Assembly Panel Moves Forward With Key Component Of Health Care Reform — Tuesday, February 7, 2012

By David Levinsky
Staff writer

TRENTON — State lawmakers took a step toward implementing a major component of President Barack Obama's health care reform law Monday as an Assembly panel moved legislation to establish a New Jersey health insurance exchange.

The Assembly Health and Senior Services Committee, which is chaired by Burlington County Assemblyman Herb Conaway, D-7th of Delanco, voted 8-2 with one abstention to approve the measure, which would establish the exchange, described as a user-friendly, one-stop online marketplace where individuals and small businesses can buy approved health insurance plans.

Some plans would qualify for government subsidies or tax credits depending on the purchaser's income, officials said.

The state-run exchanges are considered a crucial component of the health care overhaul signed into law two years ago because they are the mechanism through which millions of uninsured or underinsured Americans will obtain coverage.

Some believe the exchanges also could help drive down insurance costs because they will grant small businesses and individuals more buying power and choices.

But the health care reform law, called the Patient Protection and Affordable Care Act, has remained a political hot potato, and only a few states have moved forward with creating exchanges.

The full Assembly approved a bill creating an exchange in 2010, but the Senate never posted the measure for vote.

Conaway, who drafted both the 2010 version and the current bill, said he's hopeful that progress will be made this year, in large part because states must act to meet a January 2013 deadline for getting their exchange plans approved by the federal government so they can be up and running at the start of 2014 — the year the reform act's individual health insurance mandate goes into effect.

States that opt to not create an exchange will be saddled with one created and run by the federal government.

"Whatever your political view, I think there's a realization that New Jersey has to do something. Individuals and small employers need a way to get insurance," Conaway said Monday, adding that he wants to meet soon with Republican Gov. Chris Christie to discuss the bill.

The governor has spoken out against the health care reform act, but Conaway said he is hopeful that Christie will support a New Jersey exchange rather than a federal alternative.

Complicating matters is the U.S. Supreme Court, which is expected to rule this summer on whether the health care reform act and its mandate that all residents obtain insurance are constitutional. The ruling has the potential to derail all or most of the reform act.

During Monday's hearing, John Tomicki, executive director of the New Jersey League of American Families, urged the Assembly panel to delay action on creating an exchange until after the Supreme Court decides.

"You had to start somewhere at some time, but I don't know if it's not premature, because there's going to be some decision by the U.S. Supreme Court," Tomicki said, adding that the association is concerned with how the creation of the exchange and other health care reform mandates will affect existing plans.

"You're talking about a federal mandate of what should be a free-market system," he said.

Odette Cohen, a Willingboro doctor, said small-business owners cannot afford further delay.

"This is a medium where small-business owners like myself will be able to get the benefits of economy of scale that large-business owners have enjoyed for so long," Cohen said.

Designing the exchange is no easy task, even without the political ramifications.

Conaway acknowledged as much at the onset of Monday's hearing, which featured the addition of several amendments to the 22-page bill introduced by the assemblyman earlier this month.

"This bill sets up a framework. There's going to be a lot of regulations that come behind this," he said.

Most of the discussion Monday centered on how the proposed exchange would operate and whether it would take a so-called "active" role in choosing insurers and negotiating policy prices and plans, or an alternative "passive" approach of being an open clearinghouse where any licensed insurer would be permitted to sell policies with prices dictated by the open marketplace.

Groups such as the New Jersey Medical Society, AARP, New Jersey Citizen Action and New Jersey Hospitals Association favor the active approach, claiming it will allow the exchange to establish strong standards for policies and make sure consumer interests are protected.

"We think insurers should have to compete to be part of the exchange," said Evelyn Liebman, associate state director of AARP New Jersey.

Health insurers, brokers and some business groups prefer the passive approach, stating that consumers should be given the most options possible and that a government agency or board should not be authorized to rule out insurers.

"We don't think it's an appropriate role for the government to decide who will be permitted to offer coverage. We think the consumer should make that decision," said Ward Sanders, president of the New Jersey Association of Health Plans.

Conaway said his bill attempts to find a balance between the two concepts, but he stressed that the state should be involved.

"I think the state should have a role assisting consumers," he said. "Right now, many aspects of buying insurance are stuck in the shadows. Why not help people be better consumers?"

Another point of contention Monday was who would serve on the board of governors. Under Conaway's bill, the five public members of the exchange's board of governors would not be permitted to be employed by an insurance carrier, broker, health care facility or trade organization both during their term and for two years afterward.

Those stakeholder groups would be represented on an advisory committee that would provide input to the governing board.

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