NJ health insurance spikes: 'The bill gets higher and higher, you get less and less'

The cost of health insurance for New Jersey employers spiked again in 2017 and 2018, a study released Thursday found, putting more pressure on doctors, hospitals, drugmakers and insurers to rein in costs.

The hike is squeezing workers. Those with a median household income of $82,500 now are in line to spend 10% of their income on premiums and deductibles, up from 5.8% a decade ago, the Commonwealth Fund found.

"Over the last decade, employer health insurance premiums and deductibles have grown faster than workers' wages," said Sara Collins, the study's author. "This is concerning, because it may put both coverage and health care out of reach for millions of people."

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The Commonwealth Fund, a New York-based health care research firm, looked at the rising cost of health insurance in each state for employer-based plans, a segment that covers 56% of New Jerseyans and far outweighs enrollment in Obamacare, Medicaid or Medicare.

It comes as the state's health care industry rolls out new ideas to try to stem the tide, from convincing patients to get care somewhere other than the high-cost emergency room to building stable housing.

See the video above about a bid to improve access to mental health services.

But it's a sign as open enrollment for 2020 gets underway that those steps haven't taken hold fast enough to ease the financial burden on consumers, whose pay has only inched along. And it opens the door for health care to remain a major political issue next year.

The potential savings from healthier lifestyles only happen in the "very long term," said Belinda Anderson, director of The Institute for Health and Wellness at Monmouth University in West Long Branch. "And that’s what makes this a hard sell, because people want short-term benefits." 

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Scott Bellows, owner of Eastern Automation Systems, a manufacturer in Howell, has been a beneficiary of the nation's health spending; his company's clients include medical device makers.

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But he said his family insurance plan's premium and deductible, or the money he spends out of pocket before insurance kicks in, continues to increase. And he has few options: when a family member is sick, they go to the doctor, paying whatever they are told to pay.

"The bill goes higher and higher, and you get less and less," Bellows said.

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The Commonwealth Fund study bears that out. It found employer-sponsored plans in New Jersey last year had an annual premium of $22,294 for family plans and $7,507 for individual plans, ranking the most expensive and third-most expensive in the U.S., respectively.

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It hasn't always been that way. A decade ago, premiums for a family plan in New Jersey were in line with the nation. Last year, they were nearly 14% more expensive, the group found.

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One reason: New Jersey companies offer richer benefits in a state where the cost of living already is high, said John Coleman, a consultant with Mercer, a health care consulting firm in Morristown, said.

Workers have shouldered some of the burden. It could be worse; U.S. workers spend a bigger percentage of their income on health insurance premiums and deductibles than New Jerseyans, thanks to the Garden State's high median household income.

But New Jersey workers' potential out-of-pocket costs between premiums and deductibles doubled from $4,142 in 2008 to $8,281 last year, growing faster than the raises they get at work, the Commonwealth Fund found.

Payoff could take years

The state's health costs remain high, even though insurers and providers alike have touted strides they are making to improve care.

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For example:

Horizon Blue Cross Blue Shield of New Jersey partnered with RWJBarnabas Health for the Newark Initiative, a program that reached out to Horizon customers who frequently went to expensive emergency rooms for care.

They put patients in touch with community health workers and a social worker who focused on quality-of-life issues — transportation, housing, child care, social engagement — that have been found to impact consumers' health.

Visits to behavioral health providers increased 35%, and visits to emergency departments fell 24%, Horizon officials said.

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Elsewhere, the state's Housing and Mortgage Finance Agency last summer teamed up with St. Joseph's Health in Paterson to build apartments for low- and moderate income residents, some of whom are frequent visitors to the hospital's emergency room.

It is part of a $12 million program by the state to encourage hospitals to develop stable, affordable housing with health services nearby.

"The hospital interest has been significant in this state," said Charles A. Richman, the housing agency's executive director.

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Those steps might cut back on emergency room visits, saving workers money on their premiums. But others, like smoking cessation, nutritional diets and regular exercise, might not save money for years or decades, Monmouth University's Anderson said.

In the short term, Anderson said, the biggest fix would be to shift the business model from paying providers for each service they perform to a set amount, essentially rewarding them for taking steps to ensure their patients are healthier.

"This is going to be a progressive movement whereby generally people shift towards a healthier lifestyle and then we start to see the financial benefits kick in through lower levels of obesity and heart disease and cancer and pain," Anderson said.

Michael L. Diamond is a business reporter who has been writing about New Jersey's health care industry for a decade. He can be reached at 732-643-4038; mdiamond@gannettnj.com; and on Twitter @mdiamondapp.