Topic Category: Health

New Jersey Should Replicate ACA Penalty to Keep Coverage Affordable

Posted on by Raymond Castro

Below are prepared remarks delivered to the Senate Commerce Committee today on S-1877.

Thank you for the opportunity to testify on the need to preserve the individual health insurance market in New Jersey. While New Jersey has made major progress in reducing the uninsured, there are still about 700,000 New Jerseyans without coverage. Congress’ recent repeal of the shared responsibility penalty in the Affordable Care Act will undoubtedly cause that number to rise unless something is done.

This penalty provided an important incentive to ensure that younger, healthier people obtain insurance and spread the risk in the health insurance pool. Without robust participation of these individuals in our health insurance marketplace, premiums will climb and the market will become destabilized.

NJPP supports restoration of this requirement at the state level in New Jersey if steps are taken to also ensure that insurance is affordable. To achieve that goal we urge that S-1877 be amended to require that all revenues generated by the penalty be used only in ways that will make insurance more affordable, such as for state premium subsidies or to help fund reinsurance.

We also recommend that S-1878, which would establish a reinsurance plan and is also being considered by the committee today, be passed at the same time. We believe that the combination of these bills would create a synergy that would substantially reduce premiums for New Jerseyans. It would also be smart to allocate at least $2 million for outreach to make insurance more accessible, attract healthier people, and maximize federal funds.[1]

Because insurers need time to adjust their rates for next year, this has become an urgent matter. Unless legislation is enacted within the next four months to address this problem, next year about 150,000 middle class New Jerseyans will have to spend much more in premiums, thousands more will become uninsured, state charity care payments will increase and New Jersey will lose federal Medicaid funds.

Unfortunately, some of this is already happening. Even before the federal penalty was repealed, premiums for most plans this year in New Jersey went up by 8.5 percent[2] (as part of an overall increase of 22 percent[3]) because the Trump administration threatened to weaken the enforcement of this requirement. This affected nearly half of everyone in the individual market because these consumers exceeded the income guidelines for subsidies.[4] We estimate they will pay up to a stunning $65 million more in premiums this year.

That means the average person in the marketplace paid $400 and a four-person family paid $1600 more this year just due to the weakening of the federal provision. Those costs could double next year without a shared responsibility penalty.

The long-range implications of not replacing this provision are staggering. Based on our analysis of national data from the Congressional Budget Office,[5] premiums in New Jersey will increase 10 percent a year in most of the next 10 years, and about 340,000[6] residents will become uninsured. Because the largest decrease in coverage would be in Medicaid, the state would also lose billions in federal matching funds. At the same time, we can expect a major increase in state charity care payments, which have been reduced by more than half due to the ACA.

Restoring this penalty is one of the most cost-effective ways that the state can reduce premiums since it costs the state nothing other than administrative costs and avoids a major loss in federal funds.[7] Another advantage is that very few New Jerseyans would be affected by the penalty. About 189,000 New Jerseyans paid the penalty in 2015 which meant that about three-fourth of all the uninsured were exempt from the federal penalty. These households represent only about five percent of all tax filers.

Under a state penalty even fewer people might be affected, depending on the state policies that are established. For example, the bill understandably exempts individuals who earn less than the income threshold income for state taxes ($10,000), which is twice as low as the federal threshold ($20,000). That exemption alone could reduce the number of persons who would have to pay the penalty by over 40,000.

The mandate also would encourage many of the uninsured to seek insurance that is affordable which they may not know about. National research shows that about half (54 percent) of everyone uninsured and eligible for a plan in the marketplace would be better off financially if they bought a bronze plan rather than paid the penalty.[8]

Endnotes

[1] State Medicaid outreach funds would receive a federal match of 50 percent.

[2] New Jersey Business, Majority of Horizon Individual Premium Increases Due To Federal Changes, October 17, 2017, based on Horizon charges, https://njbmagazine.com/njb-news-now/majority-horizon-individual-premium-increases-due-federal-changes/

[3] Raymond Castro, Sabotage of the Affordable Care Act Puts Middle-Class New Jerseyans in the Crosshairs, November 21, 2017, https://www.njpp.org/healthcare/sabotage-of-the-affordable-care-act-puts-middle-class-new-jerseyans-in-the-crosshairs

[4] 400 percent of the federal poverty level which is $82,000 for a family of three, well below the state’s median family income of $95,000 in 2016.

[5] CBO, Repealing the Individual Health Insurance Mandate: An Updated Estimate, November 8, 2017, https://www.cbo.gov/publication/53300

[6] Raymond Castro, Ibid.

