Seeking Better Deals on Healthcare Insurance

Information and choice are driving efforts to make sure employees at New Jersey’s small companies have access to healthcare insurance.

By Joe Cavaluzzi, Contributing Writer On Oct 4, 2019

New Jersey employers, the state government and insurance providers are taking more creative approaches to make health insurance accessible to employees of small companies, as businesses wrestle with rising premiums and try to balance employee benefits with corporate profits.

Companies are offering insurance plans with higher deductibles, higher employee contributions to the premiums, or buying insurance through multiple-employer associations. In the case of small businesses with 50 or fewer employees, many are taking self-insured plans. The state is hoping that the new State-Based Health Exchange, to be operational for the 2021 coverage year, will add stability and access for individual customers and give them broader choices. Insurance providers are designing more varied programs and implementing better ways to engage customers through improved internet tools that provide price transparency, enabling workers to compare plan costs and coverage.

The New Jersey Business & Industry Association’s (NJBIA) 2018 Health Benefits Survey noted a decline in member companies offering healthcare coverage to employees compared to the last survey in 2016. But, the survey also found that overall, companies continue to take less profit rather than give up coverage for employees.

“It’s really hard to keep up with those rising costs,” NJBIA Chief Government Affairs Officer Christine Buteas says. “When we talk to members, salary and then health insurance are the most expensive items in a budget.”

New Jersey pays the highest health insurance premiums in the nation, with an average premium of $22,294 per employee for employer-based family health insurance, $2,729 more than the national average, according to the Kaiser Family Foundation. Employees pay an average of $6,253 of that premium (4th highest in the US), while employers pick up the remaining $16,041 (5th highest).

What Employers Are Doing

More companies are trying to ease the burden on employees, as 40% of companies in the NJBIA Health Benefits Survey reported taking a smaller profit or even a loss to help pay the increase. Just 27% froze or limited wage increases, and 21% postponed or reduced business investment. Far fewer introduced higher deductible plans, 38% in 2018, compared to 53% in 2014, at the onset of the Affordable Care Act.

David Molinaro, a CPA and member of Smolin Lupin & Co., says some companies are asking employees to pay a higher share of the cost, but most are maintaining the percentage the employees currently pays when premiums go up. He is seeing an increase of plans with higher deductibles.

“Some companies are just doing high deductible plans on hospital and ambulatory services, figuring those are not needed as often compared to sick doctor visits,” Molinaro says. He has not seen any companies drop insurance coverage, even though the federal government ended the individual mandate to buy health insurance this year. “Most employers know they need to provide some coverage to their employees to keep them there. Especially now, with a lower unemployment rate, you need to offer these types of benefits to keep your employees happy.”

Employers are looking into critical illness and accident supplemental policies that reimburse employees scheduled amounts for specific diseases and accidents, which offset their out-of-pocket costs, according to UnitedHealthcare of NJ’s Healthplan CEO Paul Marden.

“More small businesses (also) are interested in offering ancillary coverage like life, dental, vision and disability,” Marden says. “UnitedHealthcare is also offering virtual visits to provide convenient access to care when and where the member wants it. This extends to behavioral health visits.”

Some companies are turning to Multiple Employer Welfare Arrangements (MEWA), a single plan that covers the employees of multiple, unrelated companies while spreading the risk of being self-funded. MEWAs are a way for smaller companies to offer employee benefits outside of the government-run health insurance exchanges while spreading the risk of self-funding. The NJBIA MEWA has 17 NJ member associations, each with a seat on the Board of Directors, and is administered by Association Master Trust of Short Hills. It covers about 13,000 employees and 7,000 dependents.

“MEWAs are not-for-profit and self-funding, which helps control controllable cost, so there is no allowance in rates for shareholders or corporate profit,” Association Master Trust Chief Operating Officer Harvey Mishkin says, adding that the NJBIA MEWA consistently returns around 90 cents of each premium dollar to pay for benefits. A MEWA also offers access to more plans.

“So, there is still a way for the patient to get a high-benefit package and for the employer to control costs through the ways the benefits are delivered,” Mishkin says.

