TRENTON – The Senate approved legislation today sponsored by Senators Nia H. Gill, John H. Adler and Loretta Weinberg that would reform the individual and small employer health insurance markets, making health insurance policies in these markets more affordable for consumers.
“Time and again, the small business community has cited dramatically rising health care costs as a major hurdle that many businesses are finding difficult to handle,” said Senator Gill, D-Essex and Passaic. “They want to do the right thing and provide health care to their employees, but under the current laws, it can be difficult to qualify for entering the market and then afford the insurance. This bill is a critical step in providing more affordable health insurance for our state’s small business owners.”
The bill, S-2773, would make numerous changes to the laws regulating the individual and small employer health insurance markets. The bill would raise the health insurance carriers’ minimum loss ratio, which is the percentage of paid premiums that must go toward providing health services, from 75% to 77% for small employer policies and from 75% to 80% for individual policies. The shift is expected to lower premiums by reducing the amount of money going toward administrative costs.
“Small businesses are the core of the New Jersey economy,” said Senator Adler, D-Cherry Hill. “Whether a business employs just the owner or 50 people, making health care affordable is the key to keeping it in New Jersey and attracting more entrepreneurs to the State.”
The bill would also allows the carriers in the individual insurance market to move from a pure community rating system, where there is only one price, regardless of age, gender or geography, to a modified community rating system, where age can be considered and the highest premium can be no more than twice the cost of the lowest premium. The sponsors expect this change to reduce premiums for individuals under the age of 50 by up to two-thirds.
“The more people covered by health insurance, the better it is for the State of New Jersey,” added Senator Weinberg, D-Bergen. “This bill will really breathe some life into the stagnant individual insurance market, allowing insurers to price their plans in a way that will make them affordable for younger New Jersey residents currently without coverage.”
Additionally, the bill requires carriers in the small employer market to also provide policies in the individual markets and eliminates the assessments that are currently paid by those carriers who do not participate in the individual market.
The bill passed the Senate by a vote of 37-0. It now goes to the Assembly for their concurrence on amendments made in the Senate.