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Opinion: Saving the ACA, One Step at a Time

New Jersey lawmakers have passed two bills that would maintain important features of the Affordable Care Act

Joel C. Cantor
Credit: Amanda Brown
Joel Cantor, director of the Rutgers Center for State Health Policy

Abandoning the Affordable Care Act, or replacing it with as-yet unspecified policies, is a long-standing goal of the majority in Congress and the man in the White House. To date, the Trump administration has used its authority to undermine key coverage provisions of the law, including shortening the window of time people have to enroll each year, reducing funding for outreach and public education, and stopping payments to reduce deductibles and copays for low-income families buying ACA plans, to name some prominent examples. The administration is also advancing plans that could greatly diminish protections for people with pre-existing conditions.

Congress has also done its part to undermine the foundational tenets of the ACA by repealing the tax penalty for those who do not sign up for coverage, beginning in 2019. The Congressional Budget Office estimated that the repeal of the individual insurance mandate will lead to an increase of about 10 percent in ACA premiums and increase the ranks of the uninsured by millions.

In a recent poll of New Jersey residents, my colleagues and I at the Rutgers Center for State Health Policy found that about two-thirds of respondents would want the state to continue the ACA in New Jersey if Congress repealed it.

Gov. Phil Murphy appears to agree. He has used his administrative authority to counter federal policies that would make health insurance more expensive in the state.

Major health-reform legislation

Last Thursday, so did the New Jersey Legislature, passing two major health-reform bills. The New Jersey Health Insurance Premium Security Act would create a “reinsurance” program, funded with federal and state dollars, that would reduce the financial exposure of insurance companies that sell nongroup plans to patients with very high medical costs. A small group of patients account for an outsized share of insured expenses. With subsidies for these outlier cases, insurers will be able to reduce premiums for all consumers. It is likely that over half of the cost of the reinsurance would be funded with federal ACA dollars.

The New Jersey Legislature also passed a state penalty for going uninsured that mirrors the mandate that Congress just repealed. This bill, New Jersey Health Insurance Market Preservation Act, will prevent the 10 percent bump up in nongroup insurance premiums that will otherwise be the result of the federal repeal. It will also generate revenue to defray the state share of reinsurance costs.

This bill, if signed by the governor, will tax those who do not purchase health insurance and do not receive affordability or other exemptions. Viewed as free riders on the insurance system, these individuals would pay penalties that would justly be used to help make insurance more affordable for those who opt in.

The individual mandate penalty is in some ways like a tobacco tax — society should not encourage people to smoke or go without health insurance, and capturing some revenue to offset the costs to others associated with those decisions seems reasonable and fair.

Virtually everyone knows the simple fact that smoking is bad for your health and the health of those around you. But going without health insurance can also impose extraordinary costs on the individual and on others as well. Many who are eligible for free or subsidized coverage may not even know it. Therefore, responsible implementation of a New Jersey individual mandate penalty must go hand-in-hand with robust public outreach, education, and enrollment efforts.

Policymakers in Washington, D.C. still have the coverage provisions of the ACA in their sights, but their Trenton counterparts are coming together to blunt the impact of those efforts in the Garden State.

Joel C. Cantor is the director of the Center for State Health Policy and distinguished professor of public policy at Rutgers University. The views expressed in this essay are solely those of the author and are not endorsed by funders of the Center for State Health Policy.

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