[7] The current payments are $695 per adult and $347 per child or 2.5 percent of family income, whichever is greater.

[8] Matthew Rae, et al, How Many of the Uninsured Can Purchase a Marketplace Plan for Less Than Their Shared Responsibility Penalty? November 2017.

Health Care for All New Jersey Kids

Posted on by Raymond Castro

The following is a summary of this report. For the full report in PDF format, click here.

As a new administration and legislature take the reins in Trenton, New Jersey has a historic opportunity to guarantee that all children in the state have health coverage.

New Jersey has already made progress toward this goal, but more can – and must – be done.

The state has reduced the uninsurance rate for children to 3.5 percent – a major accomplishment. But there are still 70,000 children who remain uninsured, and 20 states – including every Northeastern state but Maine – have even lower rates. What’s more, New Jersey has one of the largest disparities in health coverage between white and Hispanic children in the nation, with Hispanic kids more than 3 times more likely than their white neighbors to be uninsured.

Of these 70,000 uninsured New Jersey kids, half (35,000) are undocumented immigrant children who are not eligible for NJ FamilyCare coverage and an additional 12,000 are kids in middle-class families who can no longer buy into NJ FamilyCare, since New Jersey ended the buy-in program in 2014. The remaining 23,000 uninsured children are eligible for NJ FamilyCare but are not participating due to administrative barriers and a lack of intensive outreach.

NJPP’s report identifies 10 actions the state should take to make healthcare coverage through NJ FamilyCare accessible to all children, including:

  • Stop excluding children because of their immigration status
  • Reinstate the buy-in program for middle-class families
  • Remove administrative barriers that prevent eligible children from enrolling, like locking kids out of coverage for 90 days if a payment is missed

Insuring these uncovered children is not only a moral imperative for New Jersey, it is cost-effective, incremental, realistic and affordable – important considerations given the state’s bleak financial situation. In fact, investing in the wellbeing of these kids now will likely save the state money in the long run.

NJPP estimates it would eventually cost $66.5 million a year – or less than one half of one percent of all Medicaid expenditures – to cover the state’s undocumented immigrant children. That is a third-year cost; the first year cost to the state is much less, at $10 million. What’s more, these estimates do not include state savings that would be achieved in charity care, other federal funds the state can claim for emergency care, and long-range health and social savings resulting from better health for kids. NJPP recommends an additional $2 million in state funding for outreach – an excellent investment because the $2 million would be immediately matched, and then the state would obtain even more federal Medicaid funds to help cover the additional children who are enrolled. And there is zero state cost to reinstate the buy-in program for middle-class families (they pay the full cost of coverage).

Read the full report here.

ImpacTalk: NJPP’s Jon Whiten on Defending Health Care

Posted on by Jon Whiten

Attendees at Impact 2017 – the Center on Budget and Policy Priorities’ State Policy Conference – drew inspiration from ImpacTalks by State Priorities Partnership staff members about what drives their commitment to advancing equity and shared prosperity.

In this ImpacTalk, NJPP Vice President Jon Whiten shares the story of his organization’s pivotal role in the fight to defend the Affordable Care Act – and what that fight meant to millions of Americans, including someone close to Jon’s heart.

Sabotage of the Affordable Care Act Puts Middle-Class New Jerseyans in the Crosshairs

Posted on by Raymond Castro

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

The Trump administration and Congressional Republicans’ sabotage of the Affordable Care Act’s health insurance Marketplace is driving up premiums and making insurance unaffordable for millions of Americans. In New Jersey, about 150,000 of the 341,000 people who buy insurance through the individual market will see an average 22 percent[1] – or $1,245 – increase in their premiums in 2018.

A typical four-person middle-class family will see their annual premium increase to about $23,000 for a mid-level plan next year – in addition to their deductible, copay and co-insurance – making it unaffordable for many families.[2] In all, these already-struggling New Jerseyans will face a total of $187 million in increased health care costs next year.[3]

One of the principal actions that President Trump and the Republicans in Congress took to undermine the Marketplace is defunding Cost Sharing Reduction payments, which will result in a loss of $166 million in federal funds to New Jersey insurers even though the insurers will still have to provide those subsidies to eligible consumers. Those subsidies are limited to a Marketplace customer who has an income below 250 percent of the federal poverty level ($51,000 for a family of three). In addition, Republicans in Congress have been unable or unwilling to pass legislation funding such payments.

