What the ACA Ruling Means for New Jersey

The Supreme Court decision could mean fewer uninsured New Jerseyans, and a renewed drive to improve healthcare while driving down costs

Credit: Official White House Photo by Pete Souza
President Barack Obama delivers remarks regarding the U.S. Supreme Court decision upholding the “Patient Protection and Affordable Care Act.”
The Supreme Court’s decision upholding the Affordable Care Act could clear the way for New Jersey to extend health coverage to nearly half of the state’s more than one million uninsured. Then again, it is unclear whether state Republicans, including the governor, will try to block the law’s implementation and join the legal argument that members of the national GOP have vowed to continue after learning that the court affirmed the ACA 5-4 on Thursday.

New Jersey healthcare executives, doctors, and Democratic legislators reacted positively — in some cases jubilantly — to the court’s decision and said they would return with renewed vigor to implementing the law. First on the agenda is creating a health insurance exchange, which will allow individuals and small businesses to buy coverage online in a transparent manner.

An exchange had been designed and approved by the state legislature earlier this year but was vetoed by Gov. Chris Christie, who said he did not like some provisions of the bill and wanted to wait for the Supreme Court ruling before moving forward. Christie issued a brief statement Thursday calling the decision “disappointing” as well as the “wrong approach for the people of New Jersey who should be able to make their own judgments about healthcare.”

In upholding the constitutionality of the ACA’s individual mandate, the court said that what the Obama administration has called a “penalty” to be imposed on individuals who refused to get coverage is really a tax that’s within the power of Congress to impose. Christie said in his statement that “the Supreme Court is confirming what we knew all along about this law — it is a tax on middle-class Americans.”

Sen. Joseph F. Vitale (D-Middlesex), chairman of the Senate health committee, brushed off speculation that Christie will continue to fight the legislation and said he will start meeting next week with the administration to draft a new exchange bill that the governor can support. “With all due respect to the governor,” said Vitale, “if he doesn’t like the decision of the Supreme Court he has two choices: We can design an exchange that works for New Jersey or the federal government will come in and do it. And I don’t think he [Christie] is keen on the Obama administration coming in here and designing a health exchange.”

The states must demonstrate to the federal government by January 1, 2013 that they can run their own exchanges in 2014, or the federal government will step in and run the exchange, where billions of dollars in federal subsidies will help make coverage affordable for those who either can’t afford to buy health insurance now, or who struggle to pay the premiums.

“We will sit down with the administration and talk about the differences that divide us and whether or not we can work together to operationalize this,” Vitale said, adding that there is time enough for New Jersey to get an exchange up and running by the federal deadline.

Sen. Nia Gill (D-Essex), a sponsor of the vetoed exchange bill, said she will reintroduce it and called for quick action. “Now that we have validation the law is constitutional, we must forge ahead with our responsibilities as a state so that our residents are afforded the true benefits of health reform.”

In the Assembly, Herb Conaway (D-Burlington), a doctor and the prime Assembly sponsor of the bill agreed. “Healthcare should not be a luxury. No one should have to choose between their health and paying their bills.”

Still, there were those who vowed to continue the fight. Steve Lonegan, state director of the conservative Americans for Prosperity, called the repeal of the ACA his group’s top priority. “While it appears that the Supreme Court has upheld most of this law, Congress must approve funding and that’s one battleground. The other is within our state where AFP will continue the fight against creating a state-based Health Care Exchange and other implementations of this dangerous job-killing legislation.”

Both health insurers and physicians spoke in favor of moving ahead quickly with an exchange. Ward Sanders, president of the New Jersey Association of Health Plans, the state’s organization of health insurers, said it was “nose to the grindstone time” and noted his organization has been participating in preparations for the exchange so “we are better prepared as an industry to serve New Jersey consumers.”

The Medical Society of New Jersey, the physicians’ group, noted that an exchange “could increase competition and remove barriers in the healthcare insurance market, so that more uninsured New Jersey residents may purchase affordable healthcare insurance with transparent terms.”

Hospitals, health insurance companies, physicians, and other healthcare providers have already invested considerable time and money to implement the ACA’s basic philosophy: that the American healthcare system is broken, and needs to both improve the delivery of care and reduce waste. Indeed, many providers have argued they were already on the path toward improve quality, better patient outcomes, and less wasteful spending well before the ACA was passed, in the face of the resistance from employers to the relentless double-digit upward spiral in the nation’s healthcare bills.

The provisions of the legislation are many, including expansion of Medicaid by increasing the income thresholds and government subsidies to help lower-income families pay for private insurance. The rates of underinsured and uninsured have been rising rapidly in New Jersey as well as nationally, causing more people to seek medical help in hospital emergency rooms when they are already showing evidence of serious illness, rather than in their doctor’s office when illness might be preventable.

