NJ Spotlight

Taking The First Steps Toward A New Jersey Health Exchange

At stakeholder forum, healthcare analysts and advocates start the difficult task of defining a state health insurance exchange

NJ Spotlight — Thursday, September 15, 2011

By Vanessa Roman

The law — at least on this point — is clear. The Patient Protection and Affordable Care Act (ACA) mandates that healthcare insurance exchanges — virtual marketplaces that let individuals and small businesses comparison shop for health coverage — must be established in all states by January 2014.

Defining the details of an exchange, however, is left up to individual states. That task brought analysts, advocates and researchers to Trenton yesterday, to a stakeholder forum co-hosted by NJ for Health Care and the NJ Citizen Action Education Fund.

Discussion among panelists and findings from a report released by Rutgers University last month reveal that there is general agreement that New Jersey should create its own exchange — streamlined and simple to use.

Panelist Ray Castro, senior policy analyst with research organization New Jersey Policy Perspective, said that while New Jersey is already ahead of other states in terms of health policies, "by having our own exchange we're going to be able to tailor the exchange to meet the needs in our state.

Panelists did disagree with some of the findings of the report, which where presented at the forum. Chiefly these centered on whether a state exchange should act as act as an active purchaser, bargaining for reasonable rates with insurance companies, or simply serve as a clearinghouse with issuer-set policies and prices to pick from.

There was also discussion on whether to merge non-group and small-group risk pools and whether to permit large groups to enroll in the small-business exchange. Also on the docket: the role of healthcare navigators; who exactly should govern the exchange (an independent board or existing agency); and, if such a board were created, who should be on it.

While there are many details that will need to be worked out, the forum's panelists for the most part agreed that while an exchange won't solve the many issues surrounding healthcare, it is a step in the right direction.

"It is absolutely critical that this be done right. It's absolutely critical that access be simple, that when we enter that exchange to buy insurance that we are reassured that someone has actively participated in the process," said panelist Kelly Conklin, owner of a woodworking company that employs 10 people.

Conklin said navigating the healthcare benefits market is "inordinately" time-consuming and expensive, costing him $4,300 a month in premiums.

"I think about what I could do with that money, if we could spend it on another employee, on equipment that would make us more efficient," he said.

Shopping for Socks

The expense of providing insurance to his employees in an ever-increasing cost climate forces him to shop for healthcare like he shops for socks, he said, looking for the cheapest plan and waiting a few months to see if the purchase was a bust.

"Is that really the analogy we want to use when we're talking about providing healthcare for people?" Conklin asked. [But] that's what we're asking small employers to do."

Conklin said he hopes that an effective exchange would help reduce his premiums, even if it's just a small amount, and that an exchange should be an active purchaser enacting minimum standards and ensuring affordability.

Establishing an active purchaser model would allow the exchange to negotiate the best prices and health plan standards with insurers and then offer them to consumers. In a passive model, the exchange sells plans that meet criteria, but with prices set by issuers, much like a travel website offers deals, said Dave Chandra, senior policy analyst for the Center on Budget and Policy Priorities in Washington, D.C.

According to Chandra a passive model with lots of choices can be "overwhelming."

"Consumers don't want an infinite number of options. They want several options that are really good," he said.

According to the Rutgers report, consumers favored the active purchaser model while carriers and brokers advocated for the passive model.

Combining individual and small groups in an exchange was also a point of disagreement in the Rutgers report. Castro said creating "one large insurance pool" for individuals and small-group markets reduces risk and stabilizes cost, though he acknowledged a consideration to merge the two would require more research.

Crystal Snedden, health care campaign coordinator for NJ Citizen Action, said if individuals and small businesses could pool together to purchase insurance and negotiate rates the same way a large business does, "it creates this parity in the [health insurance] market and helps brings things down to a level that regular people can use."

Margaret Koller, executive director of the Rutgers Center for State Health Policy, said Wednesday that the role of navigators was also "a big source of discussion and disagreement" among stakeholders.

Navigators will help steer consumers through the insurance application and purchasing process, facilitating enrollment.

Kathy Grant-Davis, president of the New Jersey Primary Care Association, a nonprofit representing providers and affiliates of community-based healthcare across the state, said she "strongly" feels that navigators should be community groups that have already been doing this kind of work for years, and that while there should be standards, she disagrees that navigators should have to be licensed.

The Wrong Door

Panelists also discussed the need for effective outreach, as well as ensuring that the exchange has a "no wrong door" policy in place.

According to Castro, "no wrong door" means that applicants will be able to go to the exchange as the central location for all types of insurance. When someone applies through the website, it will automatically indicate what that person is eligible for, eliminating the need to apply separately for different programs.

There was also a brief discussion about creating a basic health plan. Koller said most stakeholders agreed that a basic health plan — described in the report as a "Medicaid-like option" for those just above the Medicaid eligibility limit — should at least be looked into.

Several audience members expressed distaste with both private health insurer practices and state-run programs like Medicaid, but one audience member said the creation of an exchange "is an opportunity to bring in line some of these major issues that have broken our system."

Neil Sullivan, assistant commissioner for the Life and Health Division of the New Jersey Department of Banking and Insurance, acknowledged that while Gov. Chris Christie is not a supporter of the ACA, it is the law "and we implement the law in the best interest of the people of New Jersey."

"The commitment is to do data-driven decision-making," Sullivan said, and take the politics out of it. Snedden said the purpose of the forum was to bring people together to talk about forming an exchange that works for the people of New Jersey.

The creation of a health insurance exchange is a key component of healthcare reform that "allows New Jersey to come up with a New Jersey plan and a New Jersey way to solve the problems with access to quality affordable healthcare." It won't solve every problem, she said, "but it's going to be a huge step in creating a consumer-friendly place where people can understand the insurance that they're buying."

According to the latest census figures released Tuesday, there are currently more than 1.3 million uninsured people in New Jersey.

The ACA, signed into law by President Obama in March 2010, requires states to set up health insurance exchanges by January 2014. Exchanges will be open to people earning between 133 percent and 400 percent of the federal poverty level and the cost to consumers will be offset by federal tax credits, which will be determined based on income and premiums.

Small businesses will also be able to purchase through the exchange and will also be eligible for tax credits.

Federal law allows states to create their own exchanges or defer that responsibility to the federal government. As a third option, states can choose a hybrid model, where aspects of running the exchange are split between the federal and state governments.

States can choose how they want the exchanges governed and whether to run a single exchange for individuals and businesses or create separate ones.

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