While ACA Enrollment Climbs, Future of Federal Marketplace Still Unclear

Andrew Kitchenman | December 3, 2014 | Health Care
Government subsidies for thousands of new enrollees will depend on ruling by U.S. Supreme Court

New Jerseyans are enrolling in the federal health insurance marketplace at a growing clip this year, but whether the federal marketplace will continue to be effective may depend on how the U.S. Supreme Court rules this session on a case dealing with a key aspect of the Affordable Care Act.

The top court has agreed to hear a case involving whether the 2010 ACA allows people who are insured through the federal marketplace plans to receive federal subsidies.

Of the 161,775 New Jersey residents who enrolled in the marketplace during the first open enrollment period, 84 percent were eligible for subsidies to reduce the cost of their monthly insurance premiums through income tax credits. These subsidies were significant, reducing premiums by an average of 76 percent nationally.

Opponents of the ACA have argued that the law is flawed because it specifies that those enrolled in state-based exchanges will receive subsidies, but didn’t include the same provision for those in the federal marketplace. Supporters of the ACA contend that the law allows federal regulators to provide subsidies in both types of exchanges.

If the Supreme Court invalidates the tax credits, it will mean that state-based exchanges can provide more benefits than the federal market, thus returning legislators’ focus to a proposal for a state-operated health insurance exchange.

“I think it’s something that should be of concern to all of us,” said John V. Jacobi, health law and policy professor at Seton Hall University.

The ACA allows states to choose between operating their own exchange or using the federal marketplace. Supporters of a state exchange noted that the ACA provides more funding for state exchanges than for the federal marketplace.

However, Gov. Chris Christie vetoed two bills that would have established a state exchange, citing the potential cost to the state, as well as the fact that federal officials hadn’t answered questions raised by him and other Republican governors about the exchange.

State Sen. Nia H. Gill (D-Essex and Passaic)
Sen. Nia H. Gill (D-Essex and Passaic) said yesterday that she continues to support establishing a state exchange, adding that uncertainty over how the Supreme Court will rule adds to the importance of the issue.

Gill made her remarks after the first meeting of the Joint Legislative Task Force on Health Insurance Exchange Implementation, an 18-month-old body launched to make legislative recommendations regarding the exchange.

Gill noted that neighboring New York had much more money available to operate its exchange and conduct public outreach than New Jersey because New York chose to operate its own exchange. New York spent $32 million on consumer outreach this year, while New Jersey had $1.5 million available.

“That is the driving difference between what New York has, what they can do, how they had the outreach, how they were able to develop the infrastructure,” Gill said. “The decision (by Christie) had a great deal of consequences attached to it.”

She has reintroduced a bill, S-540/A-3953, that would establish a state-operated exchange.

She noted that the Supreme Court case potentially exposes hundreds of thousands of people — once the marketplace has increased its enrollment – to the possibility of financial peril or the loss of newly gained health insurance.

Gill said the implications of the court case are huge to thousands of New Jersey residents. She added that the potential for more federal funding and giving the state greater influence in how the marketplace operates, as well as the threat of changes being ordered in the federal exchange, are all reasons why the state should “immediately move to a state-based exchange.”

Jacobi said it would be a “terrible thing” for residents to lose access to the subsidies, but it remains uncertain how the Supreme Court will rule.

“I think that Senator Gill is right to raise the issue,” Jacobi said, adding that the state could take several approaches in launching an exchange that would protect residents’ access to the federal subsidies.

Having a full-fledged state exchange, with its own administration and information-technology infrastructure, is an option, but that isn’t necessary to maintain the subsidies, Jacobi said. The state could create a new body to oversee the exchange but allow most exchange operations to be handled by the federal government. This would combine the advantages of federal funding and state oversight with the federal expertise that’s been built over a year of operating healthcare.gov.

“There are ways to create our exchange while relying on a lot of the expertise and technical tools that have been created for the federal” marketplace, Jacobi said. “It could be done — I wouldn’t say on the cheap — but I think it could be done relatively expeditiously.”

If it reaches that point, one stumbling block could be Christie’s professed opposition to the ACA and his history of vetoing establishment of a state exchange.

But Jacobi noted that the circumstances could be different.

“The governor was opposed to the idea as it was initially proposed, but I don’t know whether the governor would be interested in … something that would qualify it as a state exchange but with less financial exposure to the state than the original proposal entailed,” Jacobi said.

ACA opponents in the state are likely to resist such a move. Americans for Prosperity New Jersey state director Daryn Iwicki said state exchanges have had problems across the country.

“They’ve all seen issues, and there’s an added cost to New Jersey taxpayers to run their own exchange,” said Iwicki, predicting that federal funding to the states would decline over time. “We’re going to be on the hook for the entire bill down the road. Running a state exchange isn’t going to fix the problem.”

The task force heard from U.S. Department of Health and Human Services regional administrator Jackie Cornell-Bechelli regarding the law’s progress. Cornell-Bechelli noted that 462,125 Americans enrolled in the federal marketplace in the first week of the new open enrollment that started on November 15. If New Jersey’s share is similar to that of the first open enrollment, than roughly 13,000 state residents enrolled during that first week, with about half of those new enrollees and the rest re-enrollees.

Cornell-Bechelli encouraged those with –existing marketplace plans to visit healthcare.gov and check to see what plan being offered this year best meets their family’s needs. She noted that the number of marketplace insurers in the state has increased from three to five. There have been changes in both prices and insurance networks.

“We’re optimistic that with more plans there will be more competition,” driving down insurance costs, Cornell-Bechelli said. She noted that in the first open enrollment period, Bergen County had 20,000 marketplace enrollees, while Camden, Essex, Hudson, Middlesex and Monmouth counties reached at least 10,000, based on ZIP-code level data released by her department.

Gill said that given Christie’s resistance to the ACA, enrollment efforts in the state have been strong. She noted that the Christie administration allowed $7.65 million in federal ACA funding to be returned due to a dispute over how the money would be spent.

“The numbers can be larger, but faced with what we were faced with for enrollment, they did an absolutely fantastic job,” Gill said.

The subsidies are available to all people with household incomes between 100 percent and 400 percent of the federal poverty line, which currently amounts to between $11,670 and $46,680 for a single person and between $23,850 and $95,400 for a family of four. The subsidies are higher for those with lower incomes, with some tax credits covering nearly the entire monthly premiums for some families.
Enrollment is also available to higher-income individuals and families, just without subsidies.