The health insurance market for employees of New Jersey small businesses is in distress and likely to get worse due to the coronavirus pandemic, according to a report released this month by the New Jersey Health Care Quality Institute.

The nonpartisan institute cites an enrollment decline in the New Jersey Small Group Market over the years, from close to 1 million people covered in 2005 to about 300,000 people in late 2019.

"There's no mandate for employers with less than 50 full-time employees to provide insurance, but many of them do," said Linda Schwimmer, president and CEO of the Quality Institute.

But as health insurance and healthcare costs rise, small employers are bearing the brunt of the increases, making the market smaller and smaller, the report claims. Because of small business closings and layoffs spurred by the COVID-19 health crisis, it's anticipated that even fewer people in New Jersey will receive health insurance through small employers through next year.

"While the government has tried to make other products more affordable — like the Affordable Care Act market has subsidies to help people buy insurance — there are no such subsidies for the small employer market," Schwimmer added. "We need policy changes to make insurance more affordable so more people are offered insurance and can afford it. More people buying within an insurance market — including those who are healthy as well as those who are less healthy — creates a more stable and sustainable insurance market."

An addition of state-based subsidies for certain individuals is among a set of nine recommendations released by the institute in the report, meant to help revive the small business health insurance market. The institute also suggests a state-based tax credit be awarded to small employers that offer compliant plans, and that the small employer market be placed on an even playing field by having all purchasers subject to the same regulations.

"There's a requirement that insurers sell in multiple markets if they want to sell in the small group market, so it limits competition. There's another requirement which prevents a plan from using a formulary, and that raises the costs because that would be a way to more competitively bid some of the drug pricing," Schwimmer said.

New Jersey ranks 11th in the nation for number of small businesses and enterprises, according to New Jersey's Office of Small Business Advocacy.

The report notes the state has made strides in improving affordability and access for those getting coverage through the individual marketplace and through Medicaid.

"The small group market is at a critical point, as small employers are paying more for less — higher premiums for lower value plans," said John Sarno, president of the Employers Association of New Jersey.

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