New Jersey: Great News! Unsubsidized enrollees to save ~$1,500/apiece next year thanks to state ACA protections!

A few weeks ago, I posted about New Jersey's preliminary 2019 ACA-compliant individual market rate filings. At the time, the official New Jersey Dept. of Banking & Insurance specifically stated that:

  • Because Congressional Republicans repealed the ACA's Individual Mandate Penalty, carriers were planning on increasing 2019 premiums by 12.6% on average, in part to account for the adverse selection which was expected to happen next year.
  • However, thanks to the Democratically-controlled New Jersey state legislature and Governor swiftly reinstating the ACA individual mandate, actual 2019 rate filings are only expected to increase rates an average of 5.8%, saving the average unsubsidized indy market enrollee around $470 apiece next year.
  • Finally, the NJ legislature also passed, and Governor Murphy signed into law, a robust reinsurance bill which, if approved by CMS, is expected to lower unsubsidized 2019 premiums by an additional 15 percentage points, for a final 2019 average premium reduction of around 9.2%.
  • It's also important to understand that New Jersey's portion of the funding for the proposed reinsurance program will be coming from the revenue generated by the reinstated mandate penalty itself.

Well, sure enough, just moments ago, CMS Administrator Seema Verma announced that New Jersey's reinsurance waiver request has indeed been approved...but she made the announcement in the most obnoxious way she could:

(Bravo) to New Jerseyans, who will see their premiums in the individual market drop by about 15% from the expected premiums because @NJGov took action to address the failures of Obamacare. Today, @CMSgov approved NJ’s 1332 State Innovation Waiver.

— Administrator Seema Verma (@SeemaCMS) August 16, 2018

Yes, that's right: Donald Trump's CMS Administrator is actually trying to blame "the failures of Obamacare" for Congressional Republicans decision to repeal the ACA's mandate penalty last December.

Furthermore, while I do applaud Verma for approving of the reinsurance waiver (oddly, while she's fully on board with all of Trump's other sabotage efforts, she seems to have a soft spot for reinsurance, which is actually a good thing), the "1332 State Innovation Waiver" system itself is itself part of the Affordable Care Act. One of the best parts of the ACA is that it includes a framework for states to come up with improvements over it.

In other words, New Jersey Democrats are responsible for nearly every part of the 21.8 point relative rate reduction...all of which was either already part of the ACA or was allowed for by it.

In fact, the only thing that Verma has any right to pat herself on the back for is pretty much scribbling her name down on the approval paperwork.

The classic definition of "chutzpah" is "a child who murders his parents, then begs for mercy because he's an orphan". In the future, this definition should just be replaced with a picture of Seema Verma's face.

(sigh) Still, having said all of this, it's still an inherently good thing that she did so. The result of this is that the four carriers offering ACA policies in New Jersey next year should be resubmitting their 2019 filings with the reinsurance program impact backed into them. This should mean overall net rate reductions of around 9.2%, give or take, although that will obviously vary from carrier to carrier and plan to plan.

For what it's worth, I wrote up an explainer about what reinsurance is and how it actually works for anyone interested in that sort of thing.

Subsidized enrollees probably won't see much difference in their costs (ironically, they may actually see their net premiums increase somewhat since the subsidy formula will be less generous), but unsubsidized enrollees should end going from paying around $570/month this year to around $518/month...instead of paying $642/month.

Between the mandate penalty reinstatement and the reinsurance program, that should mean an effective savings of around $124/month for unsubsidized enrollees...or nearly $1,500 for the year.

Therefore, as irritating and exasperating as Verma's doubletalk may be, the fact remains that this is great news for New Jersey residents. Other states should follow their example on both counts.