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New Federal Push to Protect Health Insurance Market

Pallone and other Democrats pursuing multiple options to reverse ACA repeal and replace

Pallone
Credit: NJTV
U.S. Rep. Frank Pallone (D-NJ)

New Jersey leaders are hopeful that a new federal proposal to shore up aspects of the Affordable Care Act could help stabilize the Garden State’s health insurance market, expand healthcare coverage, and improve patients’ access to medical care.

Introduced earlier this month by U.S. Rep. Frank Pallone (D-NJ), and several Democratic colleagues, the bill seeks to restore federal funding to help patients pay healthcare premiums and out-of-pocket costs, prevent insurance companies from selling barebones policies, and recommit dollars for marketing and outreach for the ACA, or Obamacare. The goal is to make coverage more affordable and also more accessible, he said.

The bill seeks to overturn or block multiple changes made by President Donald Trump and other Republican leaders over the past year in an effort to cut federal spending and live up to campaign promises to dismantle the controversial law. Experts blame these reforms for contributing to a sudden spike in insurance costs, which jumped more than 20 percent in New Jersey, and to shrinking healthcare coverage.

Acting New Jersey Health Commissioner Shereef Elnahal
Credit: NJTV
Acting New Jersey Health Commissioner Shereef Elnahal

“The risk pool is compromised when healthy people drop out [of the health insurance market], when it’s harder for insurance plans to stay in the individual market. And then of course premiums rise for people and access to healthcare suffers,” Dr. Shereef Elnahal, acting commissioner of the state Department of Health, told NJTV on Monday following a panel discussion on Pallone’s bill at Raritan Bay Medical Center, in Perth Amboy.

Pallone said that he is also pushing Congressional leaders to include elements of the legislation in a $1.7 trillion federal spending proposal, which was still being finalized Tuesday and is likely to be posted for a vote Thursday. (Wednesday’s sessions were cancelled in advance of the snowstorm.)

Bipartisan sales pitch

“We’re trying to sell this on a bipartisan basis. We’re trying to get even into the omnibus spending bill that we’re going to hopefully adopt this week,” Pallone said at Raritan Bay. U.S. Reps. Bonnie Watson Coleman and Bill Pascrell, both Democrats, are co-sponsors on the plan.

The proposal faces an uphill battle in GOP-dominated Washington, D.C, whichever path Pallone follows. But the proposal echoes a growing chorus of stakeholders — including Democratic leaders, healthcare providers, insurance industry representatives, patient advocates, and active voters — who are calling for new measures to counteract Trump’s ongoing efforts to repeal and replace Obamacare.

In New Jersey, this includes a pledge from Gov. Phil Murphy, a Democrat who took office two months ago, to invest state funds in outreach around the ACA, as well as his decision to hire several former Obama administration officials to help protect against Trump reforms. This includes Elnahal, who worked in the U.S. Department of Veterans Affairs.

Garden State insurance mandate

Garden State lawmakers — led by Senate health committee chairman Joseph Vitale (D-Middlesex), who joined Monday’s event — have also introduced legislation to create a New Jersey-based insurance mandate, which is not addressed in Pallone’s bill. Massachusetts is the only state to have its own requirement for coverage, which was adopted years before the ACA was in place. Trump ended the federal penalty for individuals who do not sign up for coverage, which experts insist is essential to a healthy marketplace, as part of the tax reform bill he signed in December.

“For the last year, the American people have consistently voiced their support for efforts to strengthen the Affordable Care Act and protect comprehensive coverage,” Pallone said. “Despite this support, the Trump administration has attempted to sabotage the ACA at every turn, jeopardizing coverage for millions and causing premiums to skyrocket.”

In New Jersey, the ACA enabled more than 800,000 additional residents to obtain health insurance; roughly 500,000 qualified for expanded Medicaid coverage and another 300,000-plus purchased plans through the individual insurance market, or healthcare exchange. Uninsured rates dropped from 13.2 percent before the law took full effect in 2014 to 8.7 percent, the lowest in three decades, researchers have found.

“The goal of the health insurance exchange was to make it easier for people to purchase health insurance plans. But chaos in Washington has threatened the viability of the individual market,” noted Chris Donnelly, a spokesman for Better Choices, Better Care NJ, a coalition of business, labor, and other groups funded in large part by Horizon Blue Cross Blue Shield, New Jersey’s largest insurance provider. (Horizon recently pledged to reinvest some of the money it expects to recoup under tax-code changes to improve care for its 3.8 million members.)

Better Choices praised Murphy’s administration for seeking to restore key protections in the law; the group has also supported a state-based insurance mandate — if it is preceded by a study of the impact on small business. “The administration recognizes that declining enrollment in the individual market means increased premiums, less-attractive health plans, and fewer coverage options,” Donnelly said.

Pallone’s bill seeks to address other Trump administration changes that experts believe have destabilized the market. U.S. Reps. Richard Neal (D-MA) and Bobby Scott (D-VA) are also lead sponsors of the plan, which has not yet been assessed by the Congressional officials who will determine its full price tag.

Among other things, the federal legislation would:

  • Provide more federal funding for premium subsidies, enabling everyone who purchases plans through the individual market to benefit in some way from these tax credits. Trump eliminated premium subsidies for those who earned more than 400 percent of the federal poverty line, or $83,120 for a family of three. In past years, nearly eight out of 10 customers in New Jersey’s marketplace qualified for these benefits.

  • Invest additional federal dollars in cost-sharing subsidies, or payments to insurance companies to help hold down consumers’ co-pays and other out-of-pocket costs; Trump’s cut to this line item cost New Jersey insurance companies a total of $166 million last year, funding that benefitted some 145,000 policy holders. His change limited these benefits to those who earn less than 250 percent FPL, or just under $52,000 for a three-person family. Pallone’s plan would boost payments for those under 250 percent and also provide some support for patients who earn up to 400 percent.

  • Prevent regulatory changes enacted under Trump to allow barebones insurance plans to be sold in certain states; the bill also blocks a recent federal rule change that would enable insurance companies to scale back on the minimum level of benefits allowed, known as essential health benefits, or EHBs.

  • Restore federal funding for marketing and outreach that states and nonprofit “navigators” used to help identify hard-to-reach patients and help them enroll. Trump cut those dollars by 90 percent last fall; Pallone’s bill would provide $100 million annually from 2019 through 2021 for federal officials to market the plan, and another $100 million annually for state grants to boost enrollment.

Ray Castro, healthcare analyst with New Jersey Policy Perspective, a progressive research organization, said lowering benefit standards could have a significant impact on market performance. When healthier people opt for barebones plans, it leaves the sickest patients in a smaller insurance pool, which drives up costs for everyone. “It’s going to have a huge impact on individuals who are the sickest in our state,” he told NJTV on Monday.

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