New Jersey Will Switch To State-Based Health-Care Exchange

Governing (by Tribune News Service) — March 25, 2019

By David Levinsky

New Jersey's government will move to create its own state-based health care exchange before next fall's enrollment period rather than continuing to rely on the federal government and its online marketplace,

Gov. Phil Murphy announced his administration's plans Friday morning, saying he has already sent a notice of intent letter to the federal government and the Department of Banking and Insurance about the state's plans to have its own exchange up and running by the fall 2020 enrollment period.

The Democratic governor said the move to a state exchange would make health care in the state more "accessible, accountable and more responsive to consumers." He also said the switch would help protect state residents from efforts by the Trump administration to undermine the Obama-era Affordable Care Act.

"A New Jersey exchange will be a strong measure of independence at a time when the federal administration continues to undermine and weaken the federal marketplace," Murphy said during a news conference at St. Barnabas Medical Center in Livingston.

"The right of every New Jerseyan to a health care policy worth more than just the paper it's printed on requires us to take these steps, and as we take each step, we'll prove the Affordable Care Act works," the governor added.

Both the federal exchange and state-based exchanges are key components of the Affordable Care Act and its goal of expanding access to coverage. The online sites function as a one-stop location where consumers who don't receive health care from their workplace or federal programs like Medicare and Medicaid can shop for coverage, often with federal assistance to try to keep premiums affordable.

Under the 2010 law, states had the option of creating their own exchanges or using the federal government's. New Jersey was among 39 states that opted for the latter. At the time, Republican Chris Christie was governor and he vetoed legislation approved by the Democratic-controlled state Legislature to create a state exchange, citing both his objections to the ACA and litigation challenging the law's constitutionality.

Murphy took office last year and has aggressively tried to protect the Affordable Care Act by requiring the state to encourage and assist residents in enrolling in health care and by signing into law legislation to create New Jersey's own insurance mandate and reinsurance program. The mandate requires most residents to get health insurance or face a fine and the reinsurance program helps cover high-risk residents and their costliest claims.

Both moves are credited with a 9 percent drop in the average price for health care plans sold on the state's individual market this year.

Murphy believes creating a state-based exchange would allow the state to take additional steps to reduce consumer costs and combat Trump sabotage of the Obama law and its protections. States that run their own exchanges have more control over health plans and are able to offer a longer enrollment period and more assistance.

During Trump's tenure, the enrollment period on the federal exchange has shrunk from three months to six weeks. The reduced window has coincided with reduced enrollment, but states with their own exchanges have fared better, officials said.

States with their own exchanges also on average have less expensive premiums, according to the Commonwealth Fund, a think tank and foundation dedicated to health care policy.

State-based marketplaces are able to charge slightly lower user fees to insurers that sell plans on their exchanges compared with the federal government, and those states also have the flexibility to offer more tailored plans.

Massachusetts, which operates its own exchange, offers its own subsidized basic plan to low-income consumers that has no premiums, and New York allows year-round enrollment.

Marlene Carride, New Jersey's Commissioner of the Department of Banking and Insurance, said the state plans to charge the same 3.5 percent insurer user fee imposed by the federal government in order to fund the creation of the state exchange. The fee is expected to generate about $50 million.

Last month, Congressman Andy Kim, D-3rd of Bordentown Township, introduced federal legislation to provide additional financial help to states that choose to create their own exchanges. The bill, known as the SAVE Act, would authorize $200 million in funding for that purpose.

Kim was not at the news conference, but he released a statement applauding Murphy's action.

"New Jersey families need immediate relief from the rising costs of health care. Establishing a state-based exchange is an important step in that direction," Kim said. "The first bill I introduced would provide our state with much-needed resources to help establish this exchange. Congress should take up this bipartisan effort immediately and provide the help New Jersey families need."

In addition to keeping user-fees in New Jersey, Carride echoed Murphy's sentiment that leaving the federal exchange would provide a degree of protection for state residents who rely on the ACA for coverage.

"Because we operate on the federal exchange, we're subject to the whims of the Trump administration and are directly impacted by efforts to damage and destabilize the market," she said at Murphy's news conference. "We as a state should have the opportunity to respond to the needs of our residents, and in 2021 we will."

In addition to the administrative actions, the governor also said he would call on the state Legislature to approve bills codifying many of the Affordable Care Act's most important components and protections, including its prohibition on insurers denying coverage for pre-existing conditions and its requirement that insurers allow parents to keep their children on their plans until they turn 26.

Joining Murphy and Carride at St. Barnabas were several state lawmakers, including state Assemblyman Herb Conaway, D-7th of Delran.

Conaway, who is chair of the Assembly Health Committee and the Legislature's only licensed physician, said ensuring access to health care was too important for the state to defer to the federal government.

"When policy in Washington can flip on a turn of a tweet, we understand how important it is in our state to protect what's vital: access to health care," said Conaway, who is also Burlington County's new director of public health. "We're going to protect it in the state of New Jersey and we're going to do it by sending less money to Washington."

Health care advocates also cheered the proposed move to a state-based online marketplace, saying it would create opportunities for the state to implement "more innovative, affordable health care coverage options" and represents a step toward the goal of universal coverage for all New Jersey residents.

"Once again New Jersey has taken the lead in protecting its residents and responding to the disruptive policies coming out of Washington," said Maura Collinsgru, health care program director with the group, New Jersey Citizen Action. "We applaud Governor Murphy for championing these initiatives on the day before the ACA's 9th anniversary."

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