The Wrong Prescription for Fixing Health Insurance in New Jersey

tt141.jpgSometimes an idea that seems too good to be true is just that. One of those ideas is being touted by President-Elect Donald Trump and the Republican leadership in Congress as a key component of the Affordable Care Act (ACA) “repeal and replace” strategy. The idea is to allow health insurance to be sold across state lines. This regurgitated policy proposal is a popular sound bite, let consumers save money by purchasing health insurance coverage from another state where the policy may be cheaper. However, this proposal, which has been kicked around for well over a decade, is a bad idea.

Supporters claim that by removing state boundaries that hinder insurance products to be sold in different states, health insurers will be better able to bring down costs due to increased competition in the health insurance marketplace. Further, they believe that insurance should be marketed and sold nationally as opposed to the current system where health insurance is sold regionally and regulated by individual states. Supporters argue that by allowing insurers to sell health insurance according to the rules of any single state that they choose, this would enhance regulatory competition among the states. This competition would create an incentive to attract insurers due to a reduction in redundant and “unnecessary” regulations. Thus, leading to a decline in insurance costs for consumers as companies create plans that meet the needs and demands of their consumers, as opposed to providing additional benefits that raise costs and are not used by the majority of consumers. Sounds good huh?

Luckily, we do not have to speculate on the potential impact that this policy change would have in New Jersey. Five states and the federal government already allow it! Georgia, Kentucky, Maine, Rhode Island, Wyoming and the ACA as well (as long as all states involved agree to it) allow for insurance to be sold across state lines. The Kaiser Health News report on the experiences in these states found that, “not a single insurance company has offered” to sell a policy approved in one of those states to consumers in another.

Why is that? Network adequacy for one is a major concern. A 2012 study by The Center on Health Insurance Reforms at Georgetown University pointed out how the challenges of finding providers likely doomed this proposal from taking root in America. Here is an illustration as to why it is difficult. A person, who lives in New Jersey and wants to buy a plan sold in Maine, is going to have a problem when it comes to finding health care providers that are in-network in their state. Why? Because the network was designed for the residents of Maine and the health care needs in their state. Therefore New Jersey health care providers will be in limited supply and building a robust network in New Jersey to meet the newfound consumer demand will be quite expensive. This will make the choices of in-network doctors and hospitals under this new multi-state plan very limited. That is, unless you don’t mind taking flights to Portland, ME when you need medical attention.

There is also the very real idea that out-of-state insurance policies could potentially discriminate against women. Prior to the ACA, thirty seven states permitted gender rating of health plans. Gender rating is the “unethical” practice of charging men and women different rates for identical health services. These different rates usually resulted into higher insurance premiums for women than men. Studies conducted before the enactment of the ACA showed that women in the individual market could pay up to 1.5 times more than men for health insurance. Research also showed that gender rating costs women in the United States approximately $1 billion dollars annually.

If that provision of the ACA were to be repealed then New Jersey’s current gender rating ban in the individual market would only apply to New Jersey-based health plans. So if you bought health care coverage from an out-of-state insurance company as envisioned by this proposal, then “Josephine” will likely pay more for the same coverage than “Joseph”. I, for one, do not want my daughter or yours to be treated differently than our sons when it comes to affordable and quality health insurance.

Additionally, individuals with pre-existing conditions could be at risk. One of the most important protections under the ACA was a provision that insurance companies cover those with pre-existing health conditions. Prior to the implementation of the ACA, New Jersey was one of five states that required health plans to do so. Allowing insurers to sell across state lines effectively creates a dynamic where lower premiums would be realized for the healthiest New Jersey residents, but it would raise premiums and reduce coverage options for virtually everyone else. So if you are an individual with a worrisome health history like a diabetic with heart disease running through your family, look out! You would likely have only the options of going without coverage or acquiring an in-state insurance plan, which will likely increase premiums when only the sickest are left behind.

Finally, if you have a problem with one of those out-of-state policies…good luck! The New Jersey Department of Banking & Insurance would have no jurisdiction to assist you with any problems associated with a policy sold in another state. If an unscrupulous out-of state insurance company were to take advantage of you through a potentially discriminatory policy with limited consumer protections, there is not much New Jersey can do under this proposal if you have a complaint. Striking the proper balance between cost containment and consumer protection in health insurance is a delicate balance that should be treaded upon carefully. Therefore, I strongly believe that allowing out-of-state health insurers to sell policies here in New Jersey is the wrong prescription to fix the problem of providing affordable health insurance in our state. That’s my take. What’s yours?


