Topic Category: Health

MacArthur & Frelinghuysen Put Politics Over People

Posted on by Raymond Castro

Today Congressmen Frelinghuysen and MacArthur put their political party ahead of the health care of tens of thousands of their own constituents by voting to repeal the Affordable Care Act and replace it with a wholly inadequate substitute that will eviscerate Medicaid, drive up insurance premiums and gut consumer protections for people with pre-existing conditions. Thankfully, they were the lone New Jersey Representatives to do so, with the other 10 members – including fellow Republican Congressmen Lance, LoBiondo and Smith – rightly seeing this legislation for what it is: An attack on the health, well-being and economic security of hundreds of thousands of New Jerseyans.

Despite the doublespeak down in D.C., none of the amendments and last-minute additions – including Rep. MacArthur’s own – made this bill substantively better. And they are all built on a faulty foundation of a proposal that strips health care from 24 million Americans, drives up premiums and shifts costs to the states – all in order to deliver massive tax cuts for the wealthiest families.

What This Means for New Jersey

  1. The Upton Amendment is Not a Solution:

Adding $8 billion over 5 years to help protect Americans with pre-existing conditions comes nowhere close to filling the likely gap created by the MacArthur Amendment.

In fact, it would take up to $790 million each year to assist the New Jerseyans with preexisting conditions who would apply for health coverage (and this is a very conservative estimate). Even if the funds from the Upton amendment are added in, the bill would only allocate about $353 million on average – leaving a $437 million gap in New Jersey, the eleventh highest in the nation.

In total, the nationwide gap is estimated to be $20 billion a year – or $100 billion over the five years that Rep. Upton’s amendment would pledge an additional $8 billion. In other words, the Upton amendment fills just 8 percent of the gap.

Background: https://www.njpp.org/blog/new-jerseyans-with-pre-existing-conditions-remain-at-risk and https://www.americanprogress.org/issues/healthcare/news/2017/05/02/431698/house-health-care-plan-not-enough-keep-high-risk-pools-afloat/ and http://www.cbpp.org/research/health/8-billion-comes-nowhere-close-to-meeting-republican-commitments-to-people-with-pre

  1. The MacArthur Amendment Poses an Even Greater Threat to New Jersey Than Original Repeal Bill:

Rep. MacArthur’s amendment retains all the worst elements of the original plan to repeal, and on top of that eliminates key protections for people with pre-existing health conditions and marks a return to the highly-flawed, discriminatory pre-ACA individual insurance market.

In practice, the amendment means that up to 3.3 million New Jerseyans with preexisting conditions would no longer be guaranteed affordable health coverage if they lose their insurance,  women would likely be charged more than men for insurance, and plans for up to 3.6 million New Jerseyans could once again come with annual and lifetime limits on coverage – violating promises President Trump and many Republican legislators have repeatedly made to maintain these protections.

Background: https://www.njpp.org/healthcare/macarthur-amendment-to-american-health-care-act-would-cause-even-more-harm-to-new-jersey and http://www.cbpp.org/research/health/fact-checking-claims-about-the-macarthur-amendment

  1. The American Health Care Act is a Horrible Deal for New Jersey:

The original proposal to repeal the Affordable Care Act would be extremely harmful to New Jersey.

  • Up to a half million New Jerseyans would lose their health insurance
  • The Medicaid expansion would be phased out, eliminating coverage for 562,000 residents and sharply reduce federal funds for the state’s budget
  • Permanent structural changes to Medicaid would reduce funding to New Jersey by 20 percent, the largest reduction in the nation, putting health care for up to 1.8 million New Jersey seniors, people with disabilities and children at grave risk.
  • Approximately 250,000 New Jerseyans who purchase insurance through the Marketplace would see an average increase in out-of-pocket health are costs of $2,740 a year, making insurance unaffordable for many of them.
  • The state’s alarming gap between the wealthiest and the rest of us would increase, thanks to big tax cuts for the top 5 percent of New Jersey households. The wealthiest 1 percent of households would get an average tax cut of $23,000 a year.
  • The loss of over $30 billion in federal funds over the next decade due to the Medicaid cap alone would lead to the loss of tens of thousands of jobs.

Background: https://www.njpp.org/healthcare/the-american-health-care-act-would-cause-nearly-half-a-million-new-jerseyans-to-lose-health-coverage and http://www.cbpp.org/sites/default/files/atoms/files/4-13-17health-factsheets-nj.pdf

New Jerseyans with Pre-Existing Conditions Remain at Risk

Posted on by Raymond Castro

Today Rep. Fred Upton is reportedly proposing an amendment to Rep. MacArthur’s amendment to the American Health Care Act that would add $8 billion in federal funding, spread over 5 years, to help people with pre-existing medical conditions pay costly premiums in states that waive the current ACA protections for consumers with pre-existing conditions.

