The Health Insurance Assessment Will Make Coverage More Affordable and Accessible

Testimony by NJPP Senior Policy Analyst Brittany Holom-Trundy in support of the Health Insurance Assessment (HIA).

Published on Jul 27, 2020 in Health, Tax and Budget

The following testimony, on A4389, was delivered to the Assembly Appropriations Committee on July 27, 2020.

Good morning Chairman Burzichelli and members of the Appropriations Committee. Thank you for this opportunity to provide my testimony on the Health Insurance Assessment. My name is Dr. Brittany Holom, and I am a senior policy analyst at New Jersey Policy Perspective (NJPP). NJPP is a non-partisan, non-profit research institution that focuses on policies that can improve the lives of low- and middle-income people, strengthen our state’s economy, and enhance the quality of life in New Jersey.

New Jersey stands at a critical juncture for our health care system. The full impact of the COVID-19 pandemic is still to be seen, but we know one thing for sure: the virus has taken a historic toll on the families, economy, and future of New Jersey. The measures needed to protect our residents and contain the virus’ outbreak have resulted not only in lost income, but also a lack of insurance coverage, rising distrust in and fear of the health care system, and uncertainty about a vast array of activities for the foreseeable future. This is a moment when New Jerseyans need to see that their leaders are not just reacting to the crisis in the short term, but are committed to protecting them in the long term.

In order to maintain the state’s vital services and build a system better able to handle these crises going forward, we need to be creative. The proposed Health Insurance Assessment (HIA) provides a golden opportunity to do just that. With the federal government giving up this source of income, New Jersey has the chance to absorb those funds without having to introduce changes to current fees.

This is why NJPP strongly supports the proposed legislation to collect an assessment on certain health insurance providers and direct those resources toward making health coverage more affordable and accessible. We understand the need for revenue to not only support current programs, but also to support new initiatives to ensure that New Jersey’s health care landscape is more equitable.

The legislation’s dedication of funds to health care gives New Jersey long-term resources to keep health care affordable. Estimates of a state HIA’s revenue come in just above $300 million. This revenue can be put toward initiatives that provide subsidies to our low- and moderately-paid working families, create more affordable coverage opportunities for our most vulnerable populations, support the reinsurance program, help small businesses with the costs of care, and much more. This is more than a simple cut of costs — this is an investment in a sustainable and affordable health care system for New Jersey’s residents for the future.

This is New Jersey’s moment to make that investment. The federal fee expires after December 31st of this year. This means that, by establishing a state fee now, we are maintaining a system that already exists and are not introducing a new fee for health insurance providers. Only by establishing the fee this year do we have the opportunity to capture this revenue without seeing an increase in rates from the previous year.

Some groups may argue that this would raise rates. This is simply not true. New Jersey would be replacing an existing fee — not introducing a new one — and, because that money is being invested back in the health care system, the state would be committing to sustainable decreases in rates. Further, by supporting increases in enrollment and improving the health insurance risk pool, the state would be directly aiding in cost decreases for New Jersey residents. In other words, this is not a one-and-done situation; rates would not just decrease for one year before increasing again. Instead, measures would support lower rates in the long term.

Again, the opportunity to establish this source of revenue and commit funds to affordability is only available this year. If we let this fee expire without replacing it, the actions needed to build this revenue in later years will face significant obstacles, and residents will be faced with greater instability in their health insurance options. Leaders need to show that they are willing to invest in their residents’ future, because if the COVID-19 pandemic has not been a strong enough lesson on the necessity for that investment, then it is clear that nothing ever will be.

Thank you for your time.

Like this publication?

Please consider supporting NJPP.

Your support powers the research, communications, and partnership building necessary to make policy work for people, so every New Jerseyan can achieve their goal for a healthy and vibrant life.