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Decision Time Arrives for Christie on State-Run Health-Insurance Exchange

NJ still has time to pursue alternative choice of partnership with federal government.

Gov. Chris Christie has until Friday to decide whether he wants an entirely state-run health-benefit exchange or move toward having an exchange operated jointly by the state and federal governments.

Stakeholders and policy experts generally believe that having a state-run exchange would be more beneficial for residents, but they are divided over the specifics. Christie said Wednesday that he would make a decision this week on whether to have a state-run exchange.

A bill sitting on Christie’s desk would establish a state exchange, but its sponsor said he wouldn’t mind if Christie issued a conditional veto requiring that the federal government provide support for an exchange overseen by state officials. Such a veto would require the Legislature to change the bill to focus state efforts on managing the exchange and assisting consumers, while the federal government would assist in applications, enrollment and financial management.

The 2010 federal Affordable Care Act, now commonly referred to as “Obamacare,” requires a virtual marketplace where health insurers could sell a variety of health plans to individuals and small businesses. People with incomes between the poverty level and four times the poverty level, or $23,050 to $92,200 for a family of four, would be eligible for subsidies to buy coverage through the exchanges.

Bill sponsor Sen. Joseph Vitale (D-Middlesex) said the state is well-positioned to operate an exchange, since it already oversees a small group health insurance market.

“I think it’s important for New Jersey (to have a state exchange) because New Jersey has many of the same reforms that the Affordable Care Act has provided,” Vitale said.

Joel Cantor, director of Rutgers University’s Center for State Health Policy
Joel Cantor, director of Rutgers University’s Center for State Health Policy

Joel Cantor, director of Rutgers University’s Center for State Health Policy, said it may make sense for the state to opt for a partnership with the federal government.

“Doing it all ourselves would not be a cost-effective system,” Cantor said. He said he doesn’t see a downside to having a joint state-federal exchange.

While Christie must decide by Friday whether to submit a letter of intent to have an entirely state-run exchange, federal officials recently extended other deadlines. The state has until Dec. 14 to submit detailed plans for state exchanges and until Feb. 15 to submit plans for a state-federal partnership, or hybrid, exchange.

Cantor noted that, regardless of the official deadlines, the clock is ticking to be ready for the Jan. 1, 2014, launch of the insurance exchanges.

“I think we are very close to the real-world deadline for actually getting this done,” Cantor said.

Regardless of whether New Jersey’s exchange is totally state-run or operated jointly with federal officials, significant differences remain over details of an exchange. The biggest points of contention are over who would serve on the board overseeing the exchange and how active the board should be in deciding which insurance plans are included.

Some advocates for increasing access to insurance coverage argue that having the board engage in “active purchasing” would offer more consumer protection. In an active- purchasing model, the state would be more selective and set tougher criteria for the plans it accepts into the exchange.

“We want to see the exchange have the most options available,” for active purchasing, said Jeff Brown, coordinator of policy advocacy and communications for New Jersey Citizen Action, a nonprofit that advocates for healthcare access. He would like to see Christie sign Vitale’s bill.

Brown points to Massachusetts as a model, saying that its active purchasing approach has lowered premiums by $91 million. Brown is the spokesman for New Jersey for Health Care, a coalition of 70 groups that support healthcare reform.

However, Wardell Sanders, president of the New Jersey Association of Health Plans, said the Massachusetts exchange has added administrative expenses totaling $30 million to $40 million annually.

He prefers a more passive approach from a state board, allowing consumers to choose from a range of options that provide the “essential health benefits” chosen by the state based on federal standards.

Sanders also said Vitale’s bill is problematic because it doesn’t reserve spaces on the 10-member exchange board for stakeholders, including representatives of the insurance industry.

“There’s a lot of talent to leverage in the state, if it’s based on existing stakeholders,” Sanders said of the state’s exchange board.

The bill does call for board members who have expertise in healthcare coverage, plan administration, finance and advocacy, but doesn’t specify industry experience. A separate 15-member advisory panel would include representatives from various healthcare industry segments, including insurers.

Christine Stearns, vice president of health and legal affairs at the New Jersey Business & Industry Association, said Vitale’s bill falls short because it doesn’t include an employer representative on the board and opens the door for creating more state bureaucracy.

“The availability of coverage is not the problem – it’s affordability,” Stearns said. “If you look at the enrollment figures in the small employer market, it’s pretty clear that small employers have hit the breaking point.”

Cantor cautioned that one area the state should focus on is ensuring that regulations are consistent for those who receive their insurance through the exchange and those who receive their insurance outside of the exchange, through the state-regulated individual and small-group markets. Without consistent regulations, which would require some state oversight, healthier residents could end up avoiding the exchange, driving up premiums inside the exchange.

While all of these groups support some form of state-based exchange, Americans for Prosperity New Jersey state director Steve Lonegan wants Christie to oppose any exchange in the state. His group supports shrinking the size of government.

“If they’re going to force these exchanges on us, they’re going to be forced to put them on the federal budget, which I don’t think they’ll be able to do,” Lonegan said.

He would prefer that the state support a lawsuit filed by Oklahoma challenging the legality of the exchanges, arguing that the state shouldn’t be bound to follow a law it finds unconstitutional.

Brown disagreed, saying that President Obama’s re-election reflects an interest in moving forward with the exchanges and other parts of the healthcare-reform law.

“I think the results of the election show that this is now the law of the land,” Brown said.

Andrew Kitchenman is the healthcare writer for NJ Spotlight.

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