While the proposal still prohibits insurers from turning down anyone with a pre-existing condition, the MacArthur amendment gutted that requirement by including waivers that would allow insurers to charge whatever they want based on a person’s health history and to exclude the very benefit a person with pre-existing conditions would need – like high-cost drugs or cancer treatment.

Rep. MacArthur’s main rebuttal has been that insurers wouldn’t charge more for people with pre-existing conditions because high-risk insurance pools would compensate insurers for the higher cost of covering these individuals. Given the failure of high-risk pools in many states – mainly to a lack of sufficient funding – it stands to reason that, without enough money, these pools would once again fail. And sure enough, the MacArthur amendment – even with the Upton amendment – doesn’t include enough money for these pools.

It would take $790 million each year to assist 37,000 New Jerseyans with preexisting conditions who would apply for health coverage, according to a national analysis released earlier this week by the Center for American Progress. However, if even if the funds from the Upton amendment are added in, the bill would only allocate about $353 million on average – leaving a $437 million gap, the eleventh highest in the nation.

In total, the nationwide gap is estimated to be $20 billion a year – or $100 billion over the five years that Rep. Upton’s amendment would pledge an additional $8 billion. In other words, the Upton amendment fills just 8 percent of the gap.

And there are a number of reasons why this gap would likely be even wider. In most estimates there is a margin of error that is often expressed as a range between a lower and upper bound. The Center for American Progress uses the lower bound of 37,000. However, the upper bound estimate could be as high as 256,000.

In addition, the estimate assumes that the Senate would approve these funds when they consider the bill and that each year the funds would not be cut during the budget process, which may not be case at all. And some of the funds allocated in the bill for the pools still require a state match, which New Jersey may not be able to afford given its dire fiscal condition.

MacArthur Amendment to American Health Care Act Would Cause Even More Harm to New Jersey

Posted on by Raymond Castro

To read a PDF version of this report, click here.

Rep. Tom MacArthur of New Jersey’s 3rd Congressional District – the only member of the state’s Congressional delegation who supported the first iteration of the American Health Care Act – has now resurrected the bill with a new amendment that retains all the worst elements of the original plan to repeal and replace the Affordable Care Act and sharply reduces protections for pre-existing conditions and other health benefits.[1]

New Jersey Still Harmed Much More Than Most Other States

Because the MacArthur amendment leaves most of the previous bill intact, in New Jersey the proposal would still cause:

  • About a half million New Jerseyans to lose their health insurance[2]
  • The phase-out of the Medicaid expansion, which would eliminate coverage for 562,000 residents and sharply reduce federal funds for the state’s budget
  • Reduced health care for up to 1.8 million New Jersey seniors, people with disabilities and children due to a permanent cap on federal Medicaid funds that would reduce funding to New Jersey by 20 percent, the largest reduction in the nation
  • An average $2,740 increase in out-of-pocket health care costs for 250,000 residents who have purchased insurance through the Marketplace, which would end coverage for many of them[3]
  • Increased income inequality due to major tax cuts for 164,000 of New Jersey’s highest income households, including millionaire and billionaire residents
  • The loss of tens of thousands of jobs with the loss of over $30 billion in federal funds over ten years
  • A major financial threat to New Jersey’s hospitals

Amendment Also Guts Protections for Pre-Existing Conditions

The MacArthur amendment to the bill poses an even greater threat to New Jersey because it eliminates key protections for people with pre-existing health conditions and marks a return to the highly-flawed, discriminatory pre-ACA individual insurance market.

In practice, the amendment means that millions of people with pre-existing conditions could no longer afford coverage, women would likely be charged more than men for insurance, and plans could once again come with annual and lifetime limits on coverage – violating promises President Trump and many Republican legislators have repeatedly made to maintain these protections.

In New Jersey, there are an estimated 3.8 million non-elderly residents with pre-existing conditions. These New Jerseyans are found throughout the state, with hundreds of thousands in every Congressional District – including 307,100 in Rep. MacArthur’s district alone. In fact, a slightly higher share of Garden State residents in districts with Republican representatives (52.4 percent) have pre-existing health conditions than residents in districts with Democratic representatives (51.1 percent).[4]

Of these 3.8 million New Jerseyans, nearly half a million (476,800) are children – that means about one of every four Garden State kids (24 percent) have a pre-existing condition.CD table preexisting conditionsv2-01

High-Risk Pools Haven’t Worked in New Jersey or Other States

Dropping these protections for people with pre-existing conditions would lead to exorbitant premium increases for many New Jerseyans. The MacArthur amendment proposes the establishment of a federal or state high-risk insurance pools – which combine the sickest people and provide a public subsidy to the insurer to partially reduce cost sharing – to address this problem. But in reality, these pools would do little to help.

