Hundreds of thousands of New Jersey residents and small business owners could have far easier access to better quality, affordable health insurance and millions more could benefit from additional health policy protections under a new proposal from Gov. Phil Murphy.
Murphy, a Democrat, plans for the state to claim full control of its health insurance exchange by 2021. The exchange, now embodied in the federal website healthcare.gov, is an online sales marketplace for lower-cost policies that was created as part of the Affordable Care Act.
The Murphy proposal — elements of which require state legislation — would make New Jersey the first state to undertake this transition since the time of the Obama administration, which created the law, according to Murphy’s office. Twelve other states and the District of Columbia already operate their own marketplaces.
The change is also designed to build on state-level reforms Murphy instituted over the past year and to provide the state far greater flexibility in how these insurance policies — which cover some 240,000 residents — are crafted and sold in New Jersey.
For example, Murphy said the proposal would allow the state to create and operate its own website to sell these products, schedule longer enrollment periods to give residents more time to sign up, and invest more in outreach and assistance for consumers, beyond what the federal government does.
‘more accountable and more responsive’
“This will have the benefit of protecting our affordability gains by making our marketplace more accessible, more accountable and more responsive to consumers,” Murphy said in announcing his plans Friday at Saint Barnabas Medical Center in Livingston. Earlier in the day, he had filed an “Exchange Declaration of Intent Letter” with federal officials to kick off the process.
“A true New Jersey exchange will be a strong measure of independence at a time when the federal administration continues to undermine and weaken the federal marketplace in their misguided efforts to dismantle and weaken the Affordable Care Act,” Murphy said.
The announcement generated immediate praise from healthcare advocates and providers, including the leaders at the state medical society and hospital association, and a number of Democratic lawmakers. “We’re talking today about healthcare security for many in our state,” said Assemblyman Herb Conaway (D-Gloucester), a medical doctor, who joined Murphy at the hospital Friday.
“Once again New Jersey has taken the lead in protecting its residents and responding to the disruptive policies coming out of Washington,” said Maura Collinsgru, healthcare program director for New Jersey Citizen Action, an established voice for expanded healthcare coverage.
The governor said he is also working with lawmakers on a package of bills that would amend New Jersey law to include certain protections, now codified in the ACA, that benefit a much larger group of insurance customers. As envisioned, this would ensure millions of residents have key benefits — like guaranteed coverage for mental health issues and pre-existing conditions — that Murphy said are now under threat as Republicans in Washington, D.C. continue their fight to dismantle the landmark law.
ACA has helped drive down NJ’s uninsured rate
The ACA, or Obamacare, funded the expansion of New Jersey’s Medicaid program to cover more than 500,000 additional low-income residents who were not insured through work; the state’s individual insurance market covers about an additional 300,000, more than two-thirds of whom are eligible for discounted policies through the exchange. The program, which took full effect in 2014, has helped drive down the state’s uninsured rate to a record low of less than 9 percent.
Critics, led by President Donald Trump, have raised concerns about the expense and sustainability of the federal program, which costs hundreds of billions of dollars annually at a time when medical costs are rising at double-digit rates. GOP leaders spent much of 2017 working to dismantle the law; federal officials cut back funding for outreach and enrollment help — by as much as 90 percent for some Garden State programs — and, last year, it halved the length of time people had to sign up for plans in the fall.
Murphy, an avid supporter of the ACA, has made a point of resisting these changes on the state level. In May, he signed a law that made New Jersey the second state (after Massachusetts) to institute its own individual mandate — or tax penalty for not having insurance coverage — which Trump had eliminated on a national basis. The governor also created a reinsurance program that can use federal funds to help offset the cost of the highest claims, a backstop designed to help stabilize the market.
Experts agree these state-level changes contributed to a decline of more than 9 percent in the cost of premiums sold through the individual insurance market for coverage this year in New Jersey. (Out-of-pocket costs may have continued to rise for consumers.) The state has also reclaimed certain aspects of plan oversight and, last fall, Murphy launched an $800,000 multi-department public outreach campaign to attract new customers and counter a recent slump in enrollment.
Murphy and Marlene Caride, commissioner of the Department of Banking and Insurance, said that taking full control of the exchange operation would allow New Jersey to do even more to protect affordability and quality of coverage for its residents. Caride said the state expects to have access to close to $50 million — which the federal government now collects through a user fee attached to plans sold through the exchange — to operate the program and pay for additional marketing and customer assistance during the enrollment period.
Guarding against Trump administration policies
“We know we can better utilize New Jersey’s money to protect New Jersey residents and get a better return on our investment,” Caride said Friday. Officials said legislation is required to establish the same user-fee on the state level.
States that operated their own exchanges were also better able to guard against Trump administration policies they saw as destructive, Caride noted. For example, when the federal government decided to shift to a six-week enrollment window last year — half the length of the previous sign-up period — California, New York and Connecticut, which have state-based programs, could opt to run a full three-month sign-up period instead.
“Because we rely on the federal exchange, New Jersey did not have the freedom to make a similar decision,” the commissioner added. “We as a state should have the opportunity to respond to the needs of our residents. And in 2021 we will.”
Ray Castro, health policy director for New Jersey Policy Perspective, a liberal research group that has long tracked the ACA, said the changes would allow the state far more flexibility. Other state-based exchanges have led to innovative programs that can cut costs for consumers, he said. “This is great news for residents who have been struggling to afford their health insurance,” Castro said.
The governor also hinted on Friday at his plans to work with legislators to codify other ACA protections in state law so that millions of other New Jersey residents are guaranteed high-quality insurance, regardless of what happens at the federal level. While the Garden State already includes a number of these popular provisions, state officials said the goal is to fill in any missing gaps between state and federal law.
Specifically, Murphy’s office said this would include requirements that insurance providers cover patients with pre-existing conditions and allow adult children to remain on their parents’ policies up to age 26, both of which are already protected for many Garden State customers. He would also require policies to contain certain essential health benefits, like addiction care, maternity and mental health and provide preventive care at no out-of-pocket cost. In addition, the plan calls for banning annual and lifetime limits on the scope of benefits available.
Dr. John Poole, president of the Medical Society of New Jersey, praised the effort to protect quality coverage, including eliminating lifetime benefit limits. Cathy Bennett, president and CEO of the New Jersey Hospital Association, agreed additional safeguards are needed, given the recent increase in insurance plans with high-consumer costs, which can lead to surprise medical bills for patients.
“Covering more people with health insurance and making sure that coverage is adequate for their medical needs is essential to improve health status and begin addressing the affordability concerns in healthcare today,” Bennett said.