Insurers Offering Wider Range of Plans for Small Businesses

Insurance companies are offering a range of plans that give small employers and their workers more options.

At Horizon BCBSNJ, Michael J. Considine, small group & mid-size markets vice president, says that the insurer’s “OMNIA products continue to dominate as the top value and most competitively priced plans in the small group marketplace. In fact, almost 50% of small group members are in an OMNIA product. We launched a new OMNIA product in July for small employers that offers out-of-state coverage. In just a short period of time since its introduction, this product is already proving to be popular.”

Considine notes that, according to enrollment data from the NJ Department of Banking and Insurance (DOBI), small group membership in 2019 has continued to shrink. “Despite this contraction, we expect that by the end of 2019, Horizon’s market share in Small Group should rise to approximately 70%,” he says. “In 2020, we anticipate continued competitive pricing similar to 2019, but overall the fully insured market will continue to shrink.”

“More than 50% of people are taking high-deductible health plans comparable with Health Savings Accounts (HAS),” AmeriHealth New Jersey Vice President of Sales Ryan Petrizzi says, adding that AmeriHealth is using the internet and enhanced tools such as database navigators to allow people to get very specific information on price and coverage. “It helps them see how much their plan will cost. It also ties together prescription drug costs. So, they know how those costs relate back to their plan.

“It’s also important to see the cost of purchasing the plan as opposed to the cost of using the plan,” he says.

Other small businesses are going to self-funding plans, which Petrizzi cautions, don’t provide the same protections as fully funded plans.

“That means a lot of benefits mandated by the state, comprehensive autism service, for example, don’t reach as many small employers in that 2-employee to 50-employee market,” he says.

When small companies go it alone with a self-funded plan, they are not able to spread the risk of having to cover catastrophic medical expenses the way a bigger company or a MEWA can. Some small employers buy stop-loss insurance to reimburse the company for catastrophic, excess or unexpected expenses. But it does not cover the employee’s catastrophic expenses. That may change.

A bill sponsored by Senators Nellie Pou and Nicholas Scutari, S-3270, would amend the law covering the Small Employer Health Benefits (SEH) program to prohibit insurance carriers from selling stop-loss insurance to companies with 50 or fewer employees. The bill does not prohibit a carrier from issuing stop loss insurance to a multiple employer arrangement.

Bringing Stability to an Unstable Market

New Jersey created the State-Based Health Exchange (SBE) in June to gain more control over the Individual Health Coverage Program (“IHC”) as the federal government continues to remove the protections of the Affordable Care Act (ACA).

The Trump administration has cut back federal funding for outreach and enrollment assistance. So, the state has pledged $2 million, twice what it spent on consumer engagement last year, to back the Department of Banking and Insurance’s request to take over advertising, outreach and the navigators. Currently, those functions are provided with health plans sold on the federal exchange and managed by the U.S. Centers for Medicare & Medicaid Services.

New Jersey plans to develop its own portal to communicate with consumers and take on additional oversight responsibilities, such as exerting greater control over plan design and the length of the enrollment period for the 2021 coverage year. Consumers would still use the federal website, healthcare.gov, to enroll in these plans for 2020 this fall.

Technology Assists in Staying Healthy

Marden, of UnitedHealthcare, estimates 35% of employers now integrate wearable devices into their well-being programs to help employees more accurately understand their daily activity levels.

“As these programs become more common, there may be opportunities for cost-savings for companies and their workforces,” he says. “For instance, some wearable device wellness programs may enable people to earn more than $1,000 per year by meeting certain daily walking goals, while employers can achieve premium renewal discounts based on the aggregate walking results of their employees.”

He also notes that technology is playing a bigger role in helping employers and their workers make sense of costs and benefits, adding that research shows 36% of Americans say they have used the internet or mobile apps during the last year to comparison shop for healthcare.

“Healthcare quality and cost varies widely within a city or neighborhood, so encouraging the use of online and mobile transparency resources may yield savings for employers and employees,” Marden says. “Employers are gaining access to online resources to help them more easily analyze and make sense of health data, taking into account aggregate medical and prescription claims, demographics, and clinical and well-being information, which may help improve health outcomes, mitigate expenses, and help employees take charge of their health.”

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