The Trump administration has also issued conflicting statements on whether, or how well, the individual mandate will be enforced, and Republicans in the Senate propose to eliminate it entirely in the tax overhaul bill. The mandate is important because it results in healthier Americans obtaining insurance, which holds down the cost for everyone else insured in the Marketplace. Lastly, the Republicans in Congress have not extended the deadline for the Health Insurance Tax on insurers; without this tax revenue, $186 million in costs will be passed on to New Jersey Marketplace consumers.

New Jersey’s Middle Class Will See More Harm Than Peers in Other States

While most New Jerseyans in the individual market will be protected from these increases because they will still receive premium subsidies, almost half (44 percent) of the state’s residents in the individual market receive no subsidy, and therefore will have to subsidize their eligible neighbors plus bear the costs of their own increase.[4] This will be a much bigger problem in New Jersey than most states because it has one of the highest costs-of-living and average earnings in the nation. The resulting increase will likely leave many unsubsidized New Jerseyans uninsured.

These New Jerseyans do not receive subsidies because their incomes exceed four times the federal poverty level – or $81,700 for a family of three. While that income level may be a lot in lower-cost states, in New Jersey it is clearly middle-class and well below the median family income of $96,126.[5] This illustrates a deeper problem with using the federal poverty level to determine benefits, because this measurement does not consider dramatically different costs of living in states across the country.

Many of these New Jerseyans will have to drop their coverage entirely because it will be unaffordable, or they will pay their premium and not be able to afford other essentials like food and transportation. Another danger is that they will purchase plans that have a lower premium but higher cost sharing that they may not be able to afford when they need medical care.

New Jerseyans across the state will face higher premiums, but people residing in Congressional Districts represented by Republicans are more at risk than people in Democratic districts. The share of all non-elderly adults who face these premium increases is about a third higher in districts represented by Republicans (3.2 percent) than in districts represented by Democrats (2.4 percent). The total number of New Jerseyans harmed by these premium increases is higher in Congressional Districts represented by Democrats because they represent more districts (7-5).

New Jerseyans With Employer-Based Insurance Could Also Be Harmed

While middle-class New Jerseyans in the individual market will see the most direct harm, the pain could very well spread to many other New Jerseyans who currently have coverage through their employer. While these residents once had the peace of mind knowing that if they lost their employer coverage they could always purchase affordable insurance on the individual market, the dramatic premium increases that are resulting from this sabotage change that equation. In fact, about 2.6 million New Jerseyans have incomes above four times the federal poverty level. If these residents were to lose insurance through their employer, they may not be able to afford the new higher premiums in the individual market.

Older New Jerseyans Will Be Hit the Hardest

All age groups are affected by these premium increases, but older New Jerseyans will be harmed the most. Half (50 percent) of New Jersey residents in the Marketplace are over age 45 and over a quarter (27 percent) are over 55.[6] While the percentage increase for older New Jerseyans is about the same as their younger peers, on average they pay much more for insurance – so this is actually a much higher dollar increase. For example, a 62-year-old New Jerseyan making $49,000 will have to pay the full cost of insurance that, on average, will increase by $12,400 to $14,500 a year. That dollar increase is almost twice the state average in the individual market.

In addition, the out-of-pocket limit rises to $7,350 next year, increasing the total potential costs for this older New Jerseyan to $21,850 – almost half (44 percent) of his or her income. To make matters worse, the House Republican tax bill eliminates the medical deduction, which would further reduce coverage for these New Jerseyans.

Many Low-Income New Jerseyans Are Also At Risk

Over 27,000 low- and moderate-income New Jerseyans could also be harmed by other actions – particularly cuts to outreach, enrollment assistance and education. This will likely have the greatest impact on the approximately 338,000 New Jerseyans who are uninsured and, in most cases, eligible for Medicaid or premium subsidies.[7]

For example, federal funding for outreach workers in states like New Jersey that chose not to establish a state exchange was reduced by an average of 41 percent.[8] New Jersey’s cut was the biggest in the Northeast, 61 percent. In addition, advertising was cut by 90 percent nationally.

An estimated 27,000 New Jerseyans will not obtain coverage in the Marketplace next year unless other resources are identified to replace the outreach efforts that have been lost.[9]

These cuts come at the worst possible time because there is much more confusion this year than in the past, thanks to the Trump administration and Congressional Republicans’ repeated efforts to repeal and replace the ACA this year and the shortest-ever open enrollment window (it runs for just 6 weeks this year from November 1 to December 15).

Endnotes

[1] Weighted average premium increases as reported by Horizon and AmeriHealth for 2018

[2] Assumes the children are ages 6 and 8 and the parents are 35 and 36. Plans were reviewed in healthcare.gov. The highest and lowest plans were selected and the mid-point was calculated.

