Christie Vetoes Health Insurance Exchange

Beth Fitzgerald | May 11, 2012 | Health Care
Some suggest governor's decision is politically motivated and in line with Republican attacks on federal healthcare reform

Credit: Governor's Office/Tim Larsen
Gov. Chris Christie
Gov. Chris Christie on Thursday vetoed a bill that would implement a key requirement of the federal Affordable Care Act — one that would create a state-run, online health insurance exchange.

Christie argued that with the U.S. Supreme Court now pondering whether to overturn the ACA, “the very constitutionality” of the law “is cloaked in uncertainty.” Given Christie’s national political profile, as he campaigns across the country for Mitt Romney, political insiders were quick to suggest that his veto was politically motivated and amplified the Republican party’s full-scale attack on “Obamacare.”

But Christie’s veto also took aim at specific provisions of the bill, suggesting there will need to be a compromise with the Democratically controlled legislature if the court upholds the ACA when it rules in June, and Trenton has to create an exchange. This is where individuals and small businesses will purchase health plans in 2014, when the ACA’s “individual mandate” requires most Americans to get coverage. It is the constitutionality of this mandate that is now under review at the Supreme Court.

In his veto message, Christie said the bill’s provision for determining which health plan can be sold on the exchange “limits the pool of [health] plan participants, which will likely reduce options and increase costs.” He also took issue with the bill’s requirements that exchange board members are to be paid $50,000 a year and can’t be current employees of health insurance or healthcare firms. They’re also barred from returning to the industry for two years after leaving the board.

“The composition of the proposed exchange’s board of directors lacks representation by all stakeholders and improvidently provides a salary of $50,000 to each board member, further increasing implementation expense,” said Christie.

State Sen. Joseph F. Vitale (D-Middlesex), chair of the Senate health committee and a co-sponsor of the bill, said “If and when the Supreme Court rules that federal reform is constitutional, then I’m sure we’ll all sit down together and design a system that works for New Jersey.”

As for Christie’s objections to banning stakeholders from serving on the exchange board, and restricting the health plans to be sold there, Vitale said “I would be willing to have those discussions. Having some stakeholders on the board would make some sense, but who would they be and where do you draw the line?”

He continued, “I think there is a lot of value to having people on the board who have the knowledge of delivering healthcare, but I would be concerned that their bias might cloud their judgment. Maybe there is a compromise and there is a way in which we can provide the expertise without being concerned about an individual’s agenda.”

The New Jersey Business and Industry Association is among those that support the creation of a New Jersey health insurance exchange; under the ACA, if a state does not form its own exchange, the federal government will step in and provide one. But Christine Stearns, vice president of NJBIA, said “it has to be an exchange that limits cost while giving employers and employees alike as much choice in health plans as possible. The governor’s veto gives lawmakers a chance to go back to the drawing board and create an exchange that will do just that.”

Several Democratic legislators criticized Christie and suggested that the governor was motivated by Republican presidential politics. Co-sponsor Sen. Nia Gill (D-Essex) said “The fact that the federal health reform law is being challenged by the right wing of the Republican Party does not eliminate New Jersey’s obligation to create a health benefit exchange, nor does it eliminate the needs of our 1.3 million uninsured residents.”

Assemblyman Dr. Herb Conaway (D-Burlington), chair of the health committee and lead Assembly sponsor of the exchange bill, said “By vetoing this bill, Gov. Christie has failed New Jersey’s uninsured residents, hurt New Jersey’s chances of fully benefiting from federal health care reform and ignored the need to provide relief to hospitals for uncompensated care. I am disappointed that Gov. Christie put national political pressures ahead of the well-being of New Jersey.”

Assembly Majority Leader Louis Greenwald (D-Camden/Burlington) said “It’s disappointing to see the governor side with Tea Party Republicans instead of the 1.3 million uninsured New Jerseyans. It’s clear from his actions that he is more focused on winning praise from national Republican pundits than protecting New Jersey families’ access to healthcare.”

Political science professor Dr. Peter Wooley, executive director of the PublicMind political poll at Fairleigh Dickenson University, was asked if national politics might have played a role in the Christie veto. He said national politics “is part of anyone’s calculations in this job and certainly if you have national ambitions then it’s going to be a more significant calculation. So I do think it is a part of what’s being considered here.”

But Wooley said Christie’s move makes sense because “If the Supreme Court strikes down the [ACA] in toto, and you have signed this bill, you look like a fool. People will say obviously that wasn’t necessary.”

He also said there have been serious questions raised nationally about the ACA, including the concern that it might discourage employers from generating jobs by penalizing them for not having adequate health insurance plans.

In his veto message, Christie also cited a provision of the bill that requires the state to establish a Medicaid-like basic health plan for individuals between 133 percent and 200 percent of the federal poverty level “without any assurance of the level of federal funding that will be available to support such a plan.”

By midsummer, the Christie administration should have a clearer picture of the potential financial impact of creating a basic health plan. The Rutgers Center for State Health Policy is conducting a study, with help from the state, to assess whether federal subsidies will be sufficient to cover the basic health plan, and if not, how much it will cost the state to provide this option.

Center Director Joel Cantor said a grant from the Robert Wood Johnson Foundation is funding the study, and that Oliver Wyman Actuarial Consulting has been hired to conduct the financial analysis. The study’s results should be available in July. Cantor said the basic health plan would be a way to enable low-income New Jerseyans to remain in the Medicaid system and not be forced to switch to a commercial health plan if their income fluctuated marginally and made them ineligible for Medicaid. The plan would also be a way to provide coverage for immigrants who are not eligible for Medicaid because they had not yet satisfied the five-year waiting period.