The experience of many states shows that these pools frequently do not work, and often allow the sickest people to fall through the cracks. These pools have come with enrollment caps, long waiting lists, unaffordable premiums, exclusions for pre-existing conditions, high deductibles, benefit caps and annual and lifetime limits on coverage. Moreover, they covered only several hundred thousand people nationwide and weren’t sustainable over time because they pooled sick people with even sicker people.[5]

High-risk insurance pools haven’t worked in New Jersey, either. In the first year of the ACA, the state created a pool (called NJ Protect) with the help of a $140 million federal grant. In the end, the pool ended up enrolling less than half of one percent of New Jerseyans who were estimated to be eligible (1,500 of 256,000 New Jerseyans)[6].

And high-risk pools aren’t even intended to help people with many of the most common pre-existing conditions like asthma, hypertension, or depression. These New Jerseyans would be left to navigate the individual market, where insurers could once again charge them higher premiums, offer them subpar coverage or some combination.

Amendment Also Allows Waivers That Could Harm Millions

The other dangerous changes the MacArthur amendment makes are through the state waivers process: the proposal would allow states to move forward with potentially damaging waivers with practically no oversight. In fact, states would receive automatic approvals for these waivers within 90 days, just by attesting that their purpose is to lower premiums, improve coverage levels, or “advance another benefit to the public interest.”

The first type of waiver allowed under the amendment would allow states to opt out of the ACA’s “community rating” requirements – which prevent insurers from charging people higher insurance premiums based on their health – so long as they create or participate in a federal high-risk pool.

This means insurers could once again discriminate against people based on their medical history. Insurers could increase premiums without limits for anyone with a history of cancer, hypertension, asthma, depression or other conditions. While insurers would still be required to offer coverage, the so-called protection would be rendered meaningless since insurers could offer coverage with such arbitrarily high premiums that the effect would be to deny coverage outright.

The amendment would also allow states to waive the ACA’s “Essential Health Benefits” requirement that requires individual and small group market health plans to cover essential services like inpatient, outpatient and maternity care, prescription drugs, mental health and substance abuse treatment.

The result would be to effectively end protections for those with pre-existing conditions by allowing insurers to drop coverage for everything from cancer treatment to high-cost drugs. This would discourage more sickly persons with high-cost health problems from enrolling. So the more than 130 million Americans – including nearly 4 million New Jerseyans – with pre-existing conditions often wouldn’t be able to find individual market coverage that covers their needs at any price, much less an affordable one.[7]

On top of that, waiving Essential Health Benefits would mean:

  • Women could again be charged more for coverage than men. While proponents claim that the MacArthur Amendment preserves the ACA’s ban on gender discrimination, eliminating Essential Health Benefit requirements means that women would have to pay more for plans that include maternity care and other key services – if they could find plans with those benefits at any price.
  • Plans could impose annual and lifetime limits on coverage – including for people who get health coverage through their jobs. The ACA prohibits plans from imposing annual or lifetime limits on coverage – but only on coverage for Essential Health Benefits. Plans can still impose annual or lifetime limits on services not classified as essential. If states are allowed to eliminate Essential Health Benefits standards, plans could once again impose coverage limits on anything from emergency services to inpatient care to prescription drugs.[8] This would also effectively end the ACA’s cap on annual out-of-pocket costs, as that limit is based on the services that are covered by the plan.

Before the ACA, 3.3 million New Jerseyans with private health insurance – most of whom had employer-based plans – had policies that imposed lifetime limits on coverage. Repealing Essential Health Benefit requirements could mean going back to a time when millions of people with health coverage were one major illness away from medical bankruptcy.

Amendment Offers No Protections for People with Pre-Existing Conditions, Just Smoke and Mirrors

Despite Rep. MacArthur’s claim that his amendment maintains some protections for people with pre-existing conditions,[9] in practice it clearly doesn’t.

  • Exorbitant premiums and coverage exclusions are no different than coverage denials. While insurers wouldn’t be allowed to deny coverage altogether to people with pre-existing conditions, they could offer plans that charge premiums of tens of thousands dollars per month and offer no coverage for hospitalizations, prescription drugs or various other basic health services.
  • Pre-existing condition protections would once again rely entirely on state options. While states could keep or impose protections if they choose, they have always had this option – but few exercised it prior to the ACA. And many states are likely to opt out if they can. Since the AHCA would sharply increase consumer costs by eliminating the individual mandate and slashing subsidies, states would be under substantial pressure to seek waivers.
  • High-risk pools are an inadequate substitute. High-risk pools have not worked in the past, and don’t even apply to people with the most common kinds of pre-existing conditions.

