Maximizing Affordable Care Act Enrollment is a Must for New Jersey
Full Enrollment Would Bring Billions of Dollars to the State While Securing Health Coverage for a Million Residents
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Maximizing the number of New Jersey residents who have health insurance under the Affordable Care Act (ACA) would improve the health of over a million New Jerseyans. It would also bring an additional $2.3 billion in federal funds to the Garden State each year, creating an estimated 26,000 jobs. This is more than the economic equivalent of building a MetLife Stadium every year, and is on top of the $2.9 billion in annual federal funds already flowing to New Jersey, which will create an estimated 32,000 jobs. Given the state’s struggling economy, maximizing federal funds by increasing ACA enrollment is a necessity.
Higher enrollment brings billions in federal funds to New Jersey mainly because the federal government pays for the entire cost of those eligible for the Medicaid expansion under the ACA and for the tax credits awarded to New Jerseyans who purchase insurance plans in the marketplace. In addition, New Jersey receives more federal funds than most states because it has higher insurance costs and the tenth highest number of uninsured residents in the nation.
Securing full federal funding via higher enrollments is an ambitious but achievable goal. In fact, New Jersey is more than halfway there. In the ACA’s first year, over 600,000 residents enrolled in marketplace plans and NJ FamilyCare. These enrollments have brought in about $239 million in federal funds each month, or $2.9 billion a year. This, in turn, will stimulate an estimated $4 billion in annual economic activity and create about 32,000 jobs – primarily in health care and related fields – by 2016. With full enrollment, the economic benefit would almost double, with approximately $7.2 billion in new annual economic activity and an estimated 58,000 jobs. (For the full methodology behind these estimates, see Appendix B.)
These estimates are conservative, because they do not take into account the added economic benefits of a healthier, more productive workforce; reduced charity care costs for hospitals that will no longer have to treat so many uninsured patients; and the $400 million in annual federal funding for newly-enrolled adults who were eligible for NJ FamilyCare prior to the ACA.
Major Boon for Counties and Cities
The economic benefit from full enrollment would be felt all over New Jersey, with millions in federal funds coming to every county and to many of the state’s cities. (For a full breakdown of impact by county and 20 largest cities, see Appendix A.)
The impact would be greatest in areas where unemployment is highest – exactly where an economic boost is most needed. Given that so many local governments are grappling with a soft economy, budget shortfalls and job losses, this opportunity could not come at a better time.
Of course, many of these new jobs would be created in the health care industry, particularly in outpatient care, which has a proven track record in generating jobs in New Jersey. Since 1990, 186,000 new jobs have been created in health care – more than twice the number created by the rest of the private sector. In fact, the health care industry kept New Jersey’s economy afloat during the recession and the painfully slow recovery. Another benefit of this industry is that it includes a range of highly paid high-skill jobs along with positions that require fewer skills and less education.
A growing health care industry creates many jobs in other fields as new health care workers spend their incomes on everything from meals out to cars and homes. This is what economists call a “multiplier effect.” Every additional dollar invested in health care in New Jersey will stimulate an estimated $1.38 in increased economic activity, according to one analysis.
It will, of course, take some time to generate these jobs. Health coverage enrollment under the ACA started just a year ago. It takes time not only to ramp up enrollment, but for those newly covered to seek the medical care that will generate the spending needed to create more jobs. This analysis uses estimates for 2016 because the Congressional Budget Office anticipates that most of the people who are eligible for marketplace plans and Medicaid expansion will have enrolled by then.
Local Leadership is Key
The full economic impact, of course, requires full enrollment. And achieving this requires more resources for outreach to those without insurance and public education. Unfortunately, state funding for outreach is zero and federal funding is modest. This means that optimizing enrollments will require the leadership of public officials, civic groups and nonprofit organizations if New Jersey is not to leave literally billions of dollars on the table.
Because New Jersey did not opt for a state-run exchange, it received far less federal money for outreach than the 14 states that chose to run their own exchanges. In fact, New Jersey received less federal funding per person for outreach than any state last year, and that meager funding was cut by 15 percent, to $1.7 million, this year. All federal funding goes to employ navigators, who reach out and help the uninsured get insurance in the marketplace. Currently there are about 19,000 uninsured New Jerseyans for every navigator (there are only about 40 navigators in New Jersey). Since helping an individual enroll takes between one and two hours, and the open enrollment period for the marketplace is only three months, navigators can only reach a small proportion of the uninsured.