[3] Percent premium increase was applied to average premium in the marketplace in 2017, as reported by The Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services.

[4] New Jersey Department of Banking and Insurance enrollment report, Q22017

[5] U.S. Census Bureau, American Community Survey, 2016

[6] Kaiser Family Foundation, 2017 Marketplace Selections by Age, November 2016- January 2017.

[7] Kaiser Family Foundation, Distribution of Eligibility for ACA Health Coverage Among the Remaining Uninsured as of 2016.

[8] Preliminary Navigator Grant Awards, 2017.

[9] New Jersey’s share of marketplace enrollment was applied towards national estimate by Get America Covered, Trump’s Ad Cuts Will Cost A Minimum Of 1.1 Million Obamacare Enrollments, October 2017.

Trump’s Sabotage Threatens Health Care for New Jerseyans

Posted on by Raymond Castro

With Congress thus far failing in its multiple attempts to roll back progress on health care by repealing the Affordable Care Act (ACA), President Trump is increasingly taking matters into his own hands. This week his sabotage efforts intensified even as we approach the crucial open enrollment period for 2018 coverage in the federal Marketplace.

The President’s move to end cost-sharing subsidies for insurers will wreak havoc in New Jersey, with premiums likely increasing by 20 to 30 percent in the state.

The change will most harm the 150,000 New Jerseyans who pay the full cost of their insurance, both on and off the federal exchange. It could cause their average annual premium – currently an estimated $5,748 – to increase between $1,100 and $2,200, making insurance unaffordable for thousands. Most New Jerseyans who receive individual subsidies in the exchange (about 200,000 individuals last year) will not be directly affected by this change – at least in the short run.

This is on top of the executive order the President issued Thursday that could destabilize the health insurance markets where millions of individuals and small businesses get their coverage and undermine protections for people with pre-existing health conditions. That policy changes outlined in that order would harm New Jersey more than most other states. (The executive order itself doesn’t change policy, but instead directs agencies to consider making changes by issuing regulations and revising guidance.)

Contrary to President’s claims, these changes would reduce coverage and access while increasing costs. Not only would they eliminate all the federal essential benefits that are currently guaranteed for nearly everyone (like hospitalization, mental health and maternal care) for organizations that form health plan associations, they would allow these businesses to bypass the many additional benefits required under New Jersey law, such as treatment for autism.

Since New Jersey requires more benefits than other states, organizations forming these associations would have more of an incentive to buy cheap policies across state lines. That would have a twofold effect: New Jerseyans who purchase these bare-bones plans will not be adequately covered if they have a real medical emergency, and the state’s entire commercial market would be at risk because the healthiest New Jerseyans could leave the New Jersey marketplace, leaving only the sickest consumers and driving up premiums to unaffordable levels.

At the same time as the President is attempting to dismantle key parts of the ACA via executive order, his administration has slashed federal funding for Navigators. This will gut the entire outreach effort in New Jersey and likely result in thousands of New Jerseyans not receiving the coverage they desperately need. The state’s 62 percent reduction was the largest in the Northeast and the ninth largest nationally. Two of the state’s five navigator contracts were cut by a stunning 85 percent.  Most of these agencies will probably have to lay off staff, reduce marketing, help fewer New Jerseyans eligible for Medicaid, or spend less time with consumers who have language barriers or other complex needs.

Despite all the confusion and the political theater surrounding the ACA, New Jerseyans should absolutely still enroll for coverage in 2018. The enrollment period that begins November 1 is crucial, and thanks to the Trump administration, it’s actually shorter this year than in past years – it will end this December 15.

New Senate Proposal Greatest Threat Yet to Health Care in New Jersey

Posted on by Raymond Castro

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

Legislation introduced this month by U.S. Senators Bill Cassidy and Lindsey Graham combines most of the worst elements of earlier failed attempts to repeal and replace the Affordable Care Act.

The proposal would strip coverage from millions of Americans, raise costs for millions more (including those living with pre-existing conditions) and gut Medicaid – and it would harm New Jersey more than most other states.