Endnotes

[1] The following is a summary of the amendment as reported by Politico: http://www.politico.com/f/?id=0000015b-8ab0-df96-a9db-dff115c30001

[2] New Jersey Policy Perspective, The ‘American Health Care Act’ Would Cause Nearly Half a Million New Jerseyans to Lose Health Coverage, March 2017.

[3] Center on Budget and Policy Priorities, House Republican Health Plan Would Mean More Uninsured, Costlier Coverage in New Jersey, April 2017.

[4] Center for American Progress, Number of Americans with Pre-Existing Conditions by Congressional District, April 2017.

[5] Kaiser Family Foundation, High-Risk Pools as Fallback for High-Cost Patients Require New Rules, January 2017.

[6] Rutgers Center for State Health Policy, Data for Planning a Temporary High Risk Health Insurance Pool In New Jersey, May 2010.

[7] Center on Budget and Policy Priorities, If “Essential Health Benefits” Standards Are Repealed, Health Plans Would Cover Little, March 2017.

[8] Brookings Institution, New Changes to Essential Benefits in GOP Health Bill Could Jeopardize Protections Against Catastrophic Costs, Even for People with Job-Based Coverage, March 2017.

[9] Rep. Tom MacArthur, About the MacArthur Amendment, April 2017.

Medicaid Cuts Would Jeopardize Health Services for Students

Posted on by Raymond Castro

The Garden State gets fourth highest amount of federal funds for Medicaid services in schools

Medicaid-Kids 4-FacebookNew Jersey’s schools receive $143 million in federal Medicaid funds each year, the fourth highest of the states, according to data released today by the Washington, DC-based Center on Budget and Policy Priorities.

This funding pays for medical services for Medicaid-eligible students with disabilities, such as mental health and speech therapy. It also covers vision and dental screenings provided in schools to Medicaid-eligible children, and helps schools connect low-income children to other health care services that aren’t provided in schools, but are critical to a child’s development. But this aspect of Medicaid is not widely known, with the program being much better known for providing affordable and comprehensive health care coverage for millions of seniors, people with disabilities and children across the country.

House Republicans’ plans to dramatically cut Medicaid funding puts these crucial services – in addition to health care for nearly half a million New Jerseyans – at risk.

Medicaid funding helps schools pay the salaries of health care and other staff who provide important services to students, not just those with Medicaid coverage. In 2017, 68 percent of school superintendents reported that they used Medicaid funding to keep school nurses, school counselors, speech therapists, and other health professionals on staff. Any cuts to Medicaid could jeopardize the benefits these health care professionals provide.

Medicaid funding cuts also could squeeze New Jersey’s education budget, impeding efforts to help schools implement proven reforms such as hiring and retaining excellent teachers, reducing class sizes, and expanding the availability of high-quality early education — keys to helping all children thrive in school.

All but one of New Jersey’s bipartisan Congressional delegation has publicly opposed this push to repeal the Affordable Care Act and cut Medicaid, because of the harm it’d bring to their constituents. This new data makes it even clearer: policymakers in Washington should protect Medicaid – not cut it.

Nearly 4 Million New Jerseyans Have Pre-Existing Conditions

Posted on by Jon Whiten

While the latest Congressional Republican plan to repeal the Affordable Care Act is apparently dead (at least for the moment) as of yesterday, it has been reported that the proposal would have rolled back protections for the more than 130 million Americans – and 3.8 million New Jerseyans – who have a pre-existing health condition.

These New Jerseyans are found throughout the state, with hundreds of thousands in every Congressional District, according to a new analysis by the Center for American Progress (CAP).

In fact, a slightly higher share of Garden State residents in districts with Republican representatives (52.4 percent) have pre-existing health conditions than residents in districts with Democratic representatives (51.1 percent). And of the 3.8 million New Jerseyans total, nearly half a million (476,800) are children – including my own four-year-old son.

For more on the issue of coverage for Americans with pre-existing conditions, and what’s at risk, see an excerpt of the CAP report below the table.

CD table preexisting conditions-01

From the CAP report:

“Republicans are now discussing a provision that is effectively a sick tax on premiums: People with health conditions would be charged multiples more based on their medical history, paying above-standard rates for coverage. Even if the new plan preserved the ACA’s rules on guaranteed issue—meaning that issuers cannot deny coverage—consumers with pre-existing conditions could still be priced out of the market.

Prior to the ACA, insurers could discriminate against consumers based on their current health conditions and medical history. Consumers with common ailments, including asthma and high blood pressure, were charged higher rates. People with histories of serious conditions, such as cancer or heart attacks, were regularly denied coverage altogether.

