Applying the Lessons of State Health Reform

Lack of health insurance is a significant, persistent problem in New Jersey.

In 2007, more than 1.3 million residents were uninsured - three-fourths were working-age adults 19 to 64 years old. About 15.6 percent of New Jersey residents are uninsured, which is close to the national average, and the U.S. Census Bureau recently ranked New Jersey 34th among states in the percentage of residents with insurance coverage.

Although many of the state's uninsured are eligible for Medicaid and the State Children’s Health Insurance Plan (S-CHIP), the majority of the uninsured are employees of small firms and individuals who have to obtain coverage on their own. A primary reason people cite for lack of health insurance is the inability to pay premiums. In the market for individually purchased insurance, premium costs in New Jersey are nearly twice the national average and among the highest of any state.

Why are health insurance premiums so high in New Jersey? One reason
is that state regulations require insurers to sell policies to all applicants, including people who wait until they become sick to buy coverage (so-called guaranteed issue). Another reason is that the state keeps insurers
from adjusting their premiums to reflect the health risks of individual consumers (called community rating). As a result, the young and healthy are charged more for insurance than they would be otherwise in order to subsidize the premiums of others.