NJ Spotlight

Executive Order Could Give Christie the Online Health Insurance Exchange He Wants

If Supreme Court upholds ACA, Christie doesn't have to forge a compromise with state Legislature to create an online exchange

NJ Spotlight — Wednesday, May 30, 2012

By Beth Fitzgerald

When Gov. Chris Christie earlier this month vetoed a bill to create the online health insurance exchange mandated by the federal Affordable Care Act, he cited the impending U.S. Supreme Court ruling on the ACA's constitutionality as one reason for his veto.

The governor also raised significant objections to the bill itself. If the ACA is upheld by the court in a ruling expected in June, the Legislature could go back and try to hammer out a compromise bill that Christie is willing to sign.

But the governor has another option: if the court upholds the ACA, Christie could bypass the Legislature and create an exchange by executive order.

When asked if an executive order is among the options under consideration, state Department of Banking and Insurance spokesman Marshall McKnight referred to Christie's veto message. McKnight said the message "notes that appropriate steps are being taken to allow the state to comply with federal mandates, once the legal landscape becomes clear, including the evaluation of all appropriate avenues to comply with if and when needed."

The governors of Rhode Island and New York have both issued executive orders to create their state exchanges, which under the ACA have to be ready to provide health insurance on January 1, 2014. Democratic New York Gov. Andrew Cuomo issued an executive order in April, after the Republic majority in the state senate refused for nearly a year to consider exchange legislation.

Sen. Joseph F. Vitale (D-Middlesex), chairman of the Senate health committee and co-sponsor of the exchange bill, has publicly raised the possibility that Christie might go the executive order route to get the kind of exchange he wants.

Vitale said that an executive order is not the best option, considering that several legislative leaders have devoted more than a year to crafting exchange legislation: "These are serious policy makers who want to participate in the legislative process."

But Christie's veto message made it clear he has major problems with the exchange bill produced by the Democrat-controlled legislature. The governor pointed out that the exchange governing board lacks representation by all stakeholders: the bill specifically bars insurance industry officials from serving on the board, and prevents them from returning to the industry for two years after they leave the board. The bill also gives the board some latitude to vet health plans sold on the exchange, which the governor said could reduce options and increase costs. And Christie pointed out that the bill requires New Jersey to create a federally subsidized, basic health plan for individuals just over the Medicaid threshold, although there is no certainty that federal funds would cover the costs of that plan.

Seton Hall Law School Professor John V. Jacobi said the governor could create an exchange by executive order if he chooses to. "But given the fact that the governor in his veto message indicated that he intends to comply with federal law if the Supreme Court upholds the statute, and given the fact that the legislature is clearly interested in creating an exchange, I think that an executive order is likely to be sort of a last resort for the governor."

One obstacle in the way of an executive order is the fact that several revisions are needed in New Jersey insurance laws to bring them into compliance with the ACA, and those revisions have to be done via legislation. Jacobi said this includes changing the rate structure of individual and small group health insurance, and adjusting the variation in premiums allowed in New Jersey to conform to federal law. "This is not a big deal, but it is something that the legislature has to do."

The governor could not use an executive order to raise money, through fees or taxes, to fund the exchange's operations. But the ACA provides multi-million-dollar grants to the states to fund exchanges through 2015, so Christie could launch the exchange via executive order and leave its future financing to be taken up by the legislature at a later date.

Steve Lonegan is state director of the free-market advocacy group Americans for Prosperity, which opposes the ACA. Lonegan said he has not heard that Christie might create an exchange by executive order. "I don't know if Chris Christie wants to follow in the footsteps of Andrew Cuomo, politically speaking, I don't know why the governor would do that."

In his veto message, Christie said his administration "stands ready to implement the Affordable Care Act if its provisions are ultimately upheld" and Lonegan said that language suggests an accommodating stance toward the ACA. Lonegan said Christie "is openly ready to support the Obama healthcare plan if the court says it's okay, instead of taking a powerful leadership role and using his legislative ability and his executive ability" to oppose the ACA.

Jeff Brown is healthcare campaign coordinator for the consumer advocacy group New Jersey Citizen Action, which wholeheartedly supported the exchange bill that Christie vetoed. Brown hopes Christie won't use the executive order. "With something this big, I would hope the governor would want to get buy-in, not only from all stakeholders but from both parties, and do something that everyone can live with."

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