About half of nonelderly Americans have one or more pre-existing health conditions, according to a recent brief by the U.S. Department of Health and Human Services, or HHS, that examined the prevalence of conditions that would have resulted in higher rates, condition exclusions, or coverage denials before the ACA. Approximately 130 million nonelderly people have pre-existing conditions nationwide …

Nationally, the most common pre-existing conditions were high blood pressure (44 million people), behavioral health disorders (45 million people), high cholesterol (44 million people), asthma and chronic lung disease (34 million people), and osteoarthritis and other joint disorders (34 million people).

While people with Medicaid or employer-based plans would remain covered regardless of medical history, the repeal of pre-ex protections means that the millions with pre-existing conditions would face higher rates if they ever needed individual market coverage.”

NJPP’s Ray Castro on Protecting Medicaid

Posted on by NJPP Staff

As the push to repeal the Affordable Care Act began its final unraveling Friday, New Jersey Policy Perspective senior policy analyst Ray Castro was a featured panelist at a NJ Spotlight conference on health care in New Jersey – and NJTV was there to talk to him and others about the impact of the GOP’s plans.

“We’re concerned about block granting the entire Medicaid program,” Castro said. “We’re even more concerned that they want to accelerate the repeal of Medicaid expansion [which in] New Jersey would have such an impact – we have half a million people in our state. About 10 percent of all adults in New Jersey get their health care from the Medicaid expansion.”

The ‘American Health Care Act’ Would Cause Nearly Half a Million New Jerseyans to Lose Health Coverage

Posted on by Raymond Castro

To read a PDF version of this report, click here.

As House Republicans rush to “repeal and replace” the Affordable Care Act (ACA), it has become clearer how much their proposal would harm New Jersey. The non-partisan Congressional Budget Office analysis of the American Health Care Act projects a major increase in the number of uninsured Americans, deep cuts to Medicaid, higher insurance premiums and tax cuts for the wealthy and corporations.

The best way to understand the American Health Care Act is to see it as a vehicle to shift income from working and poor families to the wealthy and as part of the plan to shift federal spending from a broad range of domestic services to the military budget.

In fact, the proposed cuts in the Medicaid expansion and the marketplace alone would reduce or eliminate health coverage for millions, including half a million New Jerseyans in just the next three years. Meanwhile, 250 New Jersey millionaires would see their federal taxes reduced by an average of $57,000 a year – a $14 million break, all told – while thousands of low- and middle-income New Jerseyans would face 30 percent tax hikes as support for their health care premiums would shrink or disappear.

Republicans are doing more than replacing the ACA with this legislation: Their plan is to enact a radical agenda that will dramatically change how Medicaid is funded, with the eventual result of big cuts to medical assistance for seniors, people with disabilities, working parents and children. 

Nearly Half a Million New Jerseyans Would Lose Health Coverage

By 2020 under the American Health Care Act, about 476,000 fewer New Jerseyans would have health insurance than in 2015, due to the almost-certain end of the Medicaid expansion and other changes in the insurance marketplace, like a one-third reduction in premium tax credits for low-income New Jerseyans. (2015 has the latest and most reliable data for the uninsured, as supplied by the U.S. Census.) If anything, using that year underestimates the numbers of uninsured by 2020 since marketplace and Medicaid expansion enrollment increased in 2016 and 2017.

The result would be more New Jerseyans lacking insurance in 2020 than in 2013, before the ACA began insuring more residents – because there are 172,000 New Jerseyans who were on Medicaid before the ACA but would no longer be eligible since the state is in no financial condition to replace federal funding for Medicaid expansion with state dollars.

uninsured post ahca-01

Number of Uninsured Would Spike in All Congressional Districts

CD table uninsured-01All New Jersey Congressional districts would see major increases in the number of uninsured residents under the American Health Care Act. But the largest percentage increases would be in districts currently represented by Republican Congressmen (New Jersey has no Republican Congresswomen).

Taken together, the number of uninsured constituents by 2020 would increase by 74 percent in New Jersey’s five districts with Republican Representatives, a significantly higher jump than the increase of 58 percent in the state’s seven districts with Democratic Representatives.

The largest percentage increase in the number of uninsured would be in District 3, where their ranks would almost double (94 percent increase). In that district, 34,350 additional residents would become uninsured by 2020 on top of the 36,539 residents uninsured in 2015. The smallest increase was in District 8.

