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With NJ Oversight, Health Insurance Exchange Could Launch a Year Early

Under a state proposal, New Jersey pledges to invest more than $2 million on consumer engagement for 2020 and plans to launch its own online portal by 2021

exchange word cloud
Credit: Creative Commons

Thousands of New Jerseyans could benefit from additional information, outreach and enrollment assistance in signing up for health insurance plans starting this fall — a year earlier than anticipated — under a state proposal now under federal review.

The New Jersey Department of Banking and Insurance has sought federal permission to take control of the advertising, navigation and other services associated with the plans sold on the Affordable Care Act’s health insurance exchange, or marketplace, in time to help people sign up for 2020 plans, which go on sale in November.

New Jersey officials pledged to invest more than $2 million — more than double the state’s investment last year — on these consumer engagement duties, which had largely been handled by the federal government under former President Barack Obama, but have been cut back significantly by President Donald Trump.

Under the state’s proposal, consumers would still use the federal website, healthcare.gov, to enroll in these plans for 2020. New Jersey intends to introduce its own online portal and take on other oversight duties — like more control over plan design and the length of the enrollment period — in advance of the 2021 coverage year.

New Jersey is one of the dozens of states that relies on the federal government to regulate, market or sell health insurance plans to individuals who do not have coverage through work but earn too much to qualify for Medicaid. These plans cover more than 300,000 Garden State residents.

It is also one of five states now in the process of asserting local control over healthcare exchanges, a reform Garden State leaders believe will result in a more stable market, better consumer choices, and a more user-friendly system. New Jersey officials also said the shift could help protect against potential future efforts by the Trump administration and other Republicans to dismantle the ACA.

The law Gov. Phil Murphy signed in June called for the state to design and build its own enrollment website, partner with insurance companies to design and market appropriate plans, and partner with local organizations to help customers learn about the products and navigate the system. It also envisioned these changes being rolled out in the fall of 2020, in time for consumers to purchase 2021 coverage.

A jump on outreach and enrollment assistance

But DOBI announced Friday that it has asked the federal Centers for Medicare and Medicaid Services for permission to get a jump on the outreach and enrollment-assistance aspects of this work, so it can be ready to perform those services at the state level later this year, when consumers begin to search for 2020 policies. Doing this part a year earlier will allow for a smoother transition to a full state system in the year to come, the state said.

In the coming weeks, DOBI will issue a proposal to hire a consultant to build New Jersey’s own online public platform to market and sell these exchange policies for 2021; that system will also coordinate with the state’s Medicaid program to enable consumers to purchase these policies from the same site. The department is also working closely with CMS officials on other aspects of the transfer, according to officials.

DOBI’s two-step approach could benefit both consumers and state officials, according to Ray Castro, a health policy expert with New Jersey Policy Perspective, who has tracked the ACA for years. Those buying plans are likely to benefit from greater enrollment help from the state, and the department has a chance to collect a year’s worth of data from the federal system before it must launch its own, he said.

ray castro
Raymond J. Castro, senior policy analyst for New Jersey Policy Perspective

“This will help more New Jerseyans in 2020 and make it easier to establish the full state exchange in 2021,” Castro said. “This request to the federal government makes a lot of sense and hopefully will be quickly approved.”

In addition, Castro noted that the $2 million that DOBI pledged to invest in outreach and enrollment help is more than double what the state spent last year. In 2018, Murphy committed nearly $800,000 on a public-outreach campaign to boost participation, helping to fill a funding gap left when the federal government cut support for this work by nearly 90 percent. Federal funding did provide $400,000 last year, DOBI noted.

Money for the state’s work is to come from an assessment on health plans, taxes the federal government now collects. New Jersey’s law eventually calls for a 3.5 percent tax — equivalent to the current federal rate — which officials anticipate will raise at least $50 million in 2021. The law also enables DOBI to add a 1 percent fee to 2020 plans on top of the federal rate, which will drop to 2.5 percent next year; this revenue will cover the $2 million in enrollment services and other program needs, DOBI said.

Under Murphy, New Jersey has already taken several steps to increase its oversight of health insurance systems, including claiming oversight of some aspects of plan design in 2018. The governor also signed a law last year that established an “individual mandate” — or tax penalty for those who can afford insurance but don’t have a policy — that took effect in 2019, when the federal mandate ended as part of Trump’s tax reform deal. Murphy also created a reinsurance program that will use federal funding to help offset some of the largest medical bills in the state in an effort to help stabilize the markets.

DOBI Commissioner Marlene Caride and others have credited these reforms with enabling insurance companies to hold down their costs, which led to a 9.3 percent decline in premiums, on average, for certain individual market policies in 2019.

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