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AHCA Could Slash Number of Insured, Cost State Billions, Experts Advise

Under GOP healthcare plan, New Jersey’s uninsured rate could climb to pre-ACA levels by 2020

Credit: NJPP
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Nearly half a million New Jersey residents would lose health insurance in four years under the Republican plan moving through Congress, leaving the state with fewer people covered than before the federal Affordable Care Act took effect.

This erosion of insurance coverage was among the concerns identified by New Jersey Policy Perspective, a progressive think tank that on Tuesday released an analysis of the GOP’s American Health Care Act and its impact on the Garden State. New Jersey’s uninsured rate dropped from 1.16 million in 2013, the year before the ACA was fully implemented, to 770,000 in 2015; but under the AHCA, it could climb to 1.25 million by 2020, the report warned.

These coverage losses would be driven by drastic changes to the Medicaid program outlined in the AHCA and a reduction by nearly one-third in the level of public subsidies available to customers, according to the report. Keeping these people insured would cost the state some $8.8 billion over the next decade, NJPP warns, a significant challenge given New Jersey’s budget crunch.

And that is just one of the many tough choices New Jersey would face under the Republican plan, according to NJPP, Democratic officials, and healthcare advocates who joined the policy experts Tuesday to discuss the report. The ACA, or Obamacare, added some 800,000 Garden State residents to the insurance rolls, nearly half of whom would lose coverage under the new plan.

“It’s a train wreck of a bill,” U.S. Sen. Robert Menendez, (D-NJ), said. “Governors and legislatures will have no choice but to cover fewer people” or cut benefits, he added.

“Overall, it’s just a terrible situation,” agreed U.S. Rep. Frank Pallone, (D-6th), warning that amendments added this week in an effort to attract conservative support would make the bill even more harmful to poor and working people. “It’s really devastating.”

Among other things, the AHCA would eliminate federal funding for those covered under the Medicaid expansion — about 500,000 in New Jersey — and switch to an annual per-person funding allotment for the 1.3 million residents on Medicaid, instead of paying for care as needed. While the per-capita Medicaid funding would rise each year with inflation, NJPP said it is unlikely to keep pace with the higher costs in New Jersey.

In addition, the Republican plan would change the system of direct subsidies offered under the ACA to tax-credits that could be recouped later on. While the proposal outlines higher offsets for some individuals, it would also allows insurance companies to charge older people as much as five times the premium paid by younger members. NJPP and others have said this will leave older, sicker Americans at risk of paying more. This is particularly hard on people over age 50, who are not eligible for Medicare but often have greater health needs.

“We’re talking about a very vulnerable group of people,” said Grace Egen, Executive Director of the New Jersey Foundation for Aging. Beverly Roberts, with The Arc of New Jersey, also warned that the new plan would endanger funding for homecare services that have enabled severely disabled residents to live more independently in community settings.

Republicans have framed the current proposal as a way to reduce federal spending, encourage free-market cost controls, and increase state flexibility, but those who joined NJPP said the plan would instead shift resources from the working class to wealthy individuals who had paid more to support the ACA. According to the analysis, by NJPP Senior Policy Analyst Ray Castro, changes outlined in the AHCA would enable 250 Garden State millionaires to save an extra $14 million in potential taxes, while hundreds of thousands would lose insurance coverage.

“The net effect is going to be harmful to the state,” Castro said. “It’s the beginning of the end of Medicaid as we know it.”

Credit: NJPP
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By reducing the federal dollars involved, the Republican proposal also shifts billions in costs to state taxpayers, the speakers warned. And while state leaders may have greater control in how they spend those dollars, it would be difficult to backfill the loss and would make it harder for local officials to quickly respond to a health crisis like Zika or opiate addiction, they added. Plus, competition would increase for the remaining dollars.

“In the end it’s going to pit one group against another,” warned state Sen. Joseph Vitale, (D-Middlesex), the longtime health committee chairman. “It’s going to be an awful food fight during budget season.”

“The first thing to go is mental health and drug treatment,” Pallone added. This could be a particular concern for New Jersey, which is struggling with epidemic rates of opiate addiction, the speakers said.

Menendez urged Gov. Chris Christie, a Republican who has prioritized efforts to reduce addiction and enjoys a close relationship with President Donald Trump, to “pick up the phone” and call on the president to make changes. “It’s just a series of incredibly bad news across the board and I’d be using my political capital if I could to turn that around,” Menendez said.

When asked about the NJPP report, Christie — who has expressed openness to Medicaid reform in the past — dismissed its “ridiculous” findings with “Oh God, who cares” and derided the authors as “useless partisans” who do little more than fuel press reports. Spokesman Brian Murray added: "The governor communicates with the president and members of the administration on this and other issues on a regular basis. He thanks Sen. Menendez for his kind suggestion but assures him his encouragement is unnecessary."

But NJPP and its colleagues warned the impact of the Republican plan could be larger than it first seems. For example, loss of Medicaid coverage would also increase the demand for the state funds that help pay hospitals for uncompensated care, Vitale warned; the state has saved $400 million in recent years as coverage expanded under the ACA.

“Charity care will explode,” Vitale said. Talk of “flexibility” among Republicans “is really just code for reducing services, which will have to happen. We have no choice,” he added. “And downstream from that will be reduced care for all these populations.”

New Jerseyans have already raised concerns about the impact of federal healthcare reform on state finances during recent hearings on the state’s $35.5 billion budget proposal; Medicaid alone involves $15 billion in state and federal funds. “What happens in Washington has damaging repercussions for New Jersey,” Sen. Paul Sarlo, (D-Bergen), the budget chairman, said Tuesday. “The consequences of the loss of health insurance and severe cutbacks to Medicaid on state finances and on life-saving medical care are alarming.”

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