  • In all, about 2 million mostly low-income and vulnerable New Jerseyans would be significantly harmed by this proposal: 900,000[1] would likely lose their coverage entirely due to the cutbacks in the Medicaid expansion and Marketplace while the approximately 1.1 million additional New Jerseyans on Medicaid would be at risk of losing health coverage, benefits or access to medical services.
  • New Jersey would lose about $5 billion[2] in federal funds each year, deepening the state’s budget crisis while devastating its economy – particularly its hospitals and health care sector, which would bleed tens of thousands of jobs as a result.
  • The number of New Jerseyans without health insurance would skyrocket. An estimated 500,000 residents would become uninsured by 2027 – equaling an unprecedented 71 percent increase.[3] This would erase all the gains in health coverage New Jersey has made under the ACA, and leave the Garden State with 1.2 million uninsured residents. This would increase costs for local hospitals by $450 million, threatening their financial solvency.[4]
  • New Jersey would also be hit hard because the bill redistributes millions of federal dollars from states that expanded Medicaid to those which did not to pick up more votes to pass the bill.

Elimination of Medicaid Expansion Would Cause Widespread Coverage Loss and Lead to Deep Cuts in Federal Funds

  • Starting in 2020, this proposal turns the federal funding for the Medicaid expansion into a block grant before eliminating funding altogether in 2027. This would likely result in all of the 540,000 New Jerseyans who’ve currently obtained coverage under the expansion to lose it by 2027.
  • By 2027, New Jersey would be losing about $4 billion in federal funds each year, eliminating a major source of funding for the state’s campaign to treat opioid addicts.[5]

Radical Medicaid Changes Put Over a Million New Jerseyans at Risk

  • Like earlier proposals, this one would result in lost or reduced health care for an additional 1.1 million[6] New Jerseyans due to a permanent cap on Medicaid that would drastically reduce funding to New Jersey.
  • New Jersey would lose about $4.4 billion in federal funds between 2020 and 2026 under this cap.[7] The amount would skyrocket after 2026 due to changes in the way the cap is calculated.
  • New Jersey’s seniors and people with disabilities would be most at risk because they account for 64 percent of all Medicaid expenditures in the state.[8]
  • Prescription drug coverage, community-based care for seniors and people with disabilities, and dental coverage would be especially vulnerable to elimination because they are considered optional in Medicaid.

Marketplace Insurance Would be Unaffordable for Nearly Everyone

  • Starting in 2020, up to 200,000[9] New Jerseyans would begin to lose their insurance in the individual Marketplace due to the elimination of the individual mandate and phase out of all subsidies. These subsidies would be temporarily converted to an inadequate block grant from the federal government to states but by 2027 funding for this crucial tool to help keep insurance affordable would disappear. New Jersey would lose about $1 billion in federal funds for subsidies each year starting in 2027.[10]
  • An additional 150,000[11] New Jerseyans who don’t receive subsidies would either lose private health coverage or have to pay much more for it, because the state’s insurance premiums would likely return to the highest level in the nation (as they were before the ACA).

Protections for New Jerseyans With Pre-Existing Conditions & Coverage for Essential Health Services Could Disappear

  • The latest proposal allows states to opt out of ACA protections that prevent insurers from charging higher premiums based on health status, jeopardizing affordable coverage for millions of New Jerseyans with pre-existing conditions.
  • It also allows states to opt out of ACA requirements that insurers cover essential health benefits like hospitalization, maternal care and treatment for substance abuse; this could also harm many of the 5 million New Jerseyans who have employer-based insurance.

Endnotes

[1] Consists of 600,000 New Jerseyans who are projected to be in the Medicaid expansion by 2027, 200,000 who are projected to receive Marketplace subsidies and 100,000 who do not receive subsidies and would drop their individual insurance because it would be unaffordable.

[2] Includes all federal funding lost in Marketplace subsidies and the Medicaid expansion

[3] NJPP analysis of 2016 Census Bureau American Community Survey data & Congressional Budget Office reports on earlier, similar bills to ‘repeal and replace’ the Affordable Care Act. Estimate is preliminary, pending the Congressional Budget Office report on this proposal.

[4] Kellogg Insight, Who Bears the Cost of the Uninsured? Nonprofit Hospitals, June 2015. https://insight.kellogg.northwestern.edu/article/who-bears-the-cost-of-the-uninsured-nonprofit-hospitals

[5] NJPP analysis of New Jersey Department of Human Services data on Medicaid expansion expenditures submitted to the Office of Legislative Services for the 2018 budget, adjusted for inflation. http://www.njleg.state.nj.us/legislativepub/budget_2018/DHS_response.pdf

[6] New Jersey Division of Medical Assistance and Health Services Enrollment Reports, excluding CHIP. http://www.state.nj.us/humanservices/dmahs/news/reports/index.html

[7] Center on Budget and Policy Priorities, Like Other ACA Repeal Bills, Cassidy-Graham Plan Would Add Millions to Uninsured, Destabilize Individual Market, September 2017. https://www.cbpp.org/research/health/like-other-aca-repeal-bills-cassidy-graham-plan-would-add-millions-to-uninsured

[8] Kaiser Family Foundation, Medicaid Spending by Enrollment Groups, 2014.

