FOR RELEASE: August 14, 1997

New Jersey Leads U.S. In Health Insurance Reform

1992 State Legislation Amended to Meet National Reform

TRENTON - National health care reform that went into effect on July 1 required only minor adjustments to New Jersey's sweeping health insurance reforms. The New Jersey health coverage reforms in the individual and small employer markets enacted in 1992, for the most part met, and in many instances far exceeded, the requirements of a new federal law that requires states to provide for accessibility, portability and renewability of health benefits coverage. Minor modifications to certain State law definitions and provisions regarding preexisting conditions limitations were needed to conform State law with the federal Health Insurance Portability and Accountability Act of 1996, or "HIPAA".

"New Jersey has been a leader in guaranteeing access, portability, and renewability of health coverage for individuals and small employers," said Elizabeth Randall, Commissioner of Banking and Insurance. "For several years state residents have had access to a wide range of comprehensive health insurance policies and HMO plans on a guaranteed issue, guaranteed renewal basis regardless of a person's health status, the existence of preexisting conditions, or other risk factors," she said.

A bill signed by Governor Whitman on June 30, 1997 amended New Jersey's individual and small group health insurance reforms laws, as well as the laws governing the large group health market, in large part to conform with HIPAA.

In addition to the HIPAA required modifications and some technical modifications to the individual market, the bill includes changes to the small employer market to preserve the current system of "modified community rating," which permits a carrier to vary rates among small employer groups on the basis of the age and gender of the employees and the geographical location of the business in the State. The bill eliminates a provision in the law that would have imposed full community rating beginning on January 1, 1998.

This amendment to maintain modified community rating comes after the Small Employer Health Benefits Program Board ("SEH Board"), the state agency responsible for regulating the small employer market, submitted a report to the Governor and the Legislature on the likely effect of the transition to full community rating on small employer groups. The report, based on the results of a statistical study, showed that the number of small employers who would likely pay more for their coverage under full community rating exceeded by more than a third the number who would pay less. Based on the study and a review of historical market data, the SEH Board report included a statement supporting the preservation of modified community rating.

A free New Jersey guide about health coverage for individuals is available by calling 1-800-838-0935. A similar guide for small employer coverage is available by calling 1-800-263-5912. The New Jersey health insurance reform programs in the individual and small employer markets are also described described under the Department of Banking and Insurance Web Page at its Internet address.