The main reasons for this difference are:

  • Democratic districts tend to have more residents who live below the federal poverty line who were already covered by Medicaid prior to the expansion
  • The marketplace includes more residents who work and have modest incomes who are disproportionately in Republican districts
  • Republican districts have lower uninsurance rates than in Democratic districts, so they see a bigger percentage increase when their residents are dropped from Medicaid and the marketplace 

New Jersey’s Successful Medicaid Expansion Would Be Jeopardized

The latest House Republican plan to replace the ACA includes drastic cuts in federal funding for the Medicaid expansion. This cut would likely result in many New Jerseyans losing their health coverage. If New Jersey’s economy and financial condition were stronger, the state could continue the expansion starting in 2020. However, if it were to maintain it at current eligibility levels, New Jersey would be on the hook for an additional $8.8 billion over the next decade. By 2027, New Jersey’s annual match would be five times higher ($2.1 billion instead of $461 million) than it would if the Affordable Care Act were continued. And these estimates are conservative since they assume no increase in enrollment over that time, such as would occur with the onset of another recession (inflated health care costs are factored in).

AHCA federal loss-01

Radical Restructuring of Medicaid Funding Would Harm New Jersey

New Jersey would also lose additional federal funding under the proposed Medicaid per capita cap. The bill would establish a dollar-amount cap on each person enrolled in Medicaid. The cap would be different for different types of enrollees (aged, disabled, children, and adults in the Medicaid expansion in 2016) and it would be adjusted annually by the federal index for health services prices (CPI-Medical).

The index’s increases will likely fall below what high-cost states like New Jersey need, helping to generate the federal savings needed to offset revenues lost by tax cuts to the wealthy and corporations. Most states will likely fall below the index in some years and above it in others. The Congressional Budget Office projects that the index for health costs will increase on average by 3.7 percent annually from 2017 to 2026, compared to a 4.4 percent increase for Medicaid costs – or a 19 percent higher rate. From 2000-2011, average per capita increases in New Jersey exceeded the CPI-M level for adults (7 percent) and children (5.1 percent). Using national averages almost always puts high-cost New Jersey at a disadvantage.

Since this is a national price index, it would not respond to state-specific health crises and patterns, like an infectious disease outbreak like Zika, a medical breakthrough or an opioid addiction crisis. In addition, while federal funding under a per capita cap would increase when additional residents were served – such as during a recession ­– the rate of federal reimbursement would be lower than a state would receive today. In other words, if more residents needed services during a recession it would still cost the state more ­- at the very same time when federal payments to states would be reduced.

Since states will not know their level of federal funding until the year before, long range planning will be very difficult, if not impossible. The federal government could also decrease the caps at any time. With federal Medicaid funding uncertain, states would likely spend less to stay within the caps, or cut services and/or reimbursement rates when the caps are exceeded. Because the caps are based on 2016 federal Medicaid expenditures, states would likely curtail Medicaid expenditures as soon as the bill is signed into law to avoid exceeding the caps in 2020 when they take effect. For example, if the state continues to expand services to opioid addicts, it runs the risk of increasing the average per capita cost for adults covered by the Medicaid expansion. Thus, by 2021 the state might easily exceed its cap with the state on the hook for all additional costs.

Currently there are more federal optional services (28) than required services (15). New Jersey has very comprehensive benefits and has opted for nearly all the services that are permitted. Some of these optional services that could be eliminated to reduce per capita costs include:

  • Prescription drugs
  • Home and community based services
  • Private duty nursing
  • Dental
  • Case management
  • Physical therapy
  • Hospice
  • Institutional services for the developmentally disabled and children

Reduced access to services

If a state decides to make up for steadily declining federal grants, it may focus its cuts on the most costly enrollment groups, thus putting New Jersey’s seniors and the disabled in the crosshairs since these two groups generate about three-quarters of all the state’s Medicaid spending. On the other hand, if the state decides to make the cuts based on the largest enrollment groups, children would be put at disproportionate risk, as they comprise over half of total enrollment.

medicaid breakdown-01

medicaid services breakdown-01

Instead of viewing Medicaid as an investment, the state would view it as threat to the budget and other priorities. Since total Medicaid funding would in effect become a shrinking pie, different groups in Medicaid would have to compete with each other for diminishing resources.

In addition to eliminating services, the state could also reduce reimbursement rates for services, some of which are already some of the lowest in the nation despite New Jersey’s health costs being among the nation’s highest (it should come as no surprise that just 38.7 percent of New Jersey doctors accept Medicaid patients, the lowest rate in the nation).

New Jersey would be penalized for its efficiencies in Medicaid

Proponents of capping federal Medicaid funding claim that states would have more flexibility to initiate efficiencies that would absorb any loss in federal funds. However, any additional flexibility in Medicaid in New Jersey would probably not help, because the state already implemented the most promising efficiencies under the flexibility of the current Medicaid program. Unfortunately, the federal dollars New Jersey has saved will be subtracted from the 2016 base year that will be used to calculate the state’s Medicaid funding in the future. In other words, the state would permanently lose those funds because it tried to make Medicaid more efficient and effective.