[9] U.S. Department of Health and Human Services, Assistant Secretary for Planning and Evaluation, Compilation of State Data, 2016, https://aspe.hhs.gov/compilation-state-data-affordable-care-act

[10] Ibid. Includes $166 million for cost sharing subsidies and $792 million for premium subsidies.

[11] NJ Department of Banking and Insurance, Individual Health Coverage Program, 1Q2017, http://www.state.nj.us/dobi/division_insurance/ihcseh/enroll/1q17ihcmarket.pdf

New Jersey’s Progress on Health Coverage Must Not Be Undone

Posted on by Raymond Castro

More New Jerseyans are getting vital health coverage, thanks mostly to the Affordable Care Act, including the Medicaid expansion. In fact, the share of Garden State residents with insurance has increased by 39 percent in just three years, with 455,000 people gaining coverage since 2013, according to the latest Census data released today.

The share of New Jerseyans without coverage was 8 percent in 2016, down from 13.2 percent in 2013 before the ACA reforms went into place. That’s fewer than nationally, where 8.8 percent are insured.

It’s clear that the expansion of Medicaid under the ACA has been a key driver of low-income Americans receiving health insurance. According to the Census release, the uninsured rate was nearly twice as high (11.7 percent) in states that didn’t expand Medicaid as in states that did (6.5 percent).

This remarkable progress we’ve made must not be undone by continued efforts to repeal and replace the Affordable Care Act. Our Congressional representatives must continue to work to improve the ACA, not dismantle it.

Latest Health Bill Would Deeply Cut Funding for New Jersey

Posted on by Raymond Castro

A new ACA repeal bill would cut New Jersey’s annual federal funding for health coverage by $4.7 billion by 2026, according to a new report by the Washington DC based Center on Budget and Policy Priorities. The Garden State would be among the hardest hit states under the plan, with a cut of 53 percent to federal funding for health coverage in 2026, compared to current law.

Congressional Republicans’ efforts to repeal the Affordable Care Act (ACA) have failed in recent months in large part because a large majority of Americans oppose taking coverage from millions of people, raising costs for millions more, gutting Medicaid and undermining consumer protections.

This has opened the door to a better path: a transparent, bipartisan effort to strengthen our health care system without taking people’s coverage away or gutting Medicaid. The public supports this approach and bipartisan Senate hearings slated for September offer a first step forward.

Senators Bill Cassidy and Lindsey Graham are reportedly working with the White House to block this emerging, bipartisan option and instead revive the ACA repeal effort by pushing their own version of a repeal bill, the Cassidy-Graham proposal.

Despite claims to the contrary, the Cassidy-Graham plan is in many respects worse for New Jersey than  previous, failed GOP repeal bills, which were already a disaster for the state.

For example, New Jersey sees a deeper cut in federal funding for the Medicaid expansion and the ACA marketplace subsidies through 2026, simply because it has the highest population density and third highest per-capita income among all states – but, of course, it also has one of the highest costs of living. The state would also be punished because it has one of the most successful Medicaid expansions in the nation.

The plan would eliminate the ACA Medicaid expansion, which covers 546,000 New Jerseyans, starting in 2027. It would also eliminate tax credits that help 265,000 moderate-income residents afford marketplace coverage and subsidies that help low-income New Jerseyans with out-of-pocket health costs like copays.

A far smaller block grant would replace both Medicaid expansion funding and marketplace subsidies. The plan would also cap and deeply cut the rest of the Medicaid program just like previous Senate and House repeal bills. And, after 2026, the block grant would disappear entirely, leaving Garden State residents high and dry.

The public and groups representing patients, hospitals, physicians, seniors, people with disabilities and others have forcefully rejected this misguided approach. It’s time to focus on bipartisan solutions that strengthen – rather than weaken – our health care system.

New Jersey’s Marketplace Leads the U.S in Making Health Care Affordable

Posted on by Raymond Castro

 

But continued progress should not be taken for granted

 

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

While the President and Congressional leadership have campaigned to undermine the Affordable Care Act (ACA), the health insurance Marketplace in New Jersey has provided a national example of progress. This is on top of the state’s Medicaid expansion, which – with the eighth highest enrollment rate in the nation – has provided health coverage for a half million residents and is now the primary source of funding for opioid addiction treatment in New Jersey.

