The legislature on Thursday passed a bill creating a New Jersey health insurance exchange, an online marketplace where consumers and small businesses will comparison shop for health coverage in 2014, as mandated by the federal Affordable Care Act.
The bill passed the upper house 22-13; the vote in the lower chamber was 42-35.
Some are predicting that the New Jersey Health Benefit Exchange Act (S-1319/A-2171) will get a lukewarm welcome from Gov. Chris Christie — who has yet to take a position on whether New Jersey should create its own exchange or have the federal government set one up.
Christie has said he is doing everything he needs to do to get ready. But he is also waiting to see if the U.S. Supreme Court declares the law unconstitutional in June, before seeking the tens of millions of dollars in grants that New Jersey will be eligible for once the state enacts the legislation.
“We’re not making any huge investments until we know it’s constitutional,” Christie said earlier this month. His administration has received $8.7 million in initial federal grants, which it is using to plan for the exchange. That includes doing an extensive analysis of the state’s IT infrastructure to assess whether New Jersey has the technological wherewithal to operate an online insurance marketplace.
The legislation has the strong support of a coalition of consumer advocates that include AARP, New Jersey Citizen Action, NJPIRG, and the liberal think tank New Jersey Policy Perspective. It is opposed by the New Jersey Association of Health Plans, whose members are the insurers that will sell policies on the exchange, and the New Jersey Business & Industry Association, whose members will be looking to shop for coverage for their employees.
Bill co-sponsor Sen. Joseph F. Vitale (D-Middlesex) said Christie may conditionally veto the bill. “I think he will have suggestions for changes, and will ask us to come together to design something else. And then we’ll work together and make some changes.”
Vitale noted that “The governor wants to wait until the [Supreme Court] case is over, and I get that. But in the meantime we have to start thinking about how the exchange should be established.”
Supporters applaud the bill’s provision that the exchange’s governing board can’t include any executives currently working for insurers, brokers, healthcare providers, or other industry insiders. Opponents say this rule robs the board of the expertise it will need to navigate this uncharted territory.
Similarly, advocates believe that language in the bill that empowers the board to approve for sale plans that “offer the optimal combination of choice, value, quality and service” merely ensures reasonable consumer protections. Opponents said the language paves the way for the board to over regulate the marketplace and stifle competition. They also argue that the bill will create an expensive bureaucracy.
Ward Sanders, president of the NJAHP, said the industry wants to see a state-based exchange that improves access to coverage and provide variety and choice to consumers “without raising costs that result from added bureaucracy.”
Jeff Brown, policy advocate for NJ Citizen Action, said the bill brings the state “one step closer to providing quality, affordable health insurance options to those who currently have none.”
The bill specifies $50,000 a year compensation for members of the exchange’s governing board. Sponsor Assemblyman Herb Conaway (D-Burlington) said that “because of the time they will be spending, and the need to keep the governance of the exchange as free from conflicts of interest as we can, we felt that some kind of recompense was in order.”
The ACA is expected to significantly reduce the ranks of the uninsured, who by some estimates may number as many as 1.3 million. Between an expansion of Medicaid and the government subsidies to help the working poor buy coverage through the exchange, it is estimated that the ACA will cover about 444,000 of New Jersey’s uninsured in 2014.
Conaway, a physician, said the uninsured, “Want to have the security of health insurance for themselves and their children. It is an important desire for anyone with a family, it’s important for individuals, it is important for hospitals who carry the burden of [providing] uncompensated care, it’s important for businesses who want to have a healthy workforce.”
Co-sponsor Sen. Nia Gill (D-Essex) said it is significant that the exchange governing board will be independent of the industry, and will get input from an advisory board composed of a broad cross-section of industry and consumer stakeholders. The chair of the advisory board will be an ex officio nonvoting member of the governing board.
Gill said the bill is a balance between those who wanted the exchange to be a very “active purchaser” that bargains on behalf of consumers and those pushing for an “agnostic clearinghouse” where health plans licensed to do business in New Jersey could offer their products. She said she hopes Christie will sign the bill, and rejected “The idea that we should not move forward because aspects of this will be argued before the Supreme Court.” She said the federal courts have not granted a stay of the ACA pending its journey to the Supreme Court. “This law is still valid and we cannot ignore a valid law on the idea that in court something different might happen. You can’t do that.”
Former state insurance commissioner Tom Considine, who left that post in February and joined MagnaCare, a health plan services company, as chief operating officer, said the exchange legislation “is well intentioned but riddled with flaws. I think that the last thing New Jersey needs is yet another layer of government.”
Considine disagreed with the choice to ban industry insiders from the board, and said the decision will result in a lack of expertise, “because of this unrealistically high level of an absence of conflict of interest.” He said the bill provides a $50,000 per year salary for board members to overcome the difficulty of finding people willing to serve. “Anyone who would have a legitimate interest in serving on the board, the bill precludes from serving on the board.”