Effect of the Affordable Care Act in New Jersey (2009-2017)

in New Jersey

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Effect of the Affordable Care Act
Overview of the Affordable Care Act
The ACA in other states
Affordable Care Act glossary
Medicaid • Obamacare lawsuits • Republican effort to repeal the ACA
The data on this page was the most current data available as of October 2017.

The impact of the Affordable Care Act of 2010 (ACA), also known as Obamacare, has been debated among politicians, policymakers, and other stakeholders. The ACA was signed into law in 2010 by President Barack Obama (D). The law facilitated the purchase of health insurance through a system of health insurance exchanges, tax credits, and subsidies. Initially, states were required to expand eligibility for Medicaid under the law; a 2012 ruling by the United States Supreme Court made the Medicaid expansion voluntary for states. The law also required insurers to cover healthcare services within a standard set of benefits and prohibited coverage denials based on preexisting conditions. Under the law, all individuals were required to obtain health insurance.

This article presents data that researchers have collected and analyzed, as well as reports they've released based on that data, as they attempt to understand the ACA's impact. See the following sections for more information:

1. Health insurance: This section provides information on insurance coverage overall, enrollment in Medicaid, and enrollment through the health insurance exchanges.
2. Consumer costs: This section provides information on the average premiums and deductibles paid by consumers.
3. Government spending: This section provides information on federal and state spending for Medicaid, tax credits and subsidies, and uncompensated care costs.
4. Market reactions: This section provides information on health insurer participation in the exchanges, narrow networks, and direct primary care.

For more information about the Affordable Care Act, click here.

Health insurance

Insurance coverage overall

Following the passage of the ACA in 2010, the nation as a whole saw a decline in the number of individuals without health insurance, particularly following the first open enrollment period for the health insurance exchanges in 2013 and the first state Medicaid expansions in 2014. According to the Census Bureau, between 2013 and 2014, the number of uninsured individuals declined by 18.8%, from 45 million to 36.7 million people. The uninsured rate was 16.3% in 2010, 14.5% in 2013, and 11.7% in 2014. By 2016, about 8.6% of the country lacked health insurance. Between 2013 and 2016, the number of uninsured individuals declined in every state, although the actual rate of decline varied from state to state.^[1][2][3]

Between 2013 and 2016, the number of uninsured individuals in New Jersey declined from 1.2 million to 705,000, a 39.2% decrease. As a percentage of the population, the portion of uninsured individuals in New Jersey fell from 13.2% to 8%. The line graph below displays the percentage of New Jersey's population that lacked health insurance for each year between 2004 and 2016—six years before and after the Affordable Care Act—as compared with the United States as a whole. Hover over the lines to view the data points; the solid line represents New Jersey while the dotted line represents the United States. The table below the graph displays figures on the uninsured population for the years 2013 and 2016 in New Jersey and two of its neighboring states.

The Affordable Care Act expanded insurance coverage primarily in two ways: by expanding eligibility for state Medicaid programs and by providing tax credits for people to purchase private insurance. The RAND Corporation described the gains in coverage between 2013 and 2015 in the following way:

Click to view a larger version.

The law also provided for the establishment of small business insurance exchanges, called Small Business Health Options Program Marketplaces, or SHOPs. The launch of the federal online website for SHOPs was delayed by one year, from November 2013 to November 2014. As of July 2015, 85,000 Americans were insured through a SHOP. According to data analyst and blogger Charles Gaba, who runs the website ACASignups.net, the federal government did not include SHOP enrollment in its official ACA enrollment reports.^[6][7][8][9]

Medicaid expansion

The provision for expanding Medicaid went into effect nationwide in 2014. As of September 2017, Medicaid expansion had been approved in 31 states. Of these states, six had obtained a waiver from the Centers for Medicare and Medicaid Services (CMS) to expand via an alternative method, such as assisting low-income individuals with paying premiums for private insurance. Nineteen states had not expanded Medicaid at that time.^[13]

New Jersey was one of 31 states that had expanded Medicaid as of September 2017. Even if a state did not expand Medicaid, it could have seen an increase in enrollment in the program due to the ACA's requirement to acquire health insurance. In fiscal year 2015, annual Medicaid enrollment in New Jersey increased by 23.5%, compared to 4.4% in 2014 and 1.2% in 2013.^[14][15]

In New Jersey, monthly Medicaid enrollment amounted to about 1.8 million in May 2017. Before the Affordable Care Act, average monthly enrollment in New Jersey amounted to 1.3 million, according to the Kaiser Family Foundation. This represented a difference of 40.2%.^[13][16]

