Rejection Of Health Care Law Could Hamper NJ Plans To Insure More People

The Record ( — Tuesday, June 26, 2012

The Record

New Jersey could be forced to revamp plans to insure hundreds of thousands of residents, at the same time that hospitals continue to face huge cuts in Medicare, if the U.S. Supreme Court strikes down key parts of the controversial Obama health care law, experts said Monday.

The ruling, expected Thursday, will address the constitutional questions of whether Congress can require Americans to buy health insurance and if the law can expand Medicaid — developments that have an enormous impact on the nation's economy, national politics and the role of government in health care.

If the court rejects the individual mandate — which requires people to have coverage or pay a fine — "there would be a lot of folks eligible for private insurance who wouldn't sign up," said Joel Cantor, director of the Center for State Health Policy at Rutgers University.

And if the court finds that Congress overreached in expanding Medicaid, the ruling could significantly hamper efforts to insure more low-income people through the state-federal health program, Cantor said.

"Private coverage is completely out of reach for the population Medicaid expansion is intended for," said Cantor.

Many of the reforms enacted under the sweeping law Congress passed in 2010 are well under way in New Jersey and will endure regardless of the ruling: The law has extended coverage to some 68,000 young people who are now allowed to remain on their parents' plan until age 26; new community health centers provide preventive and primary care to increasing numbers of the state's uninsured residents; and more practices are relying on electronic medical records to provide more efficient care.

But while proponents of the law say it will help lower the ranks of uninsured in New Jersey — estimated at up to 1.3 million — critics oppose it as a costly overreach and an effort that the nation can't afford, given the sustained economic downturn.

"It's not just unconstitutional — Obamacare will increase taxes and health care costs, destroy new jobs and add to the national debt, burden both small and large businesses with new regulations and violate the founding principles of a republic expressly founded to secure the blessings of liberty," Rep. Scott Garrett, R-Wantage, said in a prepared statement. Garrett introduced a bill to repeal the legislation within weeks of Obama's signing it into law.

The hospital industry nationally agreed to $155 billion in Medicare cuts over 10 years to try to guarantee passage of health care reform because it felt the Patient Protection and Affordable Care Act would result in more insured patients and greater revenues for hospitals, said Betsy Ryan, president of the New Jersey Hospital Association.

Under that agreement, New Jersey's 72 acute-care hospitals are facing a loss of $4.5 billion in those Medicare payments, reductions that are likely to have the greatest impact on struggling urban hospitals that treat higher ranks of the uninsured, Ryan said.

"If all we're getting is cuts, it's going to be a tough road," Ryan said. "If the individual mandate is struck down and cuts remain, we're going back to Capitol Hill."

The Congressional Budget Office estimates that half of eligible people nationally won't purchase insurance if there is no mandate requiring them to do so. But those uninsured patients will still seek medical care and so the rulings could have a devastating effect on hospitals' bottom lines at a time when all revenue sources are shrinking, experts say. Federal law requires that hospitals treat patients regardless of their ability to pay.

North Jersey hospitals are already bracing for the reductions in federal dollars through a variety of measures: forming partnerships with physicians and converting to electronic medical records to eliminate duplicative tests and unnecessary treatment.

"Medicare cuts are coming, with or without health care reform, and Englewood Hospital and all other hospitals need to become more efficient," said spokeswoman Maria Margiotta.

Millions in grants will also be jeopardized if the court overturns the law. Cantor noted that Rutgers is poised to receive $14.3 million to expand team-based care management for high-cost, high-need, low-income people in New Jersey and other states. Those funds could be in jeopardy depending on the ruling, he said.

However, the state has already received nearly $700 million in funding since the law was passed in 2010, according to an estimate by the Kaiser Family Foundation. In fact, New Jersey fared better than other states — federal funding was $76.28 per capita, well above the national average of $39.52, according to Kaiser.

More than half those dollars were grants to public and private employers to help them pay for early retiree benefits. It also included more than $100 million in prescription drug rebates for seniors on Medicare.

Even if the individual mandate is struck down, New Jersey can still set up insurance exchanges to help those without coverage, experts say.

While Governor Christie vetoed a bill last month that would create a marketplace for affordable health insurance for those without it, he did not block $8.8 million in federal grants to develop an online health-insurance exchange. Christie vetoed the measure pending the court's ruling.

"Even in the worse case, if the whole law gets thrown out, we're hopeful we could still do a state exchange," said Jeff Brown, health care campaign coordinator for New Jersey Citizen Action, which is prepared to lobby along with 70 other advocacy groups for the efforts to insure more state residents.

Before Obama's election, state Sen. Joseph Vitale convened legislative leaders and stakeholders to develop a plan to achieve universal coverage in New Jersey. Their first step - making insurance available to all children — was enacted, but the group went on hiatus to await federal health care reform.

"If the mandate is overturned, we would meet with groups right away and the administration to establish the parameters for the exchange," Vitale said in an interview Monday.

He acknowledged that without a mandate, "it will undermine the exchanges in some way. The low-risk individuals will not likely sign up."

He said he would explore legislation to address those concerns.

Meanwhile, insurers continue to meet to prepare for new systems that will allow the uninsured to purchase discounted policies, said Wardell Sanders, president of the New Jersey Health Plans.

"From the planning perspective, it's been full steam ahead to prepare and implement the next step," Sanders said. "We're going to have to work with the exchange and the state so that if and when the state passes the law establishing the exchanges, we're not starting from scratch."

Staff Writer Barbara Williams contributed to this article.

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