In the wake of the Supreme Court’s decision upholding most of the Affordable Care Act (ACA), Gov. Christie has been discussing the ruling in various news outlets and hinting at his plans for how New Jersey will respond. Unfortunately, many of the governor’s statements have been based on inaccurate information.
Given that the views of the governor are so critical in setting policy and implementation of health care reform at the state and even national level, it is important to set the record straight.
Gov. Christie: “I doubt that we could expand Medicaid in New Jersey a whole lot more than we’ve [already] expanded it.” – Speaking on Fox Business Network’s “Varney & Co.,” July 3
FACT: There is a need in New Jersey for the Medicaid expansion. About a half million people living at or near the federal poverty line are not currently eligible for Medicaid because of a major eligibility gap in New Jersey and cuts made earlier in the Christie administration.
First, unlike in some states, adults without children cannot enroll in Medicaid in New Jersey. They represent the largest category (62 percent) of New Jerseyans who lack health insurance. Second, the governor terminated health coverage for 10,000 legal immigrant parents who had been in this country for less than five years. He also denied 70,000 low-income parents health coverage by permanently reducing the eligibility level in NJ FamilyCare, which, like Medicaid, provides health coverage to the uninsured, to 133 percent of the federal poverty level. These are key reasons why New Jersey ranks tenth-highest in the nation in the number of people without insurance (1.3 million), and why 90 percent of all of people without insurance in New Jersey are adults.
The ACA makes Medicaid available to adults living up to 138 percent of the federal poverty level – about $15,000 – which means about 44 percent of all of the uninsured in New Jersey will be eligible. The expansion will likely insure about 400,000 New Jerseyans.
Gov. Christie: “Medicaid is pretty well expanded in our state already because of the legacy of previous Democratic governors.” – Speaking on Fox News Channel’s “Fox and Friends,” July 3
FACT: Expanding health coverage has been strongly supported by both Republican and Democratic governors in New Jersey. The greatest recent expansion in health coverage was under Gov. Christine Whitman, a Republican.
Expanding health coverage for children was one of Gov. Whitman’s major campaign promises when she ran for governor in 1993; she accomplished that and much more.
• Gov. Whitman strongly supported and signed NJ FamilyCare into law, which expanded eligibility for children up to 350 percent of the poverty level (roughly $67,000 for a family of three), then the highest level in the nation, and made the parents eligible up to 200 percent of the poverty level (roughly $38,000 for a family of three).
• For the first time in New Jersey history, under Gov. Whitman, childless adults were also made eligible for health coverage up to the federal poverty level. This was later reversed due to high demand and a budget shortfall.
• No governor since – Democrat or Republican – has reinstated the eligibility level for childless adults or exceeded Whitman’s eligibility level for children or parents.
Gov. Christie: The Supreme Court’s ruling that states could opt not to expand Medicaid is “a ray of sunshine on an otherwise cloudy day.” – Speaking on NJ 101.5 FM, June 28
FACT: The Medicaid expansion is a great deal for New Jersey. The federal government will cover the vast majority of its costs.
New Jersey normally gets half of the funds needed to pay for Medicaid from the federal government and pays the other half with state money. This is the lowest level of federal funding possible, because the funding formula takes into account the overall wealth of a state and New Jersey is relatively wealthy. But the federal government is covering the entire cost of expanding Medicaid for the first three years. After that, the feds will pay the lion’s share (90 percent) on a permanent basis. This means New Jersey will receive an estimated $22 billion in federal Medicaid funds over eight years.
FACT: Expanding Medicaid will save New Jersey money.
Major state savings from the expansion could exceed New Jersey’s modest share of the costs of the Medicaid expansion. In fact, taxpayers are already benefiting from it.
New Jersey has already claimed about $75 million in federal funds each year to help pay for medical assistance for very poor people on welfare – for over a half-century, that cost was covered only by New Jersey.