The following are some of the efficiencies that have been implemented—many with waivers approved by the federal government– which might not be available to New Jersey to absorb any future loss in federal dollars due to Medicaid caps:

  • New Jersey saved $2 billion in federal funding over five years under a comprehensive waiver that, among other things, placed the elderly in communities rather than nursing homes.
  • New Jersey is ranked sixth highest nationally in the percent of it Medicaid population in managed care (95 percent).
  • New Jersey operates three Accountable Care Organizations that focus on patient-centered quality and cost of care for Medicaid participants, one of the highest numbers in the country.
  • New Jersey is ranked 49th lowest nationally in fees to providers (mostly primary care physicians).
  • New Jersey is ranked ninth nationally in medical home participants.
  • New Jersey spends only about seven percent of its Medicaid dollars for administration, far lower than in the private insurance sector. 

Methodology

Increase in the uninsured

The estimated number of uninsured in New Jersey in 2013 and 2015 is from the American Community Survey. The 2020 estimate assumes that the state would not opt for the Medicaid expansion because of the high cost to the state and that, therefore, all of the 550,000 New Jerseyans currently enrolled in the expansion would lose their Medicaid.

The estimate that 172,000 of those New Jerseyans were participating in New Jersey Family Care prior to the Affordable Care Act is based on the New Jersey Department of Human Services’ response to the Office of Legislative Services for the 2017 budget. It is assumed that they would all become uninsured if made ineligible for Medicaid.

For the remaining individuals in the expansion it was estimated that 51 percent of them would not find alternative health coverage and therefore would become uninsured consistent with a 2015 RAND study (Trends in Health Insurance, 2013-2015) which estimated the number of individuals in the Medicaid expansion who did not have insurance prior to the Affordable Care Act.

To determine the number of the uninsured resulting from proposed changes in the insurance marketplace, New Jersey’s share of the national marketplace is applied to the Congressional Budget Office (CBO) national estimate for the number of individuals who will lose their coverage in the marketplace in 2019 and 2020. That number was reduced on the assumption that half of them would be able to find coverage elsewhere. The CBO national estimates of the number of uninsured from the marketplace decreases by 2027 which would also lower the number of the uninsured in New Jersey in that year. The projected increase in uninsured New Jerseyans is conservative because it does not take into account the likely decrease in employer-based coverage and other changes in the House Republican plan.

Congressional district impact

The share of adults enrolled in Medicaid in each district was calculated based on enrollment data for public insurance in the American Community Survey, which was applied to the number of persons statewide that would become uninsured as a result of the House Republican plan as described above. The share of adults in the marketplace in each district was calculated based on data provided by the Kaiser Family Foundation, Interactive Maps: Estimates of Enrollment in ACA Marketplaces and Medicaid Expansion, February 28, 2017 which was applied towards the statewide total of uninsured due to changes in the marketplace caused by the House Republican plan as explained above.

State cost for new Medicaid expansion

To determine the cost to New Jersey of maintaining Medicaid expansion should it elect to maintain coverage for those enrolled via Medicaid expansion, the total cost of the Medicaid expansion as estimated by the New Jersey Department Human Services for state fiscal year 2018 was increased by 4.4 percent annually as projected nationally through 2027 by the Congressional Budget Office cost estimates, American Health Care Act, March 13, 2017. Federal funds were calculated based on the 90 percent matching rate under current law. To determine federal funds under the House Republican plan, the federal funds were reduced to take into account the attrition rate for all individuals that were grandfathered in the expansion based on the attrition rate estimated by the Center and Budget and Policy Priorities. The remaining federal funds were calculated based on the 50 percent federal matching rate. The state matching rate under current law and the proposed House Republican plan were compared to calculate the additional state cost.

As written, the American Health Care Act appears to require that if New Jersey wants to continue receiving a higher federal match for individuals in the Medicaid expansion as of 2020, the state must also accept all newly eligible individuals at the lower match of 50 percent. Our cost estimates assume that scenario. However, if the state decides that it cannot afford the lower match it could also decide not to elect the Medicaid expansion in which case everyone would become ineligible in 2020 and the state would lose about $3 billion annually it currently receives in federal funds.

However, the current interpretation is that the intent of this legislation is to allow the state more flexibility in this option and allow it to 1) not accept any new enrollees and let the grandfathered cases remain in Medicaid at the 90 percent federal match until they leave; or 2) accept a narrower category of new enrollees. For example, New Jersey could make eligible the 172,000 parents and childless adults who were eligible for Medicaid prior the ACA. However even with this more liberal interpretation, it would cost the state hundreds of millions of dollars depending on how they define this new eligible category.

