Report Health reform law ‘not going to substantially change’ how businesses provide coverage

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The majority of New Jersey employers who now provide health plans to their workers will keep doing so after 2014, when the federal Affordable Care Act requires most Americans to get coverage or pay a penalty.

The majority of New Jersey employers who now provide health plans to their workers will keep doing so after 2014, when the federal Affordable Care Act requires most Americans to get coverage or pay a penalty.

That was among the findings of several months’ research led by Joel Cantor, director of Rutgers University’s Center for State Health Policy, on how federal health care reform will shape care in New Jersey.

The center’s analysis, which also found employers want a simple, market-driven insurance exchange that creates a transparent playing field with plenty of choices, is based on 13 forums it conducted with 152 participants — representing employers, health insurers, brokers, health care providers and consumer groups. The findings are posted on the center’s website. The research was commissioned by the state, which received a federal planning grant to prepare for implementation of the health reform law.

Post-2014, 65.5 percent of New Jersey’s nonelderly population will be covered by employer-sponsored health plans, down from 67.5 percent. Meanwhile, the number of New Jersey adults and children who get health coverage from employers will decline from 5.089 million to 4.938 million, a decline of 3 percent.

“This law is not going to substantially change the employee-sponsored coverage rate going forward,” Cantor said. The law includes “a whole blend of incentives and penalties for large (companies employing more than 50) that don’t offer credible coverage, and there are tax incentives for small businesses” to encourage them to provide coverage. “Underlying all of this is the fundamental reason why businesses offer coverage in the first place, which is to attract the workers they need — and that is not going to change.”

Overall, the number of uninsured New Jerseyans is expected to decline from 1.092 million to 648,000, as about 444,000 more New Jerseyans get covered as a result of the federal reform, which expands Medicaid coverage and provides subsidies to the low- and moderate-income populations to defray the cost of buying coverage through the exchange.

Christine Stearns, health care expert at the New Jersey Business & Industry Association, said the exchange “has the potential to create more purchasing options for small employers, who have been hit hard by rising costs. There is an opportunity for the exchange to create more affordable options, and better options.”

She said health care premiums keep going up, and at this point, it’s not clear if the exchange will deliver “something more affordable as a purchasing option.”

A matter of costs

Laurie Ehlbeck, New Jersey state director for the National Federation of Independent Business, said her members want the exchange to provide “the opportunity to purchase — for themselves and their employees — low-cost, dependable health care. Right now it’s really tough, because the cost is so incredibly high. Often, small-business people are forced to make a decision to offer benefits or let somebody go — and when it comes down to that decision, they can’t afford the benefits.”

She said employers want to offer health coverage, “to make them more competitive with larger firms.” Her 10,000 members average five or fewer employees, and “a lot of our members are self-employed” and uninsured. That includes her son, Kris Ruffenach, a carpenter who started Ruffenach Construction and Remodeling a year ago, and currently does not have health insurance. “He has looked at all the options, but they are so expensive; he needs a low-cost plan,” she said.

The center estimates that 263,000 undocumented immigrants may be among the uninsured after the law takes effect.

“We have a higher proportion of our population that is undocumented,” Cantor said, and those people won’t be allowed to enroll in Medicaid or buy coverage on the exchange. “It is a big problem in the state, and it will remain a big problem.”

Enrollment in the individual market, where consumers buy insurance on their own, is expected to surge by more than 362,000. Individual enrollment will more than double, to 573,000, and more than half of this group will be eligible for subsidies, according to the report.

Insurers could thus have access to 362,000 new consumers who will need to buy coverage to comply with the ACA, or pay penalties.

“I think the insurers view this s an opportunity, but it is not without some anxiety,” Cantor said. “The fear is that the enrollment mandate won’t be effective enough, and therefore, healthy people will not be enrolling in large numbers. And the related fear is that the exchange will just be a magnet for sick people.” During the focus groups, insurers said, “New Jersey really needs to design the exchange very carefully to make sure it is not a risk magnet … the state needs to do all in its power to assure that people have the incentive to get into the market early, and stay in the market,” Cantor said.