by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Here’s another reason for recent New Jersey transplants to feel good about resettling in North Carolina, at least for now. The Garden State is feeling early effects from ObamaCare, as Patrick Brennan explains for National Review Online readers.
This week, 106,000 New Jersey residents became the latest Americans to find out that, contra President Obama’s promises, whether they like their health plan or not, they can’t keep it. They’re holders of New Jersey’s “basic and essential” health-care plans, which make up 71 percent of the state’s individual market in health insurance. The president’s health-care law imposes a number of regulations nationally that will effectively ban such plans, by making them ineligible to be offered on the health-insurance exchanges where individual plans will now be sold. The rate shock that these Garden Staters will experience, which will lead many of them to go uninsured, is no small matter, but this is just one effect of Obamacare.
New Jersey’s problem is emblematic of what Obamacare will do in all 50 states: impose a highly regulated, extremely expensive model of health insurance that a number of states have already mandated — to the regret of many of their residents, who have demanded an escape hatch — and prevent any state from permitting such alternatives down the road.
New Jersey’s, which cost $200 to $400 per month, are one such escape hatch. They don’t cover a wide range of services that Obamacare mandates, and they apply dollar limits to how much they will spend on certain services in a given year, which Obamacare prohibits. So these simple plans are being eliminated, forcing people who have them to purchase much more expensive comprehensive plans — or to go without. (Obamacare does allow “catastrophic” plans for individuals under 30, but so far, even these look likely to be much more comprehensive and expensive than what’s now considered catastrophic coverage.)
Some of those people undoubtedly have B&E plans because that’s all they could afford (we don’t know how many, because New Jersey’s health insurers don’t keep track of their customers’ income); some of them will be eligible for federal insurance subsidies, allowing them to purchase better health plans for the same out-of-pocket amount that they have been paying for their B&E plans, or maybe even less. But many people won’t be better off: Fully one-third of B&E customers are under the age of 30, and they probably don’t buy a fancier plan because they don’t want or need it, not because they can’t afford it. These people will now have to buy vastly more expensive plans that cover a whole range of services they don’t need, or else stay out of the market altogether, paying the modest individual-mandate penalty and, if and when they get sick, picking up insurance during that year’s open-enrollment period (October to December).