Health insurance exchanges

On March 22, 2019, Governor Phil Murphy (D) announced New Jersey would be establishing a state-based health insurance exchange in advance of the next fall's enrollment period. During a press conference announcing the policy, Murphy said, "A New Jersey exchange will be a strong measure of independence at a time when the federal administration continues to undermine and weaken the federal marketplace." Marlene Carride, New Jersey's commissioner of the Department of Banking and Insurance, said that the state would impose a 3.5% insurer fee, the same as that levied by the federal government, to fund the development of the new exchange. The insurer fee was expected to generate approximately $50 million.^[17]

Co-ops

The Affordable Care Act also created a new type of nonprofit health insurance company to offer insurance on the exchanges: the Consumer Operated and Oriented Plan, or co-op. The law stipulated that no representative from an insurance company or association can serve on a co-op board and that no co-op can accept outside investor funding. Co-ops were also required to sell most of their plans in the individual or small employer market, while one-third of their plans could be offered in the large employer market. Co-ops received start-up funding through low-interest government loans; some also received solvency loans. Twenty-three co-ops were ultimately established nationwide and collectively received $2.4 billion in loans.^[18]

By the end of 2015, 12 of the 23 co-ops had closed. The closed co-ops had collectively received over $1 billion in government loans. According to HealthInsurance.org, an online guide to health insurance, over 1 million people were enrolled in co-ops during 2015 and about 500,000 were impacted by the closures at the end of the year. Individuals who had purchased insurance through these co-ops had to change insurers. Of the remaining co-ops, only one (Maine) was operating with a positive net income in 2015, thus raising the possibility that more co-ops would fail. Over the next year and a half, six more co-ops closed, and as of September 2017, four co-ops remained in operation.^[18]

One co-op was established in New Jersey, Health Republic Insurance of New Jersey. In September 2016, the New Jersey Department of Banking and Securities announced that it was placing Health Republic under its supervision and that it would close at the end of the year. The co-op covered 35,000 individuals. It had received $109 million in federal start-up and solvency loans. The department cited payments the company had to make into the federal risk adjustment program as the reason for its closure. The company owed $46.3 million into the program, which required insurers with relatively healthier enrollees to pay into a fund that goes to insurers that enrolled relatively less healthy enrollees. The co-op's CEO stated, "[T]he ACA's risk adjustment mandate has put the company under considerable financial strain."^[19]

For more on the co-ops and why they closed, click here.

Consumer costs

Premiums

The studies and analyses below were conducted by various organizations to examine premiums for health insurance plans in the individual market, where most of the ACA's changes took place. Different studies using similar data may find varying results due to variances in the methodologies used by the organizations conducting the studies.

2016 to 2017

The Kaiser Family Foundation (KFF) analyzed the change from 2016 to 2017 in average premiums for benchmark plans offered in major cities in each state, as estimated for a 40-year-old non-smoker earning $30,000 per year. According to KFF, premiums were "expected to increase faster in 2017 than in previous years due to a combination of factors, including substantial losses experienced by many insurers ... and the phasing out of the ACA’s reinsurance program."^[20]

In Newark, New Jersey, the organization found that average premiums for the individuals described above increased by 7%, from $330 per month to $353 per month. The organization also analyzed the change in the premium tax credit provided to such individuals, finding that the average tax credit increased by 19%, from $122 per month to $146 per month. These figures are provided in the table below and compared with those in three of New Jersey's neighboring states.

2015 to 2016

Commonwealth Fund
The Commonwealth Fund examined premiums for all plans offered on the exchanges. The organization found that premiums increased by an average of 6% nationwide from 2015 to 2016. In New Jersey, the Commonwealth Fund found that premiums increased by an average of 4%. The table below shows average 2016 premiums by plan metal level in New Jersey and surrounding states, as analyzed by the Commonwealth Fund. N/A indicates that plans in that metal level were not offered in a particular state.^[21]

Kaiser Family Foundation
For premium changes from 2015 to 2016, an analysis of benchmark plans from the Kaiser Family Foundation found an average increase of 10.1% on the exchanges. For New Jersey, the organization found that benchmark premiums on the state exchange increased by an average of 4.4% in the Newark market, from $316 to $330.^[22]

PricewaterhouseCoopers
An analysis from PricewaterhouseCoopers of premium changes from 2015 to 2016 found that average premiums for benchmark plans offered on the exchanges rose by 4.2%. In New Jersey, the organization found that average benchmark premiums rose by 5% from 2015 to 2016.^[23]

Analysis

2018 premiums

According to the American Academy of Actuaries, the major drivers of premium changes from 2017 to 2018 were the underlying growth in healthcare costs and regulatory uncertainty. The organization issued a report stating that costs for healthcare services and prescription drugs were expected to rise between 5 and 8% in 2018. In addition, the report listed four areas of regulatory uncertainty impacting health insurance premiums in 2018:^[28]

• uncertainty related to whether cost-sharing reduction reimbursements would continue to be paid;
• uncertainty related to enforcement of the individual mandate;
• uncertainty related to how the shorter open enrollment period (November 1, 2017, to December 15, 2017) and stricter rules for special enrollment periods would impact the risk pool; and
• uncertainty related to potential legislative changes to the ACA.

