State Sen. Joseph F. Vitale (D-Middlesex), New Jersey's leading spokesman on healthcare issues and chair of the Senate Health, Human Services, and Senior Citizens Committee, is watching the Supreme Court very carefully.
But he's definitely not waiting to see if the Court strikes down the federal healthcare reform law -- or portions of it. He's already making alternative plans to cover New Jersey's million-plus uninsured residents.
He's also working out a way for the state to set up its own health insurance exchanges -- the virtual marketplaces defined in the Affordable Care Act that let individuals and small businesses comparison shop for coverage.
“New Jersey is positioned to do some good things in the absence of the federal reform,” Vitale said. “It is a matter of making the commitment and continuing to work with the federal government in a partnership.”
Vitale pointed out that New Jersey has already enacted some of the reforms specified by the ACA, such as requiring insurers to cover individuals with pre-existing medical conditions.
“President Obama and others who care about this issue would work with New Jersey. We could be a laboratory for change, because we are positioned to do. We have the [most generous] eligibility already for kids in the nation,” Vitale said.
Right now New Jersey covers children up to 350 percent of the federal poverty level, and has federal approval to cover parents at 200 percent. Since 2010, budget constraints have capped enrollment at 133 percent.
The FamilyCare program -- New Jersey’s state and federally funded expansion of Medicaid -- is among the most generous in the nation. The federal government pays 65 percent of the program and the state pays 35 percent. For traditional Medicaid, the match is 50/50.
Total enrollment in all Medicaid and NJ FamilyCare programs is 1.3 million, and spending for the entire program is $11 billion a year in state and federal funds. New Jersey could potentially seek a federal waiver to expand FamilyCare eligibility to 300 percent of poverty or more, Vitale said. “We could enroll thousands more working parents, and other adults without children, into programs that have a federal match,” he said.
For the uninsured who still would earn too much to quality for NJ FamilyCare but can’t afford coverage, Vitale proposes subsidizing their purchase of health insurance with some of the charity-care dollars that hospitals now receive to provide care for the uninsured.
Vitale said that if the ACA falls, New Jersey could create its own insurance market, similar to the ACA’s exchanges, where commercial insurers like Horizon and Aetna are supposed to sell policies in 2014 to individuals and businesses, partially subsidized by tax dollars.
“We could begin to shift some of the charity care money into coverage for some of the uninsured and to support small businesses as well,” Vitale said.
He said here would still be a need for hospitals to get charity-care funds, since they would continue to treat the uninsured. Some people will refuse coverage, and undocumented immigrants won’t be eligible. “So hospitals would still have some level of charity-care burden. But I think we could direct over time, hundreds of millions of dollars out of charity care” to get more people covered.
Betsy Ryan, president of the New Jersey Hospital Association, said her industry agreed to accept cuts in Medicare reimbursements under the ACA, because the law’s individual mandate and Medicaid expansion are supposed to get about 30 million uninsured American covered when the law fully takes effect in 2014.
But hospitals will be in trouble if the individual mandate is overturned and the Medicare cuts remain in place. New Jersey hospitals stand to lose $4.5 billion in Medicare reimbursements over ten years, staring in 2011, under the ACA.
Ryan said if the law is overturned, the hospitals would look forward to working with Vitale on some sort of new plan to get New Jerseyans covered. But “if the individual mandate is struck down, and the cuts [to hospitals] remain in place, we couldn’t really afford to lose charity care.”
David Knowlton, president of the New Jersey Health Care Quality Institute, said Vitale’s ideas have merit. “There are a lot of options for New Jersey,” he said. “ We were quite a ways down the path to health reform when President Obama was elected.”
Seton Hall Law School Professor John Jacobi said what Vitale is proposing “is a very sensible approach, with a track record of success. It allows for more people to get covered short of a mandate.”
Jacobi said that several briefs in the Supreme Court case “argue pretty powerfully that income supports for low income people can be a very powerful way to increase the number of people insured in a state, even if you don’t have an insurance mandate.”
Jacobi said Vitale is proposing “combining two very sensible subsidy provisions. One is to use a public program that we already have, and try to increase the eligibility level so we can draw on as much federal money as possible. The other would provide some relief for people who desire to purchase individual or family coverage but are sort of priced out of the market, but not by a real lot. So they could, with a bit of assistance, put their own money in, get some subsidy, and be insured.”
Joel Cantor, director of the Rutgers Center for State Health Policy, said it seems unlikely the court will strike down the entire law.
If the court strikes down the individual mandate, but keeps the Medicaid expansion and the subsidies for individuals and businesses to buy converge, “I think we are in pretty good shape to cover a lot more people. The big concern will be that the people we end up covering will be disproportionately older and sicker and that will drive up costs. The challenge is for the state to put whatever safeguards they can in place to ensure that the risk pool is diverse, and includes healthy people.”
Marshall McKnight, spokesman for the state Department of Banking and Insurance, said the Christie administration won’t speculate on the Supreme Court’s review of the ACA. “We want to make an informed decision based on how the court ultimately rules.”