In the future, the state will also save money in other areas, like charity care, which defrays the cost to hospitals for providing free emergency medical care to anyone with an income below 200 percent of the federal poverty level. New Jersey currently pays hospitals about a billion dollars a year to cover care for people without insurance and other costs, one of the highest levels of support in the nation. When more residents have health insurance, this cost will fall dramatically.
In addition, costs will be contained through the development of innovative projects like Accountable Care Organizations and prevention programs that are expected to not only improve care, but also hold down Medicaid costs.
FACT: States that choose not to expand Medicaid will further exacerbate health care disparities.
Opting out of the Medicaid expansion would deprive the neediest New Jerseyans of health insurance. While residents earning more than the poverty level could obtain subsidies to purchase affordable insurance through the exchange, residents below that level would not be eligible for any assistance to obtain coverage. In New Jersey, 82 percent of people eligible under the Medicaid expansion would not be eligible for exchange subsidies and would be left without insurance if the state opts out.
FACT: New Jersey is one of the best examples for why minimum federal requirements are needed to protect vulnerable people.
In May 2011, the state proposed cutting an additional 23,000 poor working parents from NJ FamilyCare eligibility, on top of the 70,000 already denied coverage in an earlier Christie administration cut. Only an ACA provision that requires states to maintain higher eligibility levels prevented this devastating blow to families who already struggle to support their families on about $500 a month (the cut would have made Medicaid unavailable to New Jerseyans making over 28 percent of the federal poverty level – $439 a month for a family of three).
Gov. Christie: “The President should block grant this Medicaid money to each state; let each state make its own judgment.” – Speaking on CNBC’s “Squawk Box,” July 3
FACT: Medicaid block grants would result in a devastating loss of federal funds to the state and shift costs to New Jersey taxpayers.
Currently, when there is a greater need for health coverage in the state, the federal government automatically increases Medicaid dollars for New Jersey. For example, the state receives more funding when the economy slows down, as it has done for the last four years, as people lose their jobs and the insurance that often comes with those jobs.
But under a block grant, there is a ceiling on federal funds each year; if the need for medical assistance increases, the state is on the hook for most additional costs. The Center for Budget and Policy Priorities estimates that New Jersey would have lost $9.4 billion from 2001 – 2010 if Congressman Paul Ryan’s budget proposal to block grant Medicaid had taken effect in 2001 – a 22 percent loss in total federal funds. Medicaid block grants would result in either a major hit for New Jersey taxpayers or draconian cutbacks in health care – or both.
Gov. Christie on health exchange options: “If it’s more cost-effective to let the federal government set this up, we may consider going that route. I don’t want to spend any money that I don’t have to spend from state taxpayer dollars.” – Speaking on Fox News Channel’s “Fox and Friends,” July 3
FACT: While New Jerseyans would have access to subsidies to buy health insurance in either a federal or state exchange, a federal exchange is less likely to meet the unique needs of New Jersey. And cost is not an issue, as no state funds are needed to operate New Jersey’s exchange.
The governor’s consideration of a federal exchange is surprising given his criticism of what he calls the president’s “one-size-fits-all” approach to health reform. Regardless, cost is not an issue, as the federal government covers all costs in the first year, and fees on insurers cover all the costs in subsequent years.
A federal exchange would not benefit New Jersey nearly as much as a state exchange:
• The state exchange proposed in legislation vetoed this May by the governor creates an oversight board that prohibits conflicts of interest; a federal exchange may not have as strong a protection against decisions that favor private over public interests.
• The proposed state exchange actively negotiates on behalf of consumers to get the lowest insurance rates; a federal exchange will not do this for at least the first few years.
• The proposed state exchange allows for a seamless consumer enrollment experience by creating a “one-stop-shop” for insurance, whether the resident is seeking Medicaid, private-market insurance, or any other type of coverage. A federal exchange will make it more difficult to create an easy-to-use interface for New Jerseyans.
• New Jersey already has some of the highest standards for health insurance in the nation; these standards should be considered when creating an exchange – a more likely scenario if the state sets it up than if the federal government does.
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