Other drivers of premium changes included state programs to reimburse insurers for high-cost enrollees that could put downward pressure on premiums, changes in the composition of the risk pool, and the reinstatement of the ACA's fee on health insurers.^[28]

2017 premiums

According to the American Academy of Actuaries, the major drivers of premium changes from 2016 to 2017 were the underlying growth in healthcare costs, the end of the reinsurance program, and the availability of more complete information on the health status of the risk pool. Although increases in the cost of healthcare services were expected to be lower than in previous years, insurers were uncertain about whether this trend would continue. In addition, the end of the federal reinsurance program, which had reimbursed insurers for high-cost enrollees, put upward pressure on premiums.^[29]

Other drivers of premium changes included a suspension of the ACA's fee on health insurers, putting downward pressure on premiums, a change in the legal definition of small employer, and narrower provider networks.^[29]

Initial premiums

According to an article by PolitiFact, premium increases in the individual market were expected by healthcare policy analysts. The article suggested that increases could be due to the following reasons:^[30]

• A requirement for plans offered on the exchanges to cover a standard set of benefits that weren't covered before;
• Two provisions known as guaranteed issue and community rating that prevented denial of coverage to individuals with pre-existing conditions and also prohibited differing premium rates based on those conditions and other observable characteristics, such as gender. These two provisions were expected to result in rate increases for everyone to cover associated costs; and
• Higher-than-expected medical loss ratios, meaning insurers paid more for claims than expected, or in some cases paid more in claims than they received in premium revenue.^[31]

According to the Robert Wood Johnson Foundation, prior to 2014's implementation of the requirement to cover a standard set of benefits, less than half of people with individual coverage were in plans that covered those benefits. The organization found that new benefits likely resulted in an increase in the number of claims filed with insurers and thus an increase in costs requiring an increase in premiums.^[31]

Premiums for employer-sponsored insurance

The Henry J. Kaiser Family Foundation found from 2013 to 2014 increases for employer-sponsored insurance (both small and large group) were smaller than those in the individual market: average single coverage premiums increased nationwide by 2%. KFF stated that this "difference [was] not statistically significant," meaning premiums were essentially unchanged. Meanwhile, average family coverage premiums increased by 3%. From 2014 to 2015, the organization found an increase of 4% for both single and family coverage, "continuing a fairly long period (2005 to 2015) where annual premium growth has averaged about 5%."^[32][33]

According to subsequent KFF reports, employer-based coverage premiums increased by 2.9% for single plans and 3.4% for family plans from 2015 to 2016, and by 4% for single plans and 3% for family plans from 2016 to 2017. State-based data was not available in any of the reports.^[34][35]

Deductibles

2016

According to the Kaiser Family Foundation, in 2016, average deductibles in the 37 states with federally facilitated or partnership exchanges were as follows:^[36]

• $5,765 for combined medical and prescription drug deductibles on bronze plans (89% of bronze plans had combined deductibles);
• $3,064 for combined deductibles on silver plans (56% of silver plans had combined deductibles);
• $3,198 for separate medical deductibles on silver plans (44% of silver plans had separate medical and prescription drug deductibles);
• $1,136 for separate medical deductibles on gold plans (57% of gold plans had separate deductibles); and
• $409 for separate medical deductibles on platinum plans (73% of platinum plans had separate deductibles).

2015

In 2014, the publication Modern Healthcare estimated that 60 to 80% of health plans on the exchanges would be high deductible health plans in 2015. For 2015, the Internal Revenue Service considered plans with deductibles of at least $1,300 for single coverage and $2,600 for family coverage to be high-deductible plans. According to the Kaiser Family Foundation, in 2015, average deductibles in the 37 states with federally facilitated or partnership exchanges were as follows:^[37][38][39]

• $5,328 for combined medical and prescription drug deductibles on bronze plans (91% of bronze plans had combined deductibles);
• $2,556 for combined deductibles on silver plans (55% of silver plans had combined deductibles);
• $3,453 for separate medical deductibles on silver plans (45% of silver plans had separate medical and prescription drug deductibles);
• $1,431 for separate medical deductibles on gold plans (63% of gold plans had separate deductibles); and
• $418 for separate medical deductibles on platinum plans (62% of platinum plans had separate deductibles).

