Starting in 2020, New Jerseyans seeking health insurance on the state’s individual market will have more time to choose a plan and sign up, better information about how to do so, and greater protections from potential changes in federal policy, thanks to a new law.
Democratic Gov. Phil Murphy signed legislation Friday that requires New Jersey to create its own individual health insurance marketplace, or exchange, so it can take over a process now run by the Trump administration. Eleven other states and Washington D.C. now operate their own individual markets, but New Jersey is the first to make this change since the current system was established under former President Barack Obama.
In New Jersey, these plans benefit some 300,000 residents who earn too much to qualify for Medicaid but are not offered coverage through their work.
Based on legislation that received a final vote Thursday — which codified a proposal Murphy outlined in March — the law allows the state to collect a fee of 3.5 percent on plans sold through this marketplace, which enables the state to raise more than $50 million annually to fund the system. The federal government currently collects this money, now assessed at the same 3.5 percent, to pay for the national sales platform, www.healthcare.gov, which has been used by New Jersey and nearly three dozen states.
Under the new statute, the state will build its own website, work with insurance companies to conduct outreach and marketing around these products, and fund local organizations to help eligible individuals select and enroll in appropriate plans. It also allows New Jersey to keep the system open longer during the annual sign-up period so more people can enroll; under President Donald Trump, the federal government cut this in half to just six weeks.
“With this law, we take another step in securing the access families need to gaining more affordable health coverage,” Murphy said, praising the advocates who helped push the measure to a conclusion. “This bill makes it so that New Jersey can continue its work to ensure that all residents have access to the coverage and care they deserve.”
Coordinating with Medicaid enrollment
Lawmakers amended the plan Thursday to call on the state to coordinate its new individual market system with online enrollment for Medicaid, which now covers some 1.8 million New Jerseyans; there is no specific timeline for this change, but the law says it should happen “as soon as is practicable.” Sponsors of the amendment hope the state can create a single, integrated online platform with the individual market and Medicaid that helps all insurance consumers not covered through their jobs find the right product, based on their income and other parameters they could enter into a search tool.
“An integrated exchange enables the state to meet the needs of multiple programs with one system that ensures people get the coverage they qualify for, that streamlines the process, eliminates delays and will generate additional federal funds to help offset operational costs. The integrated exchange will determine Medicaid eligibility without redirecting applicants to the separate Family Care Program,” lead sponsor Sen. Nellie Pou (D-Bergen) and Senate President Steve Sweeney (D-Gloucester) said in a joint statement Thursday.
“Establishing a state exchange and a single door application portal will streamline the process and work seamlessly for thousands of New Jerseyans,” noted Sen. Joe Vitale (D-Middlesex), chair of the health committee and another bill sponsor.
Sweeney had drawn fire from patient advocates when he failed to include the bill in advance on Thursday’s voting schedule. But the measure was added to the board list after the session began, once Sweeney and Pou said they had secured the governor’s support for their Medicaid amendment.
Advocates for the bill, led by NJ Citizen Action’s Maura Collinsgru and Ray Castro of New Jersey Policy Perspective, praised Murphy’s leadership on the issue.
“With the creation of a state exchange, New Jersey is cementing itself as a national leader in keeping health coverage affordable,” Castro said.
Initial drafts of the exchange bill, which included a provision allowing the state to collect up to 5 percent on individual plans, raised some questions among insurance industry representatives, who said this would likely add to patient costs. But the final plan would allow the state Department of Banking and Insurance commissioner, who will run the program, to raise the fee from 3.5 percent to as much as 4 percent, but only if a detailed justification is provided.
Insurance options for small employers
As adopted, the legislation calls on DOBI to explore how it could also integrate the small employer insurance market into the same web-based sales platform, although business owners could still purchase these policies directly from insurance companies. These plans, which cover people in companies with less than 50 workers, now insure approximately 300,000 state residents.
The federal Affordable Care Act, or Obamacare, included a number of provisions designed to help expand access to those shopping for individual plans when it took full effect in 2014. The ACA also led to the creation of the healthcare.gov website, which has been used by more than two dozen states as the sales platform for these products.
But Republican leaders in Washington, D.C. have launched repeated attacks on the program, and in recent years, Trump reduced the enrollment period and cut by 90 percent the federal funding available to help New Jersey and other states market these plans. Murphy sought to counter this trend, investing some $800,000 of state funds last year to help boost participation in the process.
In addition, in May 2018 the governor made New Jersey the second state — after Massachusetts — to adopt an individual mandate, or tax penalty for those who are not insured, replacing the federal policy Trump had ended the previous year. Murphy also created a reinsurance program designed to offset the largest health insurance claims. Together, these actions were credited with stabilizing the market and contributing to a 9.3 percent premium decline in individual market plans, on average, sold for 2019.
“As someone whose life’s work has focused on getting people affordable, quality health care coverage, I am delighted to be part of an Administration that is leading the way in protecting the Affordable Care Act and that the Governor and Legislature have worked together to protect affordable coverage in our state,” said state Department of Human Services Commissioner Carole Johnson, who oversees the Medicaid program. Johnson worked on ACA policy as a senior health policy adviser in the Obama White House.