Blueprint for Economic Justice & Shared Prosperity

Posted on by NJPP Staff

From the President

For more than 20 years, New Jersey has been on a downward economic and financial slide. Our middle class is shrinking. Poverty is rising. The state government is effectively bankrupt. We’re dangerously close to hitting rock bottom.

The next governor is New Jersey’s last, best chance to slow the state’s collapse, restore its stable financial foundation and rebuild its enterprising, job-creating, wealth-producing economy.

How did we get here?

The Jersey Slide began with a familiar false premise: cut taxes, and the savings will stimulate economic activity and increase state revenues. Hence a 30 percent cut in income tax rates in 1994, which produced immediate declines in state support for property tax relief and set off a two-decade chain reaction of gimmicks to hide the damage.

Gimmicks like slashing the state’s payments for public employees’ pensions and retiree health benefits enough to make up for revenues sacrificed to the tax cuts. Like granting local governments a pension payment “holiday” to keep property taxes from spiking.

And, in a damning blow, borrowing almost $3 billion to cover the state’s share of pension costs for two or three years – sticking unknowing future taxpayers with the very large repayment bill.

Along the way, a bipartisan cast of governors, legislators and justices ignored the urgent warnings of financial experts, and violated state constitutional protections intended to safeguard against precisely these types of abuses. Because the constitution is clear: you can’t spend money in the annual budget that isn’t raised in the same year, and you can’t borrow money long term without voter approval.

Now the chickens are coming home to roost. The games and gimmicks must stop. It’s time for truth telling, and courageous action.

I understand the challenge. I’ve run for office five times and participated in numerous campaigns. Not once has someone come up and asked: “Gee, my taxes are pretty low, can you do something to raise them?”

But people’s concerns about the taxes they pay often mask concerns about how their taxes are spent:

• “Potholes cost me $800 for new tires.”
• “I thought public colleges were supposed to be affordable.”
• “The high school cut my kid’s band class.”
• “The district said it’s not safe for my kid to drink water from the tap.”

These complaints lay bare a fact that’s been too-long neglected by our political leadership: Residents want New Jersey’s enviable assets to be properly maintained. People understand that investments in the assets we all share are paid for by the taxes we all pay – taxes that should be levied in a fair and equitable way.

The idea that the state needs to protect and invest in its assets is what drove New Jersey’s thriving economy from the 1960s into the early ‘90s. Those were the years when the state invested strategically in public transportation; in public colleges and universities; in preserving open space; in protecting the environment; and beyond. The state’s robust opportunities and vibrant communities attracted striving immigrants from around the world, who in turn fostered further economic growth. The result: New Jersey transformed itself from a fading industrial state into an enterprising, prosperous and stable state with a robust middle class and a plentiful opportunity.

That was then. The picture is starkly different now. After ten credit downgrades in seven years, New Jersey ranks 49th among the 50 states for creditworthiness. Our once robust biotech and pharmaceutical industry is being lured to states that are accelerating – not slashing – public investments in innovation centers like university hubs. Inequality is at historic highs. In this high-cost state, which never bounced back from the Great Recession, New Jersey’s working families are finding it harder than ever to make ends meet and give their children opportunities to advance.

Here’s the good news: New Jersey still has enviable assets. And it’s not too late for new leadership to stop the state’s downward spiral. No candidate should promise that it’ll be easy or painless to restore New Jersey as an engine of enterprise and opportunity. Nor should anyone suggest that one term as governor or as a legislator will be sufficient.

But big ideas, carefully planned and plainly explained, are the starting point.

That is the work of New Jersey Policy Perspective, and specifically, this Blueprint.

– Gordon MacInnes, President

To read the Blueprint, click here.

Ray Castro Explains Damage of ACA Repeal

Posted on by NJPP Staff

Last night, NJTV News turned to NJPP’s latest report and our senior policy analyst Ray Castro to help explain to viewers the damage that repeal of the Affordable Care Act would inflict on New Jersey:

Over 1 million residents would lose benefits, according to the report. The state would lose over $4 billion a year in federal funds; 86,000 jobs would be lost and, most dramatically, the report says almost 800 would die as a result.

“This is what would happen if they repealed and did not replace it,” said Castro. “Unfortunately, we don’t know what they’re going to be replacing it with, but what we’ve heard so far is that it’s not really going to help. In fact, it could make matters worse. For example they’re talking about block granting Medicaid, so Medicaid served a lot of different people including children and seniors in nursing homes, so all of them would be vulnerable to further cutbacks in this replacement, so we’re very concerned about that.”

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