Attention: Healthcare, Business, State House Reporters

Two health insurance reform bills scheduled for Senate Commerce Committee action on Monday, December 5, would help alleviate one of the biggest problems facing New Jersey employers—the exploding cost of providing health insurance to employees, the New Jersey Business & Industry Association (NJBIA) said today.

The two bills are A-3359 (Cohen, Weinberg)/S-2773 (Gill, Adler), the Health Insurance Affordability and Accessibility Act, and A-3440 (Cohen, Russo)/S-2574 (Rice, Bucco), which would clear the way for federal Health Savings Accounts (HSAs).

“The reforms to be taken up by the Senate Commerce Committee are essential if we are going to limit the rising cost of health insurance,” NJBIA President Philip Kirschner said. “Employers routinely face premium increases of 10 to 15 percent, four times the rate of inflation. Because of this, employees are paying a greater share of the premium, higher co-pays and higher deductibles.”

Christine Stearns, NJBIA vice president for health affairs, said New Jersey employers have seen their health insurance costs rise by 55 percent in the last four years. Businesses participating in NJBIA’s 2005 Health Benefits Survey reported paying an 11 percent average increase in the cost of providing health insurance to their employees in 2004. Their average cost was $7,300 per employee. This came on top of a 13 percent increase in 2003 and 15 percent in 2002. What’s more, the survey indicated that double-digit rate increases were forcing a drop in the percentage of employers offering health insurance coverage for the first time in the survey’s 12-year history.

“These reforms are an essential first step towards making our health insurance system affordable,” Stearns said. “Five million people in New Jersey rely on private-sector employers for their health insurance.”

The Health Insurance Affordability and Accessibility Act would provide more flexibility in the design of health plans for individuals and employers with two to 50 employees by making several changes to the State-regulated Small Employer (SEH) and Individual (IHC) Health Insurance markets.

Among other things, it would institute a modified community rating for IHC plans allowing insurance companies to vary rates by up to 200 percent based on age, gender and geography. This would allow insurers to offer lower priced plans to younger, relatively healthy people, thus attracting more insured individuals to the system. The bill also would increase choice and competition among consumers by requiring insurers to offer health plans in both the individual and small employer markets, not just one or the other.

The HSA legislation would bring New Jersey’s insurance laws in line with federal requirements so employees could take advantage of lower premiums and tax savings in HSAs.

HSAs were created as part of recent federal legislation. They allow employers and individuals to contribute tax-free to savings accounts that are then used to pay for routine medical expenses. Federal regulations require those using HSAs to be covered by a high-deductible health insurance plan that covers hospital stays and expensive medical treatments, but New Jersey’s high-deductible health plan does not meet federal requirements. A-3440 would change New Jersey law to permit the sale of qualified federal high-deductible insurance plans. HSAs are now permitted in virtually every other State.