Showing 8 reactions

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  • commented 2016-12-01 22:11:57 -0500
    The ACA also removed the cap on the total amount of insurance you are covered for in a lifetime. I am chronically ill and worry this will go away too.
  • commented 2016-12-01 18:20:51 -0500
    Remove the 20 something year olds that got to freeload on mom and dads plan and what is your ACA number? Sharply lower. And the others? Thats right… they are the ones with preexisting conditions. Its easy for you who gets his gold coverage for free on the house to tell everyone else what is good for them. So you will never have to pay anything for your daughters insurance. Why dont you ask the business owner who is looking at 25% increases. As that business owner and a licensed agent, the business owner is not going to purchase coverage from a company that will not provide coverage to myself, my family and my employees. As a licensed agent im not putting my professional liabilty on the line by selling it. What NJ law does is stifle options to the employer. Troy, why don’t you tell us what the NJ employee Cadillac plan is going to cost the taxpayers in penalties due to ACA rules. Tell the whole story not just your slant….. 16 months left before my vote, payroll taxes, corporate taxes, property taxes, and income taxes get paid to a more business friendly state. Cant wait to leave liberal NJ
  • commented 2016-12-01 18:20:07 -0500
    I am impressed that you responded and even more impressed that you brought Idea’s to the table. Maybe you should be in Washington. I agree with #1,3,4, &6. not sure what your definition of value-based health care is but it sounds good on paper. I would love to know who wrote the economic studies questioning the viability of the health care systems due to charity care. I assume you do live in this state. Have you seen the massive complexes built by Virtua? The hospital in Voorhees is pretty close to empty. I Think the health care industry is doing just fine. I wouldn’t spend too much of your time worrying about their viability. Stating that 20 million Americans will be without health care is fear mongering. You don’t know that. President elect has already mentioned parts of ACA that are worth keeping so when he says the word “replace” in the same sentence do you just disregard that? My thoughts on a “National” healthcare strategy is as follows:
    I DO NOT WANT A NATIONAL STRATEGY! I want State and Federal government out of my life and out of my pocket.
    Please do your best to listen to the idea’s of the new administration. Listening has become a lost art.
    Best of luck and thank you for listening to me.
    Regards,
    Mike
  • commented 2016-12-01 16:42:02 -0500
    The ACA has provided millions of Americans with health insurance coverage Mr. Garland. Coverage that they would not have had without this program. In turn, the lack of coverage would have cost all taxpayers more in charity care costs to hospitals and made their viability a bit more tenuous as economic studies of the health care industry have shown. That said, the ACA could be greatly improved. Here are a few ways: (1) Allow employed parents greater access to the new marketplaces, and allow employers greater flexibility to offer—or not offer—health insurance coverage, (2) Offer “public option” early Medicare coverage within health insurance marketplaces to people over 60, (3) Payment reform of the Medicare Sustainable Growth Rate, (4) Addressing the “family glitch” which requires that people purchase insurance through a spouse’s employer if the employer offers it. This would fix the issue where the employee has affordable insurance, but his employer doesn’t provide affordable insurance to the employee’s family, the family is not eligible for subsidies. (5) Continue the migration from fee-for-service and integrate more fully value-based healthcare, and (6) Enhance transparency in pricing better transparency which has shown in other areas that it will lead to better quality if people can compare prices with outcomes. Those are just some of my thoughts on improving the ACA with repealing it and throwing millions of our fellow Americans out in the cold with respect to health insurance. What are your thoughts on a national health care strategy sir?
  • commented 2016-12-01 15:09:47 -0500
    Then what is your solution Mr Singleton? It’s easy to bash someone else’s idea. The ACA did not do what it was intended to do. I knew when Pelosi said pass it to find out what’s in it that we were in for a treat. When are you up for re-election….You just don’t get it!
  • commented 2016-12-01 14:29:08 -0500
    Rates differ for men and women because it reflects women are more diligent and attentive to their health then men. This is one primary reason women live longer than men, they pay more care to their health. They get check ups more often as an example. Life insurance rates are higher for men than women of the same age. Are we now going to request equal life insurance rates? Young female drivers are better drivers than young men. Do we now ask that those rates be equalized? Rates are representative of the experience of that group as it should be. The concerns noted on buying out of state plans is most legitimate but I believe they could be addressed in the hope of providing more competition. medicare for all is not the solution.
    Just look at Canada and people who need to wait for surgery
  • commented 2016-12-01 14:06:03 -0500
    Thank you for writing this, Assemblyman. I agree with you. Selling insurance across state lines is a race to the bottom. Of course, a better solution would be to get rid of private insurance altogether and implement Medicare for All. This would be a much more efficient system, save lives, and cost less. But based on the recent election, that solution won’t be on the table for at least four years. Meanwhile, America’s health care system will continue to deteriorate.