Senator GERALD CARDINALE
District 39 (Bergen)
Requires small employer health benefits plan carriers to offer a basic and essential plan.
CURRENT VERSION OF TEXT
An Act concerning health insurance and supplementing P.L.1992, c.162 (C.17B:27A-17 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The Legislature hereby finds and declares that:
a. While the Legislature enacted ground-breaking health insurance reform in 1992 for the small group market that provided guaranteed-issue, guaranteed-renewal coverage, with a prohibition against rating on the basis of health status and limiting preexisting condition exclusions in policies, the plans that were established by the New Jersey Small Employer Health Benefits Program Board did not offer sufficient variety or options to insureds in terms of the range of coverages that are provided under the standard plans;
b. The original intent of the Legislature was to give policyholders a wider range of coverage options, including policies that provide reimbursement for basic and essential health care services but do not contain either the traditional mandated benefits to which the standard plans are subject or reimbursement for services which the consumer can more economically pay for himself, rather than having those services paid for through a third-party system, which adds significantly to the cost;
c. In 2001, the Legislature enacted legislation, P.L.2001, c.368 (C.17B:27A-4.4 et seq.), requiring every insurer writing individual health benefits plans through the New Jersey Individual Health Coverage Program to offer a plan which includes limited, “basic and essential” benefits, and as part of that legislation, required the New Jersey Individual Health Coverage Program Board and the New Jersey Small Employer Health Benefits Program Board, to evaluate, and report to the Legislature and the Governor on, the effectiveness of the legislation in providing affordable health care coverage and whether a similar “basic and essential” plan should be made available to small employers;
d. In their report, the boards found that the legislation had been “modestly effective at providing affordable health coverage” to a certain portion of the individual market, but did not recommend that small employer market carriers be required to offer a similar plan, noting that insufficient time had elapsed to allow for the collection of adequate data to make a truly informed evaluation; however, since the time of that report, the basic and essential health benefits plan has become more popular as a less expensive alternative to the standard plans and now represents one quarter of the individual market, with over 20,000 individuals currently covered;
e. Yet, the New Jersey Small Employer Health Benefits Program Board still has elected to provide little variance in the coverage provided under the standard plans; rather, reductions in premium cost can be obtained primarily through increasing the deductibles to substantial sums, which defeats the objective of making the policies affordable, in that large deductibles represent large out-of-pocket expenses;
f. In the absence of any affirmative action by the board to remedy this situation, it is the purpose of this bill to create a policy that is more affordable than the options that presently exist; even though the benefit package is not as rich as the existing plans, the benefit plan provided by this act will make health insurance more accessible to many small groups that do not have the economic resources to afford the existing plans while still providing essential coverage; and
g. It is to the interest of the State and of all health care providers that as many people have access to reasonably affordable health insurance as possible, for this reduces the amount of charity care that providers provide as well as the amount of bad debt that must be absorbed by providers each year.
2. a. Notwithstanding the provisions of P.L.1992, c.162 (C.17B:27A-17 et seq.), every carrier that writes small employer health benefits plans pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.) shall offer a small employer health benefits plan that includes only the coverages enumerated in this section, as follows:
90 days hospital room and board - $500 copayment per hospital stay;
Outpatient and ambulatory surgery - $250 copayment per surgery;
Physicians' fees connected with hospital care, including general acute care and surgery;
Physicians' fees connected with outpatient and ambulatory surgery;
Anesthesia and the administration of anesthesia;
Coverage for newborns;
Treatment for complications of pregnancy;
Intravenous solutions, blood and blood plasma;
Oxygen and the administration of oxygen;
Radiation and x-ray therapy;
Inpatient physical therapy and hydrotherapy;
Outpatient physical therapy - 30 visits annually per covered person - $20 copayment per treatment;
Dialysis - inpatient or outpatient;
Inpatient diagnostic tests and $500 annual aggregate per covered person for out-of-hospital diagnostic tests;
Laboratory fees for treatment in hospital;
Delivery room fees;
Operating room fees;
Special care unit;
Treatment room fees;
Emergency room services for medically necessary treatment - $100 copayment per visit;
Pharmaceuticals dispensed in hospital;
Treatment for biologically-based mental illness, as defined in subsection a. of section 7 of P.L.1999, c.106 (C.17B:27A-19.7) - 90 days inpatient with no coinsurance - $500 copayment per inpatient stay, 30 days outpatient with 30% coinsurance;
Alcohol and Substance Abuse Treatment - 30 days inpatient or outpatient - 30% coinsurance;
Childhood immunizations in accordance with the provisions of subsection b. of section 7 of P.L.1995, c.316 (C.26:2-137.1) and adult immunizations;
Wellness benefit - $600 annual aggregate per covered person, $50 annual deductible, 20% coinsurance per service; and
Physicians visits for diagnosed illness or injury - to a $700 annual aggregate per covered person.