Prior to the ACA, New Jersey already had enacted strong insurance regulations and consumer protections, requiring comprehensive benefits (then called “standard plans”) and protection for individuals with pre-existing conditions, for example. While these policies were commendable, the comprehensive and high-quality coverage they mandated was by and large unaffordable.[1]

The ACA came to the rescue by providing subsidies to reduce costs, establishing the individual mandate and providing funding for outreach. All those changes made the Marketplace much more attractive to healthier individuals, which has helped keep the premium costs down for everyone. Without these components, the Marketplace’s success would be threatened.

While the state’s marketplace – a federal website (healthcare.gov) that allows consumers to shop for insurance plans in New Jersey – is not perfect, state and federal leaders need to protect and improve it – not seek to extinguish it. The overwhelming majority (78 percent) of Americans want the Trump administration to make the current health care law work better, not make it fail and (maybe) replace it later.[2]

The most immediate concern is President Trump’s threat to cut $166 million in federal subsidies to New Jersey insurers to reduce cost sharing for 145,000 low-income New Jerseyans who purchase insurance in the individual market.[3] Without these subsidies, which average about $1,200 per person, insurers would likely increase premiums by 20 or even 30 percent, making insurance unaffordable for many New Jerseyans and increasing federal costs for higher premium subsidies that are triggered by reducing cost sharing reduction subsidies.[4] This is now a full-scale emergency because insurers must decide next month what their premium rates will be and if they will even stay in the marketplace.

New Jersey should join 17 other states in a federal lawsuit to challenge the Trump administration if it terminates these subsidies, now that a federal appeals court has ruled that such a challenge can indeed move forward. All of New Jersey’s bordering states (New York, Pennsylvania and Delaware) are part of the lawsuit, as are seven other states with Republican governors. In other words, there is no reason Gov. Christie shouldn’t join these efforts. His support might help avert a potential crisis and avoid the loss of desperately needed health care for many New Jerseyans.

In Congress, New Jersey’s bipartisan delegation that voted against hastily-drafted and ill-considered plans to repeal the ACA must continue to put partisan politics aside to do what is best for the health and well-being of New Jerseyans by supporting efforts to sustain federal funding of these subsidies and strongly opposing the President’s reckless and unsupportable strong-arm tactics to withhold them.

The Trump administration also needs to end its mixed signals about the individual mandate, which requires most Americans to purchase health insurance. The Internal Revenue Service must continue enforcing this critical mandate, which insures that healthy people – not just sick people ­– will buy coverage, helping to hold down the premiums for everyone.

It will also be critical that the Trump administration maintain outreach. It has already canceled a major outreach contract with an agency that had three sites that served most northern New Jersey communities. It was also reported recently that the administration has decided that it may not partner with outside groups, as the federal government has done for the last four years.

New Jersey Has Slowest Growth in Federal Marketplace Premiums

New Jersey had the nation’s slowest growth by far in federal Marketplace premiums between 2013 and 2017, according to new federal data. During this time, average premiums rose to $479 a month from $428, a 12 percent increase for an average of only 3 percent a year.[5] This is a far cry from the many double-digit annual increases before the ACA, and nearly nine times slower growth than the national average.

Adjusting for health care inflation during this time (5.6 percent annually[6]), there was a 2.6 percent annual decrease in New Jersey’s average premiums – amounting to about $144 million savings in 2017 alone in the Marketplace.[7] What’s more, 82 percent of New Jerseyans enrolled in the Marketplace received premium subsidies, which offset any premium increase for most consumers.[8] As a result of this slow growth in premiums, New Jersey fell from having the highest premiums in the nation in the federal marketplace to 21st in just four years.

These Marketplace savings were achieved in every New Jersey congressional district. There was very little difference in average savings in districts represented by Democrats ($12.3 million) and those represented by Republicans ($11.6 million). These savings mainly benefit consumers who pay the full cost of their insurance, as well as all taxpayers, because there was less need for federally-funded premium subsidies.

New Jersey’s Deductibles Are Far Lower Than in Other States

The ability to keep premiums down is especially impressive because, unlike most states, New Jersey also places a cap on the deductible that can be set by insurers to help reduce consumer out-of-pocket costs.[9]

On average, deductibles in the federal Marketplace in New Jersey are about $1,600, just 43 percent of the national average ($3,609).[10] (New Jersey also offers one plan that has no deductible.) While individuals in other states can face deductibles of up to $6,000, in New Jersey there is a $2,500 cap on nearly all marketplace plans. The only exceptions are “Bronze” plans, which have the highest cost sharing, but even that deductible is capped at $3,000 for a New Jersey individual. Only 12 percent of all New Jerseyans who have selected plans in the marketplace have opted for a Bronze plan, a rate that is 25 percent lower than the national average of 16 percent.

