To download The Essential Eleven as a PDF, click here. For more proactive policy ideas for the next administration, see NJPP’s March 2017 Blueprint for Economic Justice & Shared Prosperity.
Topic Category: Health
Trump’s Sabotage Threatens Health Care for New Jerseyans
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
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
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
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
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
Lawmakers Should Block Governor’s Health Transfer Plan
Below are prepared remarks to be delivered in front of a joint meeting of the Senate Health, Human Services & Senior Citizens and Assembly Human Services Committees