Quality Institute Makes Recommendations to Prevent Dangerous Downward Spiral in Small Business Health Insurance Market Hit By COVID-19
For immediate release:
PRINCETON — The New Jersey Health Care Quality Institute today issued a comprehensive package of policy recommendations to save the state’s health insurance market for small businesses, an already distressed market hit further by the economic repercussions of the COVID-19 pandemic.
Businesses with fewer than 50 full time employees are not required to provide health insurance, but many businesses — from hair salons to restaurants to small manufacturers — know the value of insuring their employees. The New Jersey Small Group Market, where small employers purchase health insurance for their employees, has experienced steep declines in enrollment in recent years — from just under one million people covered in 2005 to about 300,000 people in late 2019.
Experts are certain the pandemic and resulting small business closings and layoffs means market enrollment for the second half of 2020 and for 2021 will show that even fewer people in New Jersey are receiving health insurance through small employers. The Quality Institute is recommending state intervention and policy changes to reduce premiums and enrollment declines that could send New Jersey’s small employer health insurance market into a dangerous downward spiral.
“Many small employers in New Jersey want to provide health insurance for their employees,” said Linda Schwimmer, President and CEO of the Quality Institute. “We need policy changes to make insurance more affordable so more people are offered insurance and can afford it. More people buying within an insurance market — including those who are healthy as well as those who are less healthy — creates a more stable and sustainable insurance market.”
The recommendations are included in the Quality Institute’s report titled, Short and Long-Term Strategies to Support Health Care Affordability and Price Transparency for Small Employers and Consumers in New Jersey.
Small businesses are an essential component of our economy. According to New Jersey’s Office of Small Business Advocacy, New Jersey ranks 11th highest in the nation for number of small businesses and enterprises. While significant steps have been taken to improve affordability and access for those getting coverage through Medicaid and the individual marketplace, small group employers in New Jersey have long struggled to provide quality and affordable coverage for their employees.
“The pandemic’s effect on the bottom lines of small businesses furthers the stress on this market and increases the need for action,” Schwimmer said. She said both short-term and long-term interventions and policy changes are needed.
The Quality Institute created the recommendations after obtaining input from leaders and experts in health policy, consumer advocacy, business, and insurance throughout New Jersey. The set of nine recommendations build a comprehensive plan to support reforming and reviving this market and include:
- Increase availability and transparency of data on where employees of small employers are getting health care coverage.
- Provide a state-based tax credit to small employers that offer plans that are fully compliant with New Jersey and Affordable Care Act regulations.
- Even the playing field for the small employer market by having all purchasers subject to the same regulations.
- Add state-based subsidies for individuals below 400 percent of the federal poverty level to purchase insurance on the individual market.
- Remove the restrictions that prevent health benefit plans from using a prescription drug formulary.
“Most of us get health care from an employer, including a small employer,” said John J. Sarno, President of the Employers Association of New Jersey. “The small group market is at a critical point, as small employers are paying more for less — higher premiums for lower value plans.”
Added Christine Buteas, Chief Government Affairs Officer of the New Jersey Business & Industry Association: “NJBIA has long stated the rising cost of health insurance is a top concern for our small employers and we will continue to work with stakeholders to ensure there is cost-effective, high quality care offered in New Jersey.”
About the New Jersey Health Care Quality Institute
At the Quality Institute, we believe that collaboration is essential to improving our health care system. That’s why we bring providers, payers, patients and decision makers together to advance health care safety, quality and affordability. We’re the only independent, nonpartisan advocate working in New Jersey to promote accountability and transparency. We have more than 100 unique member organizations— all committed to improving health care for everyone in New Jersey