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Vitale said he wants the state to expand Medicaid via the ACA, which will cover 100 percent of the cost of the new Medicaid members who enroll under the law’s expanded income eligibility, which in 2014 rises from the federal poverty level to 138 percent of poverty. New Jersey generally gets a 50 percent matching fund for its 1.3 million Medicaid members, because the state is among the nation’s wealthier state. Less affluent states get as high as 90 percent matching Medicaid funds. In 2016, the 100 percent match will drop to 90 percent.

Although the bill originally called for penalizing states that did not participate in a Medicaid expansion, that was the one provision struck down by the court, ruling that the federal government can’t penalize states that don’t want to go along with the ACA’s expansion of Medicaid.

Rep. Frank Pallone (D-6th District) said he doubts that Christie will turn down millions of dollars in federal money to expand Medicaid. The Rutgers Center for State Health Policy has estimated that in 2014, about 444,000 more New Jerseyans would be covered under the ACA, between the Medicaid expansion and the subsidized coverage on the exchange. New Jersey Policy Perspective, a liberal think tank, issued a report yesterday projecting that by 2022, the ACA could get more than 800,000 additional New Jerseyans covered.

Turning down Medicaid expansion money would be difficult for the states, Pallone said. “For the state not to take the money from the feds and expand Medicaid would be incredibly stupid and very few states will do that,” said Pallone, one of the sponsors of the ACA. “The state has an incredible incentive to expand coverage by getting all this extra money.”

The advent of the law, and incentives built into it to spur efficiencies in healthcare, have already caused changes in the way New Jerseyans have their medical care delivered. Indeed, hospital administrators as well as doctors typically applauded the decision.

“I am quite thrilled to say the pundits were wrong on this one,” wrote Betsy Ryan, president of the New Jersey Hospital Association, in a blog post. She said the law funds demonstration projects and other innovative efforts to help hospitals, physicians and other healthcare providers reinvent healthcare delivery so it is higher in quality and lower in cost.

Skip Cimino, chief executive of Robert Wood Johnson Hospital Hamilton, agreed. “This decision really allows us to continue on that pathway toward greater efficiency, better outcomes, and prevention and wellness. It’s a very good decision for the industry and excellent for Americans.”

Dr. Robert Brenner is chief medical officer of the Summit Medical Group, the state’s largest integrated physician practice, with more than 250 doctors. Summit Medical Group has been working for years to develop its practice into a “medical home” where patient care is coordinated with an eye to improving quality and lower excess medical spending, he said. Demonstration projects for this type of integrated care are a key feature of the ACA.

Nationally, patients with certain chronic conditions have a 20 percent rate of being readmitted to the hospital within 30 days of their discharge. Brenner said SMG has gotten that down to 9 percent. “Everyone talks about managing quality in the hospital, but why not keep people out of the hospital?” Prevention is “a long term investment” he said, noting that 10 or 20 percent of the population are driving the cost of healthcare. ‘You want to put special programs in place to manage people at high risk not only for the cost, but so their lives are improved.”

Despite all the initial controversy, even the pharmaceutical industry seemed to want to move forward. Drugmaker Johnson & Johnson said it supported enactment of coverage under the ACA. It added, “We believe this law has the potential to help more patients gain access to high-quality, affordable care and innovative treatments.

Dr. David Shulkin, president of Morristown Medical Center and vice president of Atlantic Health System, seemed to speak for many in the healthcare industry when he said he was grateful for a clear decision from the court. “Indecision is our worst enemy,” he said. “If it had been overturned without clear action, it would have meant the status quo. We do need solutions.”

Shulkin said the law would help hospitals reduce their costs because they will no longer need to care for the uninsured and underinsured in emergency rooms where treatment is expensive. It will also help the public become healthier by enabling them to get regular preventive care and treatment in a doctor’s office.

Despite the celebration, there were some who warned that the ACA is only a first step in curbing medical costs and providing care to all Americans. Risa Lavizzo-Mourey, president and chief executive of the Robert Wood Johnson Foundation, a national healthcare advocate, applauded the ruling and said it allowed for implementation in full force.

“But our ultimate goal of helping Americans lead healthier lives will require more than simply implementing the law. Healthcare spending continues to rise and crowd out investments in other areas; even for people with insurance, high out-of-pocket costs can be a barrier to accessing care,” Lavizzo-Mourey said.

“Furthermore,” she continued, “our health is not just something that comes from the doctor’s office. Community and neighborhood conditions have a significant effect on health. The Affordable Care Act offers ways to address many of these aspects of health, and we will continue to pursue opportunities stemming from the law and elsewhere to improve the health of our nation.”