STATEMENT BY RAYMOND CASTRO, SENIOR POLICY ANALYST, NEW JERSEY POLICY PERSPECTIVE, ON A2171 (THE NEW JERSEY HEALTH BENEFIT EXCHANGE ACT), BEFORE THE ASSEMBLY HEALTH AND SENIOR SERVICES COMMITTEE, FEBRUARY 6, 2012
New Jersey Policy Perspective strongly supports A2171, which establishes a consumer-friendly health insurance exchange in New Jersey. 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 underinsured is only getting worse.
The number of uninsured in New Jersey has been increasing almost every year since 2000 and in 2010 was about 50% higher than it was then. This rate is even higher than the national average, which increased by about a third. There are about 1.3 million uninsured people in New Jersey.
We have made major progress in insuring children because of NJ FamilyCare, but the problem for adults has gotten much worse. Eighty-eight percent of all the uninsured in New Jersey are non-elderly adults, of whom 60 percent are employed, mostly in full time jobs.
The recession has also shown that all of us are only one paycheck away from losing our insurance. One in five adults in NJ are uninsured regardless of income. However the problem for low-income adults is even worse, a staggering 43% are uninsured.
All races and ethnic groups have unacceptable high uninsurance rates, but African-Americans and Hispanics are particularly hard hit. Their rates are three times the rate for whites. About one in four (26%) non-elderly African Americans are uninsured and one in three (33%) Hispanics are uninsured compared to one in ten (9%) for whites.
In fact, racial disparity in health insurance in New Jersey is by far the highest in the nation (with a 16% difference between African Americans and whites).
Insurance costs are also out of control. Even during the recession we saw double digit increases in health insurance in the individual and small group markets. New Jersey has the unenviable distinction of having the highest premiums in the individual market among all the states.
High insurance costs are also resulting in more cost sharing and less coverage even for families with employer-based insurance. About a quarter of individuals with insurance are underinsured.
All of these problems not only threaten the state’s health, but its economy as well.
A2171 address many of these problems by creating a consumer-friendly health insurance exchange that:
• Will make health subsidies and Medicaid available to the uninsured, which will result in about 800,000 individuals obtaining affordable, quality, insurance by 2019.
• Provides flexible outreach that will enable the exchange to effectively reach people of color and working families in underserviced areas of the state.
• Reduces insurance costs by creating more competition among insurers, and a larger insurance pool for individual and small businesses.
• Requires that only quality, comprehensive insurance plans can be offered in the exchange.
• Establishes an independent governing board that excludes member who may have a conflict of interest. Given that that the board will control the distribution of about $22 billion in federal health subsidies and new Medicaid funding over ten years, this conflict of interest prohibition is absolutely critical.
• Enables New Jersey to start obtaining federal planning funds immediately to establish the exchange to ensure that affordable health coverage can become available starting in January 2014.
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