Government spending

Overall

In 2016, the Congressional Budget Office (CBO) estimated the net cost to the federal government of the subsidies, taxes, and penalties associated with the health insurance coverage provisions of the ACA to be $8.9 trillion between 2017 and 2026. This was $1.4 trillion higher than if the ACA had never been enacted. This was the most recent report from the CBO on the ACA's impact on federal spending as of October 2017; the report stated that the CBO would no longer estimate the specific impact of the ACA on the federal budget because "generating such estimates is becoming more difficult and less meaningful" as time goes on.^[40]

For states, the primary changes in spending associated with the ACA were on Medicaid and uncompensated care. States that ran their own exchanges were also responsible for financing them, which The Washington Post reported in 2015 could cost these states $28 million to $32 million per year.^[41][42]

Medicaid

See also Medicaid spending in New Jersey

Spending on Medicaid expansion

On January 1, 2017, states began contributing 5% of the total cost of covering expansion enrollees; this amount increased to 6% in 2018. Some states that covered childless adults through Medicaid before the Affordable Care Act were already contributing some state funds to their coverage before January 1, 2017. For individuals who had been eligible for Medicaid prior to the expansion but chose to enroll afterward, the federal share of their costs remained at pre-ACA levels.^[43]

In its spring 2017 report, the National Association of State Budget Officers collected data from states on spending for individuals enrolled in Medicaid under the expanded eligibility provisions of the ACA. New Jersey reported that about $2.9 billion was spent on its residents during 2016, with 98.7% of this spending being funded by the federal government. The table below provides these figures as broken down into state funds and federal funds for New Jersey and three neighboring states.^[43]

Projected Medicaid spending

Between 2012 and 2016, the Congressional Budget Office released a series of reports that estimated the impact of the Affordable Care Act on state Medicaid spending over the following 10 years:^{[41][44][45][46][47][48]}

• March 2012: The CBO estimated that between 2012 and 2022, total state spending for Medicaid would be $73 billion higher than it would have been without the ACA.
  • The Center on Budget and Policy Priorities calculated this to represent a 2.8% difference.
• July 2012: The CBO revised its estimates due to the Supreme Court ruling that Medicaid expansion must be made voluntary on the part of the states. That estimate put the impact of the ACA on state Medicaid spending at $41 billion.
• February 2014: The CBO estimated Medicaid spending would be $70 billion higher between 2015 and 2024 than without the ACA.
• April 2014: The CBO reduced its estimate for the impact of the ACA on state Medicaid spending to $46 billion, where it remained in its March 2015 estimate for 2016 through 2025.

In the CBO's March 2016 estimate of the impact of the ACA on the federal budget, the agency stated it would no longer estimate the impact of the ACA on government spending as compared to no ACA because "generating such estimates is becoming more difficult and less meaningful" over time. The March 2016 report did not estimate the effects on state spending.^[40]

Total Medicaid spending, 2012-2016

During fiscal year 2016, combined federal and state spending for Medicaid in New Jersey totaled about $14.5 billion. Spending on New Jersey's Medicaid program increased by about 40% between fiscal years 2012 and 2016.^{[49][50][51][52][53]}

Tax credits

The Kaiser Family Foundation estimated the total amount of premium tax credits received during 2017 by residents in each state. The organization calculated this estimate by multiplying the total number of enrollees by the average tax credit received. Federal spending on cost-sharing reductions was not calculated. In New Jersey, residents received an estimated combined total of $812.3 million in federal tax credits during 2017. The table below shows the amounts calculated by the Kaiser Family Foundation for New Jersey and three neighboring states.^[54]

Uncompensated care

Uncompensated care is the sum of healthcare services provided to patients without reimbursement; this includes both charity care and bad debt. In 2013, total government spending for uncompensated care nationwide amounted to $53.3 billion. The federal government paid $32.8 billion, while state and local governments paid $19.8 billion. Due to the expansion of insurance coverage options (Medicaid in some states and health insurance exchanges in every state), states could see a reduction in their spending for uncompensated healthcare. According to a 2015 report from the U.S. Department of Health and Human Services, in 2014, uncompensated care costs declined by $5 billion in states that expanded Medicaid and by $2.4 billion in states that did not. State-level data was not available.^[55][56]

According to a separate report from the American Hospital Association, uncompensated care costs nationwide amounted to $35.7 billion in 2015. This was a decline of $7.1 billion from 2014, when the organization estimated uncompensated care costs amounted to $42.8 billion.^[57]

