Health insurance coverage unaffordable in N.J.

Published in the Asbury Park Press 07/26/05

BY MERRILL MATTHEWS



In August, my youngest daughter, 22, could join the ranks of the 45 million Americans who do not have health insurance, a victim of state health insurance law.



She will be leaving our home in Texas, where she has always been covered by health insurance, to go to graduate school in New Jersey.



I pay for her coverage now; I would be glad to try and pay for it when she moves. But I'm not sure I can afford it. New Jersey has the highest rates in the country for individuals buying coverage for themselves, rather than through an employer.



An online marketer for health insurance, eHealthInsurance, tracks hundreds of thousands of individuals purchasing coverage around the country and how much they pay in premiums. An individual living in New Jersey buying coverage for himself pays, on average, about $4,080 a year, with neighboring New York running a close second at $3,540.



However, the average annual premium for similar coverage in Iowa is $1,236, the lowest in the country, and $1,284 in Wyoming.



Thus, health insurance is roughly 3.5 times more expensive in New Jersey and New York than in Iowa and Wyoming. Perhaps the difference is due to the higher cost of living in New Jersey. But neighboring Pennsylvania has an average premium of $1,488. Even high-cost California is only $1,680 per year — still less than half that of New Jersey.



No, the primary reason for the higher price is that in 1994 the New Jersey Legislature passed guaranteed-issue legislation. This means anyone can buy a health insurance policy, regardless of how good or bad the individual's health is.



When a state imposes guaranteed issue, the cost of policies escalates for young healthy people, so they drop out of the health insurance pool, leaving it smaller and sicker. Fortunately, there are better and more affordable ways to provide coverage for the "uninsurable," such as high-risk pools, which 33 states have implemented.



How much individuals pay for a policy in New Jersey is a bargain compared to what it costs for a family policy. The lowest price for a family policy (known as "Plan D") with a $500 deductible and a 20 percent co-payment is $3,912 — a month. See the rates at the state's Web site: www.state.nj.us/dobi/acrobat/ihcratepage.pdf.



The point is that in their zeal to protect consumers by imposing coverage mandates and other regulations, some states have made health insurance so costly that the people they intended to protect have been protected right out of coverage, leaving millions of Americans — especially in high-cost states, such as New Jersey, New York and Maine — struggling to find affordable insurance.



If they could buy health insurance coverage that is already available and being sold to people in another state, millions would buy that coverage and leave the ranks of the uninsured. So why don't they? Individuals are prohibited from purchasing individual health insurance policies outside of the state where they reside.



The good news is there is federal legislation that would fix that problem. Rep. John Shadegg, R-Ariz, has introduced the Health Care Choice Act of 2005, which would allow residents of one state to buy a health insurance policy that is being sold to residents of another state.



The insurer selling the policy would still be regulated, but by that state where the policy is being sold rather than the state where the buyer lives. Thus the insurance company isn't escaping state regulation and financial oversight.



Of course, this is the way most other products work. If you buy a food product over the Internet, that product has to conform to the health standards of the state where the product was made, not where you live. The Health Care Choice Act simply creates the same model for health insurance.



If the Health Care Choice Act were law, my daughter moving to New Jersey would have access to health insurance policies available to residents of Pennsylvania, Connecticut, Illinois or several other states. That would open up lots of affordable options.



But if her choices are limited to only those policies available to the residents of New Jersey, there is a very good chance she will join the ranks of the uninsured.