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Decision Time: Health Insurance Exchange Act Comes Up for Vote

Even if controversial law passes, it won't mean an end to the questions.

The legislature is set to vote Thursday on a bill authorizing a health insurance exchange for New Jersey -- an online marketplace that will let individuals and small businesses comparison shop for health coverage, as mandated by the federal Affordable Care Act.

The upcoming vote may well be one of the few certainties associated with the New Jersey Health Benefit Exchange Act (S-1319/A-2171).

For instance, Gov. Chris Christie has given no indication if he will sign, veto, or conditionally veto the bill if it passes. Further, the administration has not yet gone on record as to whether it wants a state-run exchange or prefers to leave that task to the federal government.

Meanwhile, the administration has earned accolades for laying the groundwork for a Garden State health insurance exchange. And it has been criticized for doing too little, too late -- given that the ranks of the insured will swell appreciably when ACA goes into effect in 2014.

But that eventuality also is uncertain: The U.S. Supreme Court is expected to hear arguments as to the constitutionality of the linchpin of the ACA -- the individual mandate, which for the first time in history requires Americans to buy health insurance. If the courts strikes it down, it's back to square one.

Even the ACA deadlines are in flux. New Jersey had been facing a June 29 cutoff to enact exchange legislation in order to be eligible for millions of dollars in federal grants to establish the exchange and to run it for its first year, through the end of 2014.

But in late February, the federal Department of Health and Human Services did away with that deadline. States still must legally authorize their exchange, either through legislation or executive order, before applying for lucrative Level 2 Establishment Grants. But they now have until November 2014 to authorize an exchange and apply for the funding.

Marshall McKnight, spokesman for the state Department of Banking and Insurance, which has taken the lead planning the insurance exchange, said of the extended deadline, "New Jersey is happy to have this flexibility that we and other states asked for."

To date, only Rhode Island has received a Level 2 Grant -- for $58.5 million, which will pay for it to establish and operate its exchange through the end of 2014.

Beginning in 2015, all states must fund their own exchanges. The New Jersey bill would cover operating costs with a tax on insurers, a cost of doing business that will likely to be passed on to those who buy coverage.

The ACA is expected to significantly thin the ranks of the uninsured, who now number more than 1 million New Jerseyans. Some of the planning money that New Jersey received from the federal government funded research by the Rutgers Center for State Health Policy, which estimates that 444,000 of the state's uninsured will get covered in 2014, either by purchasing coverage on the exchange or by enrolling in Medicaid. Excluding the elderly, who are covered by Medicare, the center estimates that the ACA will reduce the percentage of uninsured New Jerseyans from 14.5 percent to 8.6 percent.

At the same time, the state's Medicaid rolls will grow significantly in 2014, when the ACA broadens Medicaid eligibility nationwide to 138 percent of the federal poverty level. According to the RCSHP, an additional 234,000 residents will join Medicaid in 2014; currently more than 1 million individuals are covered by the program.

The RCSHP projects that New Jersey will still have 684,000 uninsured adults in 2014, of whom about 40 percent will be undocumented immigrants.

To ensure that insurance coverage is affordable, subsidies will be provided on a sliding scale based on income, up to four times the federal poverty level. That means that for a family of four, subsidies would be available to an income level of about $88,000 a year. Joel Cantor, director of the RCSHP, estimated that 320,000 New Jerseyans will be eligible for subsidies to help them afford to buy coverage from the exchange in 2014.

Christie says New Jersey is doing everything it must do to get ready to launch a health insurance exchange. His administration to date has received about $8.7 million in federal grants for planning, and is using some of the money to analyze the critical IT infrastructure needed to support the exchange.

The intensity of this preparatory work has impressed healthcare experts around the state. But at the same time New Jersey has held off seeking tens of millions of dollars in Level 2 Grants -- a delay that a number of healthcare proponents find frustrating.

A coalition of consumer advocates, including New Jersey Citizen Action and the AARP, held a press conference Tuesday urging the legislature to pass the exchange bill. Jeff Brown, policy advocacy and communications coordinator for NJ Citizen Action, said the Christie administration's "wait-and-see" approach has delayed the receipt of millions of dollars in federal grants that could speed up the process of getting the exchange off the ground.

Brown said the state's more than 1 million uninsured residents "are a compelling reason why we should act now."

He continued, " It is not the easiest thing to enroll hundreds of thousands of people overnight. We'll need to update our IT system, expand our eligibility and enrollment framework, appoint a board, hire staff, and issue rules and regulations."

"By just coasting along with a wait and see approach, New Jersey is leaving millions of dollars in federal funds on the table to help us do just that," Brown added.

Christie countered these criticisms during a call-in show earlier this month hosted by public television's Steve Adubato.

"We're going to have to see if the president's health insurance plan is found constitutional," he stated.

"We are taking all the steps we need to take to be able to implement federal health care reform if it comes through. But I think we all know this is going to be argued for three days before the U.S. Supreme Court this spring and everyone anticipates there will be a decision by the Supreme Court by the end of June. So we're not making any huge investments in it until we know it's constitutional."

The governor added that if the ACA survives the constitutional challenge "New Jersey is positioned to meet the law. But we have spent the minimum amount we needed to be able to get ready. Because if it turns out to be unconstitutional, I don't want to waste the people's money."

The exchange bill is opposed by the New Jersey Association of Health Plans, whose members are the health insurers who will be selling policies on the exchange. The association has testified that the bill envisions an expensive bureaucracy that is likely to duplicate regulation already provided by the state insurance department, and objects that the board that will govern the exchange doesn't include people currently working for insurance, healthcare or consumer groups, and thus won't get the benefit of their expertise.

The bill is also opposed by the New Jersey Business & Industry Association. Christine Stearns, vice president of the NJBIA, said the legislation isn't likely to solve the business community's chief problem with health insurance -- the high cost that makes it unaffordable for many small employers and their workers.

"This bill seems to create a more expensive bureaucracy than we need," Stearns commented. That will just help make the insurance more expensive and won't meet the needs of small employer purchasers who want affordability and choice."

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