Those who remain uninsured more than a year after the launch of the ACA are much more likely to need personal assistance to obtain insurance in the marketplace; simply letting them know about the federal enrollment website, healthcare.gov, will not be sufficient. Even during the last open enrollment period, when those seeking insurance were typically more motivated consumers, people who had personal assistance were twice as likely to get insurance as those who tried to apply online themselves. Local leaders will need to develop strategies to meet the distinctive needs of immigrants, people with disabilities and working families as part of a comprehensive plan to reach the uninsured.
To achieve full economic benefits, it is critical that local leaders ensure that enough health care services are available to meet the increased needs of the newly insured. The expected economic activity from full enrollment will occur where residents go to get their health care, not necessarily where they live.
It’s essential, then, that local leaders not view health care narrowly as the responsibility of only a health department. Full enrollment is an enormous opportunity for local economic development offices, chambers of commerce and business leaders to work together to entice new health care providers to open in areas where the need is greatest.
Mayors in Newark and Jersey City, for example, are already mobilizing and coordinating local resources to increase health coverage enrollments. Cities and counties that demonstrate real leadership and invest in their residents will reap the biggest economic rewards and create more jobs. This should be a no-brainer for any area that has a large number of uninsured residents.
Major Progress So Far
The Decision to Expand Medicaid is Paying Off
Most of the health-care related economic benefits seen in 2014 came from the highly successful expansion of Medicaid in New Jersey. NJ FamilyCare saw a 31 percent increase in enrollment in 2014, with nearly 400,000 previously uninsured residents obtaining coverage. In all, nearly 80 percent of the federal ACA money that came to New Jersey in 2014 was a result of NJ FamilyCare. New Jersey’s decision to expand Medicaid has clearly paid off for the state.
This success was mostly driven by the fact that many more New Jerseyans needed and applied for Medicaid than anyone expected. This despite the fact that the annual eligibility level for the Medicaid expansion for new adults is relatively low, at 138 percent of the federal poverty level ($16,224 for one adult). For example, the Rutgers Center for State Health Policy initially estimated that NJ FamilyCare enrollment would reach only 234,000. Also, unlike marketplace plans, people could apply for NJ FamilyCare anytime – and they did, with enrollments climbing steadily throughout the year.
What’s more, many parents and children who were already eligible for NJ FamilyCare applied for assistance. These uninsured New Jerseyans, driven in part by the publicity surrounding the ACA’s rollout, made up over a third (39 percent) of new Medicaid enrollees in 2014.
Although New Jersey did not spend any state dollars on outreach, it took other steps to help reach the uninsured. The Division of Medical Assistance and Health Services applied for, and received, federal funds to train nonprofit community partners to help individuals apply for NJ FamilyCare. It also identified households that were likely eligible for Medicaid by using databases to determine whether those receiving nutrition assistance and other supports also qualified for Medicaid.
It appears that most – though certainly not all – New Jerseyans who were eligible for the Medicaid expansion have now enrolled. Nevertheless, we estimate that an additional 122,000 individuals will need to be enrolled by 2016 to achieve full enrollment.
Marketplace Enrollment Has the Greatest Economic Potential
With fewer potential Medicaid enrollees to reach, the marketplace has the most potential to reduce the number of uninsured New Jerseyans and boost the economy. As of January 16, about 210,000 New Jerseyans had selected a marketplace plan. That means there are still about a half million uninsured New Jerseyans who could enroll in the marketplace by the end of 2016.
Individuals must have a household income that is less than four times the federal poverty level (for instance, $97,000 for a family of four) to receive a subsidy. So far, 84 percent of everyone who has selected a plan in the marketplace qualified for a subsidy. The average annual subsidy for an individual purchasing a subsidized marketplace plan in the last open enrollment period was $3,804, which was the sixth highest amount in the nation.
