A year after its high-profile arrival in New Jersey, Horizon's OMNIA plan will give most enrollees premium increases of 5% to 6%-far less than the 25% average increase announced in a report from HHS.
Its arrival in New Jersey caused a stir, but on Monday, Horizon’s OMNIA health plan delivered what it promised: 2017 premium hikes for most consumers will be around 6% or less, or roughly a quarter of the national average that federal officials reported almost simultaneously.
Rate increases for OMNIA plans, announced in a statement from Horizon Blue Cross Blue Shield of New Jersey, came as HHS released a 40-page research brief on Marketplace trends. The report showed that premiums will rise 25%, on average, in states using the federal exchange, HealthCare.gov, and 22% when the states with their own exchanges are added.
OMNIA plans, by contrast, will see premium increases that average 6.19% for Bronze plans, 5.37% for Silver plans, and 5.4% for Silver HSA (health savings account) plans. Bronze plans are selected by 23% of enrollees, and Silver plans are selected by 67%. Gold plans, which are selected by less than 10% of enrollees, will increase 24.24%.
Horizon launched OMNIA in September 2015 as a response to New Jersey’s historically high premiums, which had been ranked second-highest in the nation; company officials said the plans were specifically aimed at the individual and small group markets. OMNIA is both a tiered health plan and a population health initiative that gives consumers discounted health coverage and limits out-of-pocket costs if they use preferred hospitals and other providers. However, hospitals left off the preferred list objected to this status and to being labeled “Tier 2” in marketing efforts. A string of State House hearings and lawsuits followed, but after a year, Horizon prevailed.
Also Monday, Horizon said 280,000 people had enrolled in OMNIA across all market segments, including 163,000 in the individual market; this exceeds the 250,000 that the company said would enroll the first year. The number includes 41,000 previously uninsured, in line with Horizon’s estimate of 40,000.
In its statement, Horizon said that the only other Gold plan on New Jersey’s exchange, AmeriHealth, will increase premiums between 52.3% and 54.3%. “Gold plans tend to attract consumers who use more medical services, and we anticipate higher medical spends in Gold as a result,” the company said in its statement.
Nationwide, insurers have bolted exchanges amid rising losses, giving consumers fewer choices. New Jersey has seen the withdraw of UnitedHealthcare and Aetna, among others, and the failure of its co-op, The Health Republic. The HHS report notes the declining options in many markets, and calls have come from President Obama himself, in an article for JAMA, to revisit the idea of a “public option” in markets where choices are limited.
Eduardo Lara, Horizon's vice president for Marketing and Product Development, said the insurer had not yet done a major analysis of individuals who drop coverage after a major procedure, but this is clearly a problem, along with special enrollment periods. "The viability of the marketplace has always been dependent on a balanced risk pool," he said, citing CDC data that show adults age 25 to 34 were twice as likely as those age 45 to 64 to lack health coverage in the first quarter of 2016. In September, HHS announced several initiatives to target adults under age 35 for the 2017 open enrollment period, including reaching out to those who had previously paid a penalty for not having coverage.
The HHS report finds wide variation in rate increases from state to state. A key table shows the average percentage premium increase of a benchmark second lowest—cost silver plan for a 27-year-old, before tax credits: 11 states, including New Jersey, report average increases in the single digits. But 20 states report average increases above 20%, and 7 report average increases above 50%.
In a panel discussion Friday, held by The American Journal of Managed Care in Philadelphia, AJMC co-editors-in-chief, Michael E. Chernew, PhD, and A. Mark Fendrick, MD, said the challenges on the exchanges would immediately confront the next president, but they would not be easy to resolve.
“It is clear that preserving a competitive marketplace in the future requires some federal policy changes to increase stability,” said Horizon’s Director of Public Affairs Tom Wilson. “While the marketplace volatility and underlying structural uncertainties caused many insurers to leave New Jersey’s individual market, Horizon worked hard to meet the needs of this market again in 2017.
“We’re proud to offer plans in 2017 that ensure that the overwhelming majority of New Jerseyans who choose a Horizon plan—those enrolling in a Bronze or Silver plan—will see very modest rate increases, and not the large, double-digit rate increases that consumers are facing in many other states,” Wilson said.
As national insurers have struggled to adapt to the dynamics of the exchanges, some of the Blues have fared quite well. In August, after Aetna announced it was leaving the exchanges in all but a handful of states, Florida Blue CEO Patrick Geraghty told CNBC’s “Closing Bell,” that his company was well suited to handle ACA business because it new its market “intimately well."
At Horizon, Lara said there were several factors that allowed the insurer to avoid the huge losses seen elsewhere. With 84 years in the state, "that understanding has enabled us to take a more prudent approach to pricing and deliver products and services that reflect what we've learned serving the individual market."
In some states, competitors say the Blues benefited unfairly from the design of risk adjustment mechanisms, which were set up to insulate those insurers who take on the sickest patients. But in New Jersey, that’s not the case—spokesman Thomas Vincz said Horizon paid out $63 million in risk adjustment funds for 2015.
After other insurers have left, Lara said the challenge for those that remain is in absorbing their customers, the same ones who caused the losses. "We want and need a market with robust competition and hope that policymakers will step in to restore stability and promote a marketplace that attracts more companies willing to compete for business."