NJ Spotlight

NJ Poised To Vote On Health Insurance Exchange

Senate committee approves bill creating online marketplace for health coverage

NJ Spotlight — Tuesday, February 28, 2012

By Beth Fitzgerald

The legislature is to vote March 15 on bills to create New Jersey's health insurance exchange, an online virtual marketplace that would make a range of more affordable options for health coverage available to individuals and employees of small businesses when federal healthcare reforms go into effect in 2014.

If approved, the legislation goes to Gov. Chris Christie, whose administration has been working for more than a year to lay the groundwork to launch an exchange — yet still remains officially neutral on whether or not New Jersey should create its own exchange, or let the federal government provide one instead.

On Monday, the Senate Commerce Committee approved S1319 despite objections from the health insurance industry, which argued the bill gives the exchange's governing board too much latitude to decide which plans should be sold.

Ward Sanders, president of the New Jersey Association of Health Plans, said the insurers who sell plans on the exchange are licensed by the state, and the products they sell governed by state regulations. In addition, products offered through the exchange must comply with extensive federal regulations spelled out by the federal Affordable Care Act, which include offering a suite of federally mandated benefits, and demonstrating an adequate network of providers.

Sanders argued that an extra layer of vetting by the board, the so-called "active purchaser" model, could increase bureaucracy and expense while reducing consumer choice and competition.

The bill has the support of consumer groups, including AARP, New Jersey Citizen Action and New Jersey Public Interest Research Group (NJPIRG), and is supported by the policy research organization New Jersey Policy Perspective.

"While there could be stronger language giving the exchange more authority to negotiate with insurers for the highest quality, most affordable options for consumers, the bill in its current form aims to promote fairness in the private market," said Jeff Brown, healthcare policy coordinator for NJ Citizen Action.

Ray Castro, senior policy analyst for New Jersey Policy Perspectives, estimated that $1.2 billion in federal money will flow into New Jersey in 2014, between subsidies to help low and moderate income New Jerseyans buy health coverage on the exchange, and increased Medicaid funding as that program is expanded under the healthcare reform.

"There is a tremendous need to enact this legislation as soon as possible because the current health insurance system is broken and the problem of the uninsured and the underinsured is only getting worse," Castro said.

New Jersey has more than 1 million uninsured residents, and research by the Rutgers Center for State Health Policy estimates that the Affordable Care Act, through subsidies and the Medicaid expansion, will result in 444,000 of the uninsured getting coverage.

Sen. Nia Gill (D-Essex), chairwoman of the Senate's commerce committee, said she had not received any indication of Christie's opinion of the bill. Her goal is to move the legislation quickly, and is posting it for vote next month since New Jersey faces a June 30 deadline to enact insurance exchange legislation. At that point, the state becomes eligible for potentially tens of millions of dollars in federal grants to establish the exchange.

Federal grants will cover the operating costs of New Jersey's exchange through 2014, and in 2015 the states must pick up the cost of running their insurance exchange. The bill imposes an assessment on health insurers to pay for the exchange's operating costs — something the industry objects to. Gill said the legislation does not prevent insurers from passing the cost of that assessment on to their customers.

Gill said she disagrees with the insurer's view that the bill creates excessive regulation of commerce on the insurance exchange. The bill creates a balanced form of active purchasing, she said. "The board can certify [plans] as to the optimal combination of choice, value, quality and service. So we give them discretion but with some objectifiable standards."

The bill excludes insurance and healthcare industry employees from serving on the exchange board, or going back to industry for two years after leaving the board. The insurers argue that the board should be made up of stakeholders, including consumer advocates as well as insurance and healthcare executives. Gill said a non-stakeholder board is essential to avoid conflicts of interest.

"For you to be on the board and decide issues that can make you millions of dollars — that is not the optimal way to make sure we have both transparency and the best decision making process," Gill said.

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