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You see them every day. They are your waitress at the diner, the clerk who bags your groceries, the salesperson at the clothing store, the gas jockey who fills your tank, and the aide who tends to your child at the day care center. They look and sound like everyone else but they suffer a special burden that they are often too embarrassed to talk about: they have no health insurance.
Contrary to common perceptions and political sloganeering, most people who lack health insurance are hardworking adults. In New Jersey, nearly 700,000 working adults have no insurance. Many of these workers could gain coverage through a provision in the Affordable Care Act (ACA) that allows states to expand Medicaid to cover adults with incomes up to 138 percent of the poverty line ($15,414 for an individual and $26,344 for a family of three) starting in 2014. The U.S. Supreme Court, in its decision upholding the ACA, gave each state the option of expanding Medicaid coverage or not.
The New Jersey workers who would benefit from the expansion work in a range of industries, from restaurants and retail to construction and education. Expanding Medicaid would not only benefit these workers, it would provide an economic boost to some of the largest industries in New Jersey by creating a healthier and more competitive workforce. In fact, not expanding Medicaid would put the state at a distinct disadvantage since many businesses would be more likely to locate in other states that provide health coverage for their employees though the Medicaid expansion.
The major increase in federal Medicaid funds that the state would receive to pay for the expansion would stimulate New Jersey’s economy in other ways as well. For the first three years the federal government would pay 100 percent of all expenditures generated by the expanded coverage, which would gradually be reduced permanently to a still-generous ninety percent by 2020 (the current federal matching rate is 50 percent). The small state match would be more than offset by savings in other state-funded programs such as charity care to hospitals and health coverage for parents.
It is estimated that New Jersey would receive about $10.7 billion in federal Medicaid funds in the first five years. That means many more jobs for New Jerseyans, particularly in the health care industry, which would be welcome news in a state with the fourth highest unemployment rate in the nation.
Unfortunately, it remains uncertain if New Jersey will opt for the Medicaid expansion. If Gov. Christie rejects this opportunity, New Jersey will forgo a significant opportunity to increase the health and economic security of hundreds of thousands of low-income workers in New Jersey and will lose billions of dollars in federal aid that will go to other states.
The best estimate is that up to 176,970 New Jersey workers who lack insurance could gain coverage under the Medicaid expansion. That’s one quarter of New Jersey’s uninsured adult working population. They would be eligible because their incomes fall below 138 percent of the poverty line, the new income eligibility requirements under the expansion.
These uninsured workers are employed in 71 percent of all Census-defined job categories (190 out of 268) in New Jersey. Among them are more than 26,000 restaurant workers, more than 20,000 construction workers and nearly 9,000 landscapers. Some of these categories include undocumented immigrants who are not eligible for the Medicaid expansion, but will continue to be eligible for medical assistance at community health centers.
Below are the 20 occupations with the most uninsured workers who meet the income criteria for the Medicaid expansion.
The lack of health insurance across industries demonstrates the enormous depth and scope of the problem among New Jersey’s lowest-income working families and the continued decline in employer-based health insurance. In many of these large industries – which are central to New Jersey’s economy – more than half of the workers are uninsured, as the table below shows.
An expanded Medicaid would improve the health of New Jersey’s low-income workers. People with Medicaid have much better access to health care than the uninsured. They’re much more likely to have seen a doctor in the last six months and not use hospital emergency rooms for routine care. A recent study found that when states have expanded Medicaid, mortality rates have fallen.
Medicaid beneficiaries also have financial security when a catastrophic illness hits. Medicaid patients are 40 percent less likely to have to borrow money or leave other bills unpaid in order to cover medical expenses, compared to those without insurance.
For low-income people, Medicaid can be better than private insurance, because it limits out-of-pocket costs like co-pays and deductibles that can make having private insurance such a financial strain.
There are several reasons for New Jersey’s high rate of uninsurance among working adults. The main reason is that New Jersey’s employers are dropping health coverage for workers at a higher rate than the national average, mostly due to the high cost of insurance. The percent of New Jersey residents with employer-based insurance dropped from 76.9 percent in 2001 to 65.1 percent in 2011, a decrease of 11.8 percentage points compared to a decline of 10 percentage points nationally.
Not surprisingly, many of the occupations with workers who would become eligible for Medicaid under the expansion tend to be low paying and lack benefits like health coverage. Many of these industries also rely on part-time workers. Many uninsured New Jerseyans with very low incomes work either part-time year-round or full-time but only for part of the year.
In addition to the significant drop in job-based insurance, the state made it harder for parents to qualify for NJ FamilyCare, by reducing in 2010 income eligibility for parents from 200 to 133 percent of the poverty level (from $46,100 to $30,657 annually for a family of four). It also eliminated coverage for legal immigrant parents who had been in the country for less than five years. Thus, while children in many working families that do not have employer-based health care can get covered under Medicaid, their parents can’t.
Many working adults without children have no viable insurance options. They don’t get insurance through their jobs and can’t afford a plan on the private market. They may end up choosing between unaffordable premiums and other basic needs, like food and utilities. For most uninsured working adults, this is a Hobson’s choice.
The governor has yet to opt for the expansion even though it would clearly benefit New Jerseyans from both a health and economic perspective. A non-binding resolution recommending that the state expand Medicaid under the ACA is making its way through the Legislature, but the decision is solely the governor’s to make. Nor is there any federal deadline for making a decision, which only adds to the discomfort of the uninsured desperate for health care.
This report clearly shows that failing to expand Medicaid will be felt statewide by working New Jerseyans of all stripes, who are often our friends, relatives, co-workers and people we come in contact with everyday. Without the expansion, the poorest New Jerseyans would not be eligible for any assistance and the state would lose about $2 billion annually in federal aid that would boost New Jersey’s economy and create jobs.
New Jersey should opt for the expansion sooner rather than later so the state can develop an effective outreach and public information campaign and workers can receive the health coverage they need as soon as possible.
Most New Jersey workers eligible for the expansion have never been on Medicaid and are not familiar with how the program works or how to apply for it. Federal Medicaid administrative funds are available for this outreach – New Jersey should use them.
The state should already have an outreach plan that can be shared with stakeholders and the general public for input. Time is of the essence since the state can start accepting applications on October 1, 2013 for coverage starting January 2014. If the state does not have an outreach campaign up and running well before the October 1 date, fewer uninsured workers will obtain Medicaid, which would lessen and delay the benefits of health care reform.
It is also very important that Medicaid be integrated with the health insurance exchange that will also become operational January 1, 2014. The state’s Division of Medical Assistance and Health Services will continue to determine eligibility for Medicaid, but so will the exchange. The exchange will also determine if a person is eligible for subsidies for buying health insurance if they are not eligible for Medicaid. Common sense dictates that there be a single stop for New Jerseyans exploring their options under the ACA, since many people will not know if they are eligible for the subsidies or Medicaid. The exchange will conduct outreach and consumer assistance, which will also include Medicaid, so coordination in these efforts is essential.
The governor has decided against a state-run exchange, leaving two options: a state/federal partnership that he must apply for by February 15 or an exchange run entirely by the federal government. The chances of a smooth connection between the exchange and Medicaid would appear better with a partnership, since the state remains responsible for Medicaid. The federal exchange increases the risk of delays and poor coordination, since the federal government may be responsible for operating as many as 35 exchanges ¬– each of which must be tailored to a different individual state.
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