b. A carrier shall offer the benefits on an indemnity basis, with the option that: (1) coverage is restricted to health care providers in the carrier's network, including an exclusive provider organization, or the carrier's preferred provider organization; or (2) coverage is provided through health care providers in the carrier's network or preferred provider organization with an out-of-network option with 30% coinsurance in addition to whatever other coinsurance may be applicable under the policy.
c. With respect to all policies or contracts issued pursuant to this section, the premium rate charged by a carrier to the highest rated small employer group shall not be greater than 350% of the premium rate charged for the lowest rated small employer group purchasing this health benefits plan, provided, however, that the only factors upon which the rate differential may be based are age, gender, and geography. Policies or contracts issued pursuant to this section shall be rated separately from the five standard plans, in accordance with their own loss experience.
d. Carriers may offer enhanced or additional benefits for an additional premium amount in the form of a rider or riders, each of which shall be comprised of a combination of enhanced or additional benefits, in a manner which will avoid adverse selection to the extent possible.
e. The provisions of P.L.1992, c.162 (C.17B:27A-17 et seq.) shall apply to this section to the extent that they are not contrary to the provisions of this section, including but not limited to, provisions relating to preexisting conditions, guaranteed issue, and calculation of loss ratio.
f. No later than one year following enactment of this act, every carrier shall make an informational filing with the board, which shall include the policy form, the premiums to be charged for the coverage, and the anticipated loss ratio. If the board has not disapproved the form within 30 days, the form shall be deemed approved.
g. Every carrier that writes small employer health benefits plans pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.) shall make available and shall make a good faith effort to market the contract or policy established pursuant to this section. A carrier who is in violation of this section shall be subject to the provisions of N.J.S.17B:30-1 et seq.
3. This act shall take effect on the 270th day following enactment, but the New Jersey Small Employer Health Benefits Program Board may take such anticipatory administrative action in advance as shall be necessary for the implementation of the act.
This bill adds a basic and essential health benefits plan to the five standard health benefits plans currently offered in the small employer health insurance market.
The health benefits plan established under this bill provides for essential services, including hospitalization and hospital-based treatment, diagnostic tests, wellness benefits, mental health and substance abuse benefits, and physician services. The plan must be sold on a guaranteed-issue, guaranteed-renewal basis, and rating cannot be based on the health status of the individual member. The plan contains the same preexisting condition provisions as the standard plans.
The bill also provides that the health benefits plan established under the bill will be subject to modified community rating, permitting a differential of 350% from the highest-to-lowest premium, and rating maybe based on age, gender, and geography; while the other plans in the small employer market will continue to be rated at a 2-1 ratio of highest-to-lowest premiums.
In addition, the bill requires that a carrier that participates in the small employer market must make available, and make a good faith effort to market, this health benefits plan. A carrier that fails to comply with the marketing requirement would be subject to the provisions of the life and health insurance trade practices act, N.J.S.17B:30-1 et seq.