Big Issues Await State’s New Insurance, Health and Human Services Leaders

Andrew Kitchenman | June 24, 2015 | Health Care
Decision on ending hospital sale, possible cuts in charity funding, and looming ruling on ACA subsidies among potential challenges

Saint Michael’s Medical Center workers and patients rally at the Statehouse yesterday.
As New Jersey’s commissioners of health and banking and insurance prepare to leave office, as announced earlier this week, they will vacate their posts at a particularly uncertain time, with major healthcare issues unresolved.

Successors to Health Commissioner Mary E. O’Dowd, and Department of Banking and Insurance Commissioner Kenneth Kobylowski, face the possibility that more than 200,000 New Jerseyans could lose their health insurance That’s because the federal tax subsidies that make individual and family coverage affordable to low- to medium-income families are at stake if the U.S. Supreme Court invalidates that key component of the Affordable Care Act in the King v. Burwell case,

The successor to the well-regarded O’Dowd will also have to weigh in on the fate of hospitals in the Newark area, including the proposed purchase of Saint Michael’s Medical Center by the for-profit California-based Prime Healthcare.

Acting Health Commissioner Cathleen Bennett
Gov. Chris Christie has named current Department of Health policy and planning chief Cathleen Bennett to be acting health commissioner, while lawyer Richard Badolato was nominated to replace Kobylowski.

In addition, acting Human Services Commissioner Elizabeth Connolly has been nominated to lead the Department of Human Services. She has served in an acting capacity since DHS Commissioner Jennifer Velez left in February.

“These are three very important slots in a very dynamic time,” said David Knowlton, president and CEO of the New Jersey Health Care Quality Institute.

Bennett inherits the state’s review of the Saint Michael’s sale, which was the focus of a rally by Saint Michael’s workers and patients at the Statehouse yesterday.

The Department of Health has “big decisions to make about the future of hospitals in Newark,” said Joel Cantor, director of the Rutgers Center for State Health Policy. “I think that’s been an ongoing challenge for the department — to deal with hospital consolidation and for-profit acquisitions. I think the jury’s out on how all that will work out because the changes are still ongoing.”

Prime has already purchased St. Mary’s Hospital in Passaic and is on track to acquire the three-hospital St. Clare’s Health System.

Saint Michael’s President and CEO David Ricci said hospital officials are feeling a sense of urgency after a series of delays in the state review of the sale, which has already taken more than two years.

“The urgency comes from how you keep an organization going, and the morale of the employees up, and the physicians committed, the longer a process takes,” Ricci said. “We never thought — none of us, whether it was Prime, Saint Michael’s, the staff — that it would be a two-year process. We may have been naïve in our thinking that it would be at most a year.”

The decision is particularly sensitive because the state owns and is committed to operating University Hospital, a competitor to Saint Michael’s in Newark. A report from consulting firm Navigant recommended that University Hospital be expanded and Saint Michael’s converted from a full-service acute-care hospital to an outpatient center.

In addition to the Saint Michael’s issue, Bennett could oversee the next phase in changes to state funding for hospitals. The state began to cut back on charity care this year as a result of a drop in the number of uninsured residents. That funding could be cut further in future years, although hospitals will likely oppose more cuts. And the number of uninsured could rise if the Supreme Court eliminates the individual-market insurance subsidies.

Badolato, for his part, could also face challenges if the Supreme Court invalidates the ACA subsidies. The King v. Burwell decision is expected before the end of the month.

Badolato “could be coming in at an interesting time, given that a decision for the plaintiff in King may have a dramatic effect on our health insurance market,” said Heather Howard, a former state health and senior services commissioner and the current director of the State Health Reform Assistance Network at Princeton University’s Woodrow Wilson School of Public & International Affairs.

Badolato will get a helping hand from insurance-industry veteran Brendan Peppard, who began work as the assistant commissioner for life and health in May. The position had been vacant for more than a year.

“Having new people there at a time where they might be pressure for rapid change might be a challenge,” Cantor said, adding that Peppard’s experience as a vice president with UnitedHealthcare may help.

Experts expect that Bennett will ensure continuity at the Department of Health, since she worked closely with O’Dowd. Bennett has a strong policy background, including 15 years in the private sector with Policy Studies Inc., a company that assisted states in implementing Medicaid policy.

“She’s been a major force in navigating the department (and is) close to the commissioner,” Cantor said.

Bennett’s work with O’Dowd may put her in a strong position, as Cantor and other healthcare analysts praised the outgoing commissioner for her four-year tenure as commissioner. They said O’Dowd handled a series of crises – including Superstorm Sandy, during which O’Dowd worked closely with local hospitals and emergency responders — while managing the department’s bureaucracy effectively.

And while Gov. Chris Christie’s initial response to the Ebola scare has been criticized, O’Dowd was credited with the long-term response and for working to prepare the state for future infectious-disease outbreaks.

“There were moments early on where the department had to get its footing, but once it did … it did fine,” Cantor said.

[related]Howard, who hired O’Dowd to be her chief of staff from January 2008 to January 2010, said she has admired the work that O’Dowd has done.

“She’s been commissioner during challenging times with significant resource constraints – it’s a real loss for her to be stepping down,” Howard said.

Howard noted that O’Dowd worked to shore up the healthcare safety net while focusing on issues such as promoting maternal and child health.

Howard, a Democrat, said that the Republican O’Dowd was noted for her bipartisan approach – gaining instant credibility with lawmakers, thanks to her work with the New Jersey Hospital Association.

“She leaves a strong legacy for protecting the public health and will be missed,” she said.

O’Dowd, who’s expecting her second child soon, hasn’t announced her future career plans. Gov. Chris Christie has nominated her to serve on Horizon Blue Cross Blue Shield of New Jersey’s board. The part-time position pays $72,000 per year.

O’Dowd has faced interesting ethical challenges since December, when her husband Kevin O’Dowd left his position as Christie’s chief of staff to serve as senior vice president and chief administrative officer for Camden-based hospital Cooper University Health Care. Mary O’Dowd said at the time that she would recuse herself from decisions involving Cooper.

Knowlton said O’Dowd would be a major asset for the Horizon board.

“Even if Mary hadn’t been a commissioner, I would tell the governor” that she’s an excellent choice, Knowlton said.