated and -oriented plan (COOP), because of its “hazardous financial condition.” It was one of only seven of the 23 original COOP plans established by the lawThe insurer blamed its financial problems on an aspect of the law, called risk adjustment that required companies with healthier members, and lower health expenses, to subsidize those with sicker customers and higher expenses. The requirement “penalizes companies with healthy member populations,” Health Republic a statement posted Tuesday morning on the insurer’s web site.
On June 30, Health Republic was assessed a $46.3 million risk-adjustment payment, which placed it “under considerable financial strain,” Tom Dwyer, the interim CEO, said in the statement.
“We built this organization to provide much needed competition, and to offer consumers the ability to enroll in a plan that would give them a voice in their health care,” the statement said. “We hope the novel approach we’ve taken to providing health insurance – putting the best interests of our members ahead of executives and shareholders – continues to resonate in the state and across the country.”
It added that it anticipates a return to the market in 2018.
“I don’t think it shows that the Affordable Care Act is failing,” said Linda Schwimmer, CEO of the New Jersey Health Care Quality Institute, a non-partisan group focused on improving quality and affordability of health care in New Jersey. “What this shows is, it’s very difficult to break into this market. It’s very difficult to compete as a small entity in this market.”
With just 7.5 percent of the individual market, or 26,000 people, covered through individual plans, Health Republic is a small player compared with Horizon Blue Cross Blue Shield of New Jersey, with 209,100 members, and AmeriHealth of New Jersey, with 73,000. Both of those companies will continue to offer coverage in 2017.
As a start-up, Heath Republic had little data to use when it calculated its premiums at the start of the new subsidized in surance marketplace in 2014.
“More competition is better than less competition,” said Katherine Hempstead, head of a health-reform monitoring project at the Robert Wood Johnson Foundation. “But New Jersey had a lot of carriers, and had some really low rate increases compared to the rest of the country.
“When you think about premiums, New Jersey is doing a lot better than a lot of neighboring states,” she said.
Rate increases requested for next year range from 4.8 percent for Horizon’s OMNIA plans — which use a tiered network, with patients paying more out of pocket to access a wider network of hospitals and providers— to 7.6 percent for its other plans. AmeriHealth requested a rate hike of 12.1 percent for about 50,000 individual customers, and 26.3 percent for 14,000 customers in its HMO plan. By switching plans, many customers will be able to minimize their premium hikes, federal officials have said.
As the Nov. 1 start of the fourth annual open enrollment period approaches, 359,000 New Jersey residents are covered through individual plans — up from 104,000 before the federal marketplace created through the federal law was launched. Almost all of those earlier customers were in plans with skimpier, or “basic and essential,” coverage, compared with the comprehensive benefits required now.
“It’s not perfect,” Schwimmer said. “There is a lot more cost-sharing that there used to be. Even for people with premium subsidies and assistance for their co-payments, it can be difficult to navigate.”
While the law made it possible for people to purchase health insurance with subsidies, she said, it didn’t do enough to address the underlying high costs of health care. “We have to fix the product,” she said.
UnitedHealthcare and Oscar Health Insurance announced earlier this year they will pull out of New Jersey’s individual health market in 2017, and Aetna withdrew its plans to join the market.
Health Republic’s customers will remain covered through the end of the year, and their health claims will be paid, as long as they pay their premiums, the insurance department said.
“We are committed to continuing to provide our current members and other partners with excellent service and support, and to ensure we pay claims and meet all obligations appropriately,” the company said in its statement.
Individual customers can choose a new insurer during open enrollment, from Nov. 1, through Jan. 31, 2017. Small employers can select a replacement policy from a new carrier at any time, the insurance department said.to survive. Once its financial condition is strengthened, Health Republic may rejoin the marketplace in 2018, the department said in a statement issued Monday.
What does it mean?
The state Department of Banking and Insurance moved on Monday to take over Health Republic, citing its “hazardous financial condition.” Here’s a breakdown of what that means for individuals who have purchased health insurance through the start-up under the Affordable Care Act:
– Individual plan members will be fully covered through Dec. 31. All claims for covered services provided by that date will be paid. Premiums will not change. Health Republic will not offer new plans for 2017.
– When the open enrollment period for 2017 begins on Nov. 1, individual members should chose a plan from a different carrier. Horizon Blue Cross Blue Shield of New Jersey AmeriHealth of New Jersey are the two insurers that will continue to offer coverage in the state next year. The open enrollment period ends on Jan. 31, 2017.
– Dependents can be added or removed from a plan between now and the end of the year. Those who enrolled through the state’s Affordable Care Act marketplace can log on to their account at healthcare.gov or call 800-318-2596 to make these changes. Those who purchased coverage directly from Health Republic should call the number on their ID card.
– For more information, visit state.nj.us/dobi/division_insurance