This progress was possible despite the federal government’s modest $2 million allocation for navigators in New Jersey last year. Other resources became available, with the federal government kicking in about $5 million to New Jersey community health centers and smaller grants to other nonprofits, and private foundations providing over $1 million. In addition, many residents volunteered to help others enroll in the marketplace, and the federal government and nonprofit organizations were unusually effective in coordinating outreach activities.
Nonetheless, in the open enrollment period that ended in March 2014, just 25.7 percent of New Jerseyans eligible for a plan in the marketplace selected one; nationally that figure was 28 percent.
To reach everyone who is uninsured or underinsured by 2016, an estimated 500,000 additional New Jerseyans will need to be enrolled in marketplace plans. If all these folks were to enroll, it would bring about $1.6 billion in federal funds to New Jersey each year – over two-thirds (70 percent) of the additional economic activity that can be generated in the state.
To achieve that goal, special efforts will have to be made to reach certain groups of uninsured New Jerseyans who face unique barriers to enrolling. The largest group without health insurance in New Jersey is Hispanics. They represent about a third of the state’s uninsured, with about one in five lacking coverage. While many New Jersey marketplace enrollees chose not to identify their race or ethnicity on their application, of those who did, only 6.7 percent identified as Hispanic, which was even lower than the national average (10.7 percent) for states with a federal marketplace. New Jersey could also do a much better job reaching young adults (ages 18-34) who often believe they are healthy and don’t need insurance – these folks make up 38 percent of the state’s uninsured but only 25 percent of those who have enrolled.
The good news is that most of the reasons given by the uninsured for not obtaining health coverage can be addressed with better education and outreach. For example, while the overwhelming reason cited is affordability, polls show that about half (53 percent) aren’t even aware of marketplace’s subsidies.
It’s Not Too Late for New Jersey to Lend a Hand
Since the ACA presents an unusual, low-cost opportunity to increase economic activity and produce badly-needed jobs, the governor and legislature should seize the chance to not only provide health insurance coverage to hundreds of thousands New Jerseyans but put the state on the pathway to economic recovery. In a $34 billion budget, surely New Jersey could afford to launch a more visible, state-led campaign to increase outreach to the uninsured.
In the upcoming budget, an appropriation of $25 million would bring New Jersey up to a level seen in states that chose a state marketplace, which would help cities and counties achieve the goal of generating about $2 billion more in federal funds. That is a rate of return the state should not pass up, beyond the obvious health benefits it would create. Moreover, the governor could use the visibility of his office and his unchallenged skills at persuasion to help promote New Jersey’s effort to optimize enrollment in the marketplace. The healthy returns from his decision to expand Medicaid provide ample evidence of the potential for an energized campaign to reach the uninsured.
Appendix A: Economic Impact by County and Major City
Appendix B: Methodology
The methodology for converting federal funds received to economic activity and jobs was based on a report published by Families USA, New Jersey’s Economy Will Benefit from Expanding Medicaid, which contracted with the Regional Economic Model, Inc. (REMI) to estimate the impact of expanding Medicaid in New Jersey. REMI used its 51-Region PI+ Model, which includes 70 industry sectors for the Families USA report. The same ratio of federal funds to economic activity and jobs that was used in the above report was also used in this report. The model reduces the economic activity and jobs by 15 percent to take into account that some of the federal funds will be spent in neighboring states. The full enrollment date of 2016 was selected because the above model is based on that year and that is the year the Congressional Budget Office estimates that most people will be enrolled. However, we recognize that it will take much longer than that to reach full enrollment.
Average per capita federal funding was calculated based on the average premium tax credit that was paid to New Jerseyans who enrolled in a Marketplace plans in the last open enrollment period. Average per capita federal funding for the Medicaid expansion was calculated by the federal match for each category (childless adults in Medicaid expansion, children in Medicaid, children in the State Child Health Insurance Program (SCHIP), parents in Medicaid and parents in the Medicaid expansion), and the average federal spending and average cost for each group was weighted by their enrollment. The federal match for these groups varies from 50 percent for previously eligible adults enrolling after ACA’s launch to 100 percent for newly eligible adults.
The 100 percent federal match for newly eligible adults will be gradually reduced to 90 percent starting after 2016. It was assumed that the 65 percent federal match will be maintained through 2016 for children eligible for the SCHIP from families with incomes up to 350 percent of the federal poverty level, although this formula could be revised in this year’s reauthorization legislation.
