Op-Ed: NJ’s new state-run health insurance exchange must learn from the mistakes of others

Andrew Sprung | October 23, 2020 | Health Care, Opinion
Don’t overemphasize the marketplace of private plans at the expense of Medicaid
Andrew Sprung

With the pandemic still raging and the state economy still limping, New Jersey has launched its sparkling new state-run health insurance exchange, GetCoveredNJ, where those who lack access to job-based health insurance can get themselves insured, usually with government assistance. Open enrollment begins on Nov. 1. Plans and prices (with subsidies factored in) can be previewed now.

In 2020, New Jersey was one of 38 states using the Affordable Care Act (ACA) exchange run by the federal government, HealthCare.gov, while 13 states ran their own exchanges. Among the good things flowing from a state-run exchange is a robust budget for enrollment assistance and advertising, funded by user fees charged to insurers offering products on the exchange. In HealthCare.gov states, those fees go to the federal government. The Trump administration slashed funding for enrollment assistance by 84%, and advertising by 90%.

Better yet, the state is offering its own subsidies in the private-plan marketplace to supplement federal subsidies, which by themselves cover an average of 76% of premiums. For enrollees with incomes up to 400% of the federal poverty level (FPL) — which is $51,040 for a single person, $104,800 for a family of four in 2021 — state subsidies will further reduce the premium paid by enrollees by between $20 and $95 per month. The state subsidies were funded by replacing a newly repealed federal tax on all health insurers with a state-based tax.

Put Medicaid in the mix

All this is good news and good policy. To maximize the advantage, however, GetCoveredNJ and state officials should avoid repeating a mistake endemic to state exchanges: overemphasizing the private-plan marketplace at the expense of Medicaid (NJ FamilyCare).

The ACA reduced the uninsured population mainly through two core programs. The first was a marketplace of private plans, offered to buyers without regard to their health status, and subsidized on a sliding income scale for enrollees with incomes up to 400% FPL. The second was an expansion of Medicaid eligibility to all adult citizens and some noncitizens with incomes up to 138% FPL ($1,468 per month for an individual, $3013 for a family of four).

From the ACA’s passage in 2010 to the present, the private-plan marketplace has sucked up all the political passion. But the Medicaid expansion has insured far more people who would otherwise be uninsured. In New Jersey, as of September, 597,000 enrollees in NJ FamilyCare were rendered eligible by ACA criteria. About 175,000 New Jerseyans were subsidized in the private-plan marketplace.

Since the pandemic triggered millions of unemployment claims nationally, Medicaid has been the chief bulwark against a massive surge in the uninsured. In New Jersey, there were 367,000 more unemployed in September than in April. From March to September, enrollment in NJ FamilyCare has increased by 170,000, or 10%. Enrollment growth among adults specifically made eligible for Medicaid by the ACA has increased by 88,000, or 17%, and 60,000 children have also been added to the rolls.

Meanwhile, enrollment in New Jersey’s ACA marketplace dropped by 2% from the first quarter to the second. That’s not surprising: Attrition in the marketplace after the annual open enrollment period ends is normal. Open enrollment this fall may trigger a large surge, if the state’s ramped-up advertising and outreach and new subsidies do their work. Even so, an enrollment increase of 50,000 (20%) would constitute a major success — and would still be dwarfed by the increase in Medicaid enrollment.

The marketplace bias

Why does this matter? In states that enacted the ACA Medicaid expansion, the ACA exchanges do route applicants to Medicaid if their income qualifies them. But many visitors to the exchanges never start an application. And visitors who qualify for Medicaid may never realize it — especially those who earned a middle-class income prior to layoff.

Almost universally, the exchanges bury information about Medicaid. They are focused on the private-plan marketplace and front-load a welter of information about that complex program. The “preview plans and prices” tools prompt users to estimate their annual income, whereas Medicaid eligibility is based on current monthly income. If that income has just fallen off a cliff, the preview tool may miss Medicaid eligibility.

GetCoveredNJ does a better job than some exchanges in signposting Medicaid. Centered on the home page is a box titled “Covid-19 information” that begins with marketplace information but adds, “Free or low-cost coverage is also available through NJ FamilyCare for those who qualify.” Two clicks will bring a visitor to information about NJ FamilyCare eligibility.

But to get there, you have to recognize that you may qualify. And both pages that must be clicked through are likely to divert you with information about the private-plan marketplace. Much more could be done to emphasize that the majority of New Jerseyans who qualify for subsidized insurance are likely to end up in NJ FamilyCare.

The same admonishment applies to advertising. At least equal billing should be accorded to NJ FamilyCare as to the private-plan marketplace. At all points, the aid available to New Jerseyans should be presented as a continuum.

Gov. Murphy and the state Legislature have used financial judo to fund improvements in the state’s health insurance marketplace, capturing funds that previously went to the federal government to finance enrollment assistance, advertising and supplementary subsidies. To best protect New Jerseyans from becoming uninsured during the current crisis, however, they need to focus equal energy on maximizing Medicaid enrollment.