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ACA Medical Insurance Shoppers in New Jersey Get More Choices for 2015

One of the state’s largest insurers and a technology-focused startup will be joining the three companies currently competing on New Jersey’s individual health insurance marketplace next year.

UnitedHealthcare decided to enter the federally operated marketplace in the state after sitting out the first year, while Oscar Health Insurance will be bringing a new tech-centered approach to insurance in the state.

The two companies will join AmeriHealth New Jersey, Horizon Blue Cross Blue Shield of New Jersey and Health Republic Insurance of New Jersey in offering coverage through the state’s marketplace.

Healthcare analysts see the additions as a positive development, bringing more choices to consumers and reflecting a relatively healthy and stable marketplace after a rocky launch last winter. The federal marketplace and state-based exchanges are a central feature of the Affordable Care Act, allowing individuals and families to buy health coverage, with federal income tax credits subsidizing the cost for low- to middle-income people.

“It signals that the ACA is working, because it signals that the market is working,” said Heather Howard, director of the State Health Reform Assistance Network at Princeton University’s Woodrow Wilson School of Public and International Affairs.

She noted that UnitedHealthcare, one of the country’s largest commercial insurers, is increasing the number of states in which it’s offering marketplace or exchange plans, from four states in 2014 to as many as 24 next year.

Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute, pointed out another advantage of having UnitedHealthcare join the marketplace: It will be able to transfer consumers seamlessly between its different plans as their income changes.

For example, an individual who is covered through Medicaid under UnitedHealthcare’s Community Plan may transfer to a UnitedHealthcare’s marketplace plan if their income exceeds the income limit for Medicaid.

“If they have those personal health records, it will be better for United and it will frankly be better for those patients as well,” Schwimmer said.

Howard said Oscar has the potential to be a “disruptive carrier,” focusing foremost on engaging consumers and encouraging them to use technology to manage their healthcare. Oscar launched in New York this year and is making New Jersey the second state where it will be offering coverage.

“There’s a year of experience under everyone’s belt,” Howard said.

Schwimmer said Oscar, more than most other health insurers, reflects changes in business practices occurring in other industries. Their New York plan includes consumer-friendly features like a promise that patients will receive a free return phone call from a doctor within an hour of making a call. Oscar’s founders built their experience in the technology industry.

“It seems like they have really more of a direct-to-consumer, direct-to-patient type of strategy,” reaching out to younger consumers who are comfortable using a mobile application to track their health data, Schwimmer said.

Schwimmer said having different insurers with varying business models will benefit consumers.

“I think that that is a good development because I think that different things are going to be more appealing to different types of people,” said Schwimmer, noting that while consumers tend to make their initial choice in insurers based on the price of monthly premiums, the features of different insurance products will affect whether people keep their insurers.

Howard said both the new and existing carriers will face a pair of challenges in the coming year: that there will be a shorter open enrollment season and that the consumers most interested in buying marketplace plans have already done so.

While the first round of open enrollment stretched from October 1, 2013, to April 17, 2014, it’s scheduled to last only three months in the next season – November 15, 2014 to February 15, 2015.

One motivating factor for consumers will be the increased penalty under the ACA’s individual mandate for those who aren’t insured. In 2014, it was the greater of $95 or 1 percent of taxable income. In 2015, it will be greater of $325 or 2 percent of income, rising to the greater of $695 or 2.5 percent of income in 2016.

Howard added that having two more insurers advertising and publicizing the marketplace will help reach more consumers who aren’t aware of their options. She noted that New Jersey has limited federal funding to advertise the marketplace since the state opted against operating its own insurance exchange.

“United is a big brand name that will put resources” into the state, Howard said, adding that Oscar did innovative advertising – which included cartoons on YouTube – in New York. “More noise is good,” she added.

Howard noted that New Jersey is in line with a national trend, as the U.S. Department of Health and Human Services announced this week that there has been a 25-percent increase nationwide in the number of plans offered on the marketplace and state exchanges.

That shows the marketplace is becoming more stable, said Wardell Sanders, who frequently serves as the public face of the state’s insurance industry as president of the New Jersey Association of Health Plans.

“Last year, there were so many unknowns,” Sanders said, adding that federal officials were still building the marketplace website, healthcare.gov, after it went live, and that insurers and consumers were facing changing regulations.

“It was difficult for the plans and consumers and others, but a lot of that has been worked out, so it’s a more attractive now for carriers,” Sanders said. “At the end of the day, carriers want to make sure that the rules are clear and aren’t going to change.”

Insurance industry observers observed that New Jersey may be reaching a happy medium between the extremes of not having enough insurance choices and having too many. In states where there is only one insurer on the marketplace, they can have enough power to determine prices, while having an abundance of insurers can increase the power of providers to set high reimbursements.

Howard noted another challenge that can occur when there are scores of insurers competing — consumers can be overwhelmed by the array of choices, which was what happened initially when the Medicaid prescription drug benefit was introduced.