New Jersey’s Marketplace Is Stable

Opponents of the ACA contend that insurers are abandoning the Marketplace, leaving consumers with no coverage. While this is hardly true nationally – in fact, just one percent of all the nation’s counties are without at least one insurer (and most of them are sparsely populated rural areas) – it is especially not true in New Jersey, where all 21 counties have a choice of two (and next year, perhaps three) insurers.

While three out of New Jersey’s initial five Marketplace insurers did exit last year, one (Oscar) is reportedly likely to return next year. New Jersey has two insurers and 18 plans to choose from in the Marketplace this year. This includes Horizon, the largest insurer in the state and the only non-profit. Recently Standard and Poor’s maintained Horizon’s “A” credit and said its outlook was described as “stable.” In addition, New Jerseyans have a choice of five insurers outside the marketplace – an attractive option for consumers not eligible for subsidies.

Record Number of New Jerseyans Getting Coverage in Individual Insurance Market

Meanwhile, despite the threats emanating from Washington, enrollment in New Jersey’s individual insurance market continues to grow, according to new state data. In 2017’s first quarter (which reflects the open enrollment period), enrollment grew by 19 percent to 369,000 covered individuals (this includes about 265,000 individuals in the Marketplace and 104,000 who purchase insurance outside the Marketplace).[11] This impressive growth defied the Trump administration’s elimination of all advertising and other outreach in the last week of open enrollment and Gov. Christie’s refusal to establish a state-run marketplace that would have brought more than $100 million in federal funding to New Jersey.

This progress is even more remarkable considering that before the ACA, comprehensive plans for individuals were in a death spiral. From 1995 to 2013, enrollment decreased by 78 percent, leaving only 39,000 New Jerseyans who could afford coverage. Since the Marketplace started in 2014, enrollment has increased 840 percent.

Endnotes

[1] This became such a big problem that the state went so far as to enact a statute P.L. 2001, chapter 368 establishing bare bones policies (called “Basic and Essential”) which reduced the premiums by allowing modified community rating and providing more limited coverage which proved popular with consumers when sold with riders that provided more comprehensive coverage.

[2] Kaiser Family Foundation, Poll: Large Majority of the Public, Including Half of Republicans and Trump Supporters, Say the Administration Should Try to Make the Affordable Care Act Work, August 2017. http://www.kff.org/health-reform/press-release/poll-large-majority-of-the-public-including-half-of-republicans-and-trump-supporters-say-the-administration-should-try-to-make-the-affordable-care-act-work/

[3] Center on Budget and Policy Priorities, Interactive Map: Cost-Sharing Subsidies at Risk Under House GOP Health Bill, March 2017. https://www.cbpp.org/blog/interactive-map-cost-sharing-subsidies-at-risk-under-house-gop-health-bill

[4] American Academy of Actuaries, Cost-Sharing Reductions: What Are They And Why Do They Need To Be Funded?, July 2017. http://www.actuary.org/content/cost-sharing-reductions-what-are-they-and-why-do-they-need-be-funded-0

[5] U.S. Department of Health & Human Services, Office of The Assistant Secretary For Planning And Evaluation, Individual Market Premium Changes, 2017, https://aspe.hhs.gov/pdf-report/individual-market-premium-changes-2013-2017

[6] Centers for Medicare and Medicaid Services, NHE Summary including GDP, CY 1960-2015, (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html) and National Health Expenditure Projections 2016-2025 (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/proj2016.pdf)

[7] Savings were likely also achieved outside the marketplace but no data was available.

[8] U.S. Department of Health & Human Services, Office of The Assistant Secretary For Planning And Evaluation, Compilation of State Data on the Affordable Care Act, December 2016. https://aspe.hhs.gov/compilation-state-data-affordable-care-act

[9] This report did not examine co-payments and co-insurance in New Jersey compared to other states

[10] Kaiser Family Foundation, Impact of Cost Sharing Reductions on Deductibles and Out-Of-Pocket Limits, May 2017 (http://www.kff.org/health-reform/issue-brief/impact-of-cost-sharing-reductions-on-deductibles-and-out-of-pocket-limits/) and NJPP analysis of healthcare.gov for New Jersey average premium

[11] New Jersey Department of Banking and Insurance, Market Summary, http://www.nj.gov/dobi/division_insurance/ihcseh/enroll/1q17ihcmarket.pdf

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