Don't Eliminate NJ FamilyCare Coverage — Thursday, May 14, 2009


Raymond J. Castro is senior policy analyst at New Jersey Policy Perspective, a nonprofit, non-partisan organization in Trenton that conducts research on state issues.

The remarkable progress that has been made recently in NJ FamilyCare, which provides health coverage for children and low-income parents, is being undermined by proposed cutbacks in Governor Corzine's budget.

This is perplexing because the governor has been such a champion of this program at both the state and federal level. Nevertheless, the governor's budget would roll back the annual income level for NJ FamilyCare eligibility for parents from $36,620 to $27,465 in a typical family.

According to the Department of Human Services, about 17,000 parents applying for the program would be denied coverage in the first year alone. While this is a difficult budget year, such a move would be devastating to these families who increasingly are facing their own major budget pressures.

The timing could not be worse. There are now about 377,000 unemployed persons in New Jersey, the highest number ever recorded by the state and about twice the level before the recession began. These folks not only lost their primary job, many lost their employer-based health insurance, too.

About two-thirds of low-income unemployed persons are not even eligible for COBRA.

Eliminating NJ FamilyCare coverage may mean cutting off many unemployed parents from their only option for health coverage.

Experience in New Jersey and other states shows that parents are more likely to enroll their children in this program if they, too, can enroll.

In an evaluation of NJ FamilyCare that New Jersey Policy Perspective published in 2007, we estimated that 45,000 children did not receive coverage over a four-year period in NJ FamilyCare due to a similar freeze in parent enrollment in 2002.

While New Jersey would save $9 million in state dollars, it would lose almost twice that ($17 million) in federal funds. That's because NJ FamilyCare has one of the highest federal matching rates for a health insurance program in the nation.

Increasing losses

Because of the large number of parents who are uninsured, our study of the cutbacks in 2002 shows that the federal funding loss would continue to grow in subsequent years. More than a third of low-income parents lack health insurance in New Jersey.

Most importantly, those additional federal funds could benefit these vulnerable families.

But they are also needed to stimulate the economy. Economists have found that every dollar the state invests in NJ FamilyCare increases business activity by $4.20 because of the additional matching federal funds that are obtained. That means about $40 million to stimulate the economy in New Jersey.

This investment is needed now more than ever in our state. It does not make any sense to reduce federal funds while the federal government is trying to give the state more money to stimulate the economy.

A cutback in coverage for parents also would deal another blow to hospitals that are already reeling from caring for the many unemployed persons who have lost their health coverage. The strain of providing care for increasing numbers of uninsured people is one of the main reasons that hospitals are going belly up in New Jersey, which of course further increases unemployment.

New Jersey Policy Perspective's study found that the last time parent enrollment was frozen, charity care costs at hospitals eventually increased by $750 million over three years through 2006. This estimate is conservative because it does not take into account the cumulative impact since then.

Neither the governor nor the Legislature question, the value of NJ FamilyCare for uninsured parents and children. In fact, historically, they have been very supportive of this program and passed landmark legislation last summer creating a mandate to cover all children and establish a working group consisting of state departments and advocacy organizations to advise the Department of Humans Services on how to better reach children and set enrollment goals.

The governor also recently made New Jersey the first state to use an "express lane" application to make it easier to apply for NJ FamilyCare, and he is proposing to eliminate premiums for low-income families who cannot afford them.

Support from congressional delegates

Most of the New Jersey congressional delegation also supported the federal legislation that was recently enacted, which ensures New Jersey will receive the flexibility and federal funds it needs to expand the program. Sens. Robert Menendez and Frank Lautenberg, as well as Rep. Frank Pallone, all played key roles in protecting parents and children in NJ FamilyCare.

Nevertheless, the real promise of this federal and state legislation will not be achieved unless all uninsured low-income parents can continue to be eligible for health coverage.

Given record unemployment, the effects of lowering enrollment of children and a major loss in federal funds, now is not the time to turn our backs on parents who have played by all the rules and have fallen on hard times through no fault of their own. They deserve better than that.

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