Current enrollment in Medicaid was calculated based on the total increase in enrollment since December 2013, the month before the Medicaid expansion began, through December 2014. Current marketplace plan enrollment was as of January 16, 2015 according to a county breakdown of enrollment that was prepared by Enroll America. This enrollment was reduced 16 percent to take into account those individuals who have incomes above four times the poverty level who will not be eligible for premium tax credits.
To project the number of person who will be eligible for Medicaid by 2016, the Urban Institute’s current estimate of 465,000 was used and adjusted to take into account the additional number of employees projected to lose their health insurance by the Congressional Budget Office. That brought the total to 518,500. The same methodology was used for marketplace plans except that the Kaiser Family Foundation estimate of 628,000 was used which increased to 709,000 by 2016 when adjusted. Again, that estimate was reduced by 16 percent to 595,560 to take into account individuals who will not be eligible for subsidies.
To estimate the current county impact, the above per capita expenditures and federal matching rates were multiplied times the county enrollment in Medicaid according to the NJ Division of Medical Assistance and Health Services website for December 2014 minus the enrollment in December 2013. The county enrollment in marketplace plans is from Enroll America data, which was estimated based on federal zip code data. To project the county impact by 2016, each county’s share of all of the eligible uninsured in the state was calculated using 2011 PUMA census data multiplied by the projected total state eligibles of 1.2 million.
The projected impact on each of the state’s largest 20 municipalities was calculated by multiplying the municipality’s share of its county’s uninsured per the 2013 American Community Survey, times the federal funding, economic impact and jobs in that county. We were not able to estimate those data currently because enrollment numbers in Medicaid and the Marketplace are not available by city, so we could only show what the total impact would be in 2016.
 The economic and jobs estimates were adjusted to take into account that about 15 percent of the federal funds that were received in the state were paid to health providers in neighboring states to care for New Jerseyans.
 New Jersey Department of Labor and Workforce Development, New Jersey’s Health Care Cluster: Winter 2014-2015, December 2014.
 Families USA, New Jersey’s Economy Will Benefit from Expanding Medicaid,
February 2013. This report was also used to estimate the number of jobs created.
 According to the Robert Wood Johnson Foundation (http://www.rwjf.org/content/dam/files/rwjf-web-files/Research/2014/Hempstead_Findings%20from%20the%20HRMS.pdf), about 500,000 individuals have been insured due to the ACA and there were about 1.25 million uninsured in the state leaving 750,000 remaining uninsured.
 Enroll America, In-Person Assistance Maximizes Enrollment Success, March 2014.
 Rutgers Center for State Health Policy, Health Insurance Status in New Jersey After Implementation of the Affordable Care Act, August 2011. The estimate is based on full ACA enrollment in 2009.
 New Jersey Department of Human Services, Division of Medical Assistance & Health Services, Informational Update: NJ FamilyCare Expansion Enrollment, October 2014.
 Enroll America, Marketplace Enrollment Estimates by County, January 2015. Some individuals did not pay their premiums but this was not taken into account in the fiscal estimates because we know that enrollment will continue to increase in the open enrollment period.
 U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Premium Affordability, Competition, and Choice in the Health Insurance Marketplace, 2014, June 2014.
 Kaiser Family Foundation, State-by-State Estimates of the Number of People Eligible for Premium Tax Credits under the Affordable Care Act, November 2013.
 See methodology
 Kaiser Family Foundation, Distribution of the Nonelderly Uninsured by Race/Ethnicity for 2013.
 Kaiser Family Foundation, Uninsured Rates for the Nonelderly by Race/Ethnicity.
 U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Health Insurance Marketplace: Summary Enrollment Report For The Initial Annual Open Enrollment Period, For the period: October 1, 2013 – March 31, 2014 (Including Additional Special Enrollment Period Activity Reported through 4-19-14), May 2014.
 U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Addendum To The Health Insurance Marketplace Summary Enrollment Report For The Initial Annual Open Enrollment Period, For the period: October 1, 2013 – March 31, 2014 (Including Additional Special Enrollment Period Activity through 4-19-14), May 2014.
 Kaiser Family Foundation, Kaiser Health Tracking Poll, October 2014.
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