Market reactions

Number of insurers on exchange

In July 2017, the Centers for Medicare and Medicaid Services issued a press release stating that fewer health insurers had applied to offer plans on the health insurance exchanges for 2018, 141 compared to 227 applying to offer plans for 2017. The press release followed announcements from Humana and Aetna that they would not offer any health plans on any state exchange in 2018. In addition, in 2016, UnitedHealthcare had announced that it would exit all but three exchanges in 2017. The insurers said their decisions to exit the markets were based on financial losses and regulatory uncertainty regarding the cost-sharing reduction reimbursements.^{[58][59][60][61][62]}

Nationwide, an average of 4.3 insurers per state offered plans on the exchanges, compared to five insurers in 2014 and six in 2015. In New Jersey, two insurers offered plans on the state's health insurance exchange in 2017, compared to five insurers in 2016 and 2015. The table below displays the number of health insurers that offered plans on each state's exchange for each year between 2014 and 2017. This information is provided for New Jersey and three of its neighboring states.^[63]

Narrow networks

The Affordable Care Act required insurers to design plans that offered a standard set of health benefits, termed by the law as essential health benefits. The law also prohibited them from denying coverage to individuals with pre-existing conditions or from varying a person's premium for any reason other than age, tobacco use, and location. These provisions limited the ways insurers could design plans that featured lower premiums. One way insurers kept premiums down was to offer plans with limited or narrow networks, meaning they contracted with fewer providers for services in exchange for lower prices. The Robert Wood Johnson Foundation found that in 2014, 41% of silver-level plans, the most common type sold on the state exchanges, offered narrow networks. In a separate study, management consulting firm McKinsey & Company found that in 2014, 39% of plans offered on the exchanges had narrow hospital networks; in 2015, they found that this figure had increased to 45%.^[28][64][65]

Although they could allow insurers to offer lower premiums, narrow networks restricted consumers' choice of providers by design. According to Kaiser Health News, this sometimes caused consumers to drive long distances for care, impeded their access to providers, or resulted in high out-of-pocket costs for necessary care because the provider was out of network. Some state regulators have enacted legislation requiring insurers to offer wider provider networks, sometimes referred to as network adequacy standards. Just over half of states applied network adequacy standards to plans offered on their exchanges. As of November 2015, New Jersey was one of these states, limiting the distance patients must travel for care and the length of time they must wait for an appointment.^[66][67][68]

Direct primary care

See also: Direct primary care

In 2012, there were 4,400 direct primary care practices in the United States, up from 146 in 2004.

Direct primary care, a type of retainer-based healthcare, is a healthcare model that emerged as an alternative to the system of paying for healthcare with health insurance. In a direct primary care arrangement, patients contract directly with their primary care physicians, paying a flat monthly, quarterly, or annual fee—also called a retainer—that covers all primary care visits and services over the time period. According to the Heritage Foundation, doctors switch to direct primary care practices due to concerns about "doctor shortages, narrow networks, and ... third-party reimbursement." In 2004, the U.S. Government Accountability Office identified 146 retainer-based practices, which included direct primary care as well as other types of retainer-based healthcare, such as concierge medicine. In 2010, the National Opinion Research Center found that this number had increased to 756. In 2012, the American Academy of Private Physicians counted 4,400 direct primary care practices.^{[69][70][71][72]}

In direct primary care, the physician's practice does not accept insurance; instead, a monthly fee of typically $100 or less is charged and covers all services. Alongside the arrangement with their primary care physician, individuals often have a supplementary insurance plan that covers specialist and catastrophic care. Direct primary care practices often see fewer patients than traditional practices, and their physicians tend to spend more time with their patients in appointments.^[72][73][74]

The Affordable Care Act contained a provision allowing direct primary care plans to be sold on the health exchanges along with a wraparound insurance plan. Under the law, direct primary care on its own did not constitute insurance. However, in 2005, the West Virginia Insurance Commission investigated a concierge medicine practice for potentially violating state insurance laws. As of November 2015, 15 states had either introduced or enacted legislation clarifying that direct primary care is not subject to insurance laws and removing them from liability. As of November 2015, New Jersey was not one of these states.^{[70][75][76][77]}

Historical data

Medical loss ratio rebates

Insurance coverage overall

Health insurance exchange enrollment

Recent news

The link below is to the most recent stories in a Google news search for the terms Affordable Care Act New Jersey. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

See also

• 

  Federal policy on healthcare, 2017-2020

• 

  Medicaid spending in New Jersey

• 

  Healthcare policy in New Jersey

Effect of the Affordable Care Act in the 50 states

Click on a state below to read more about how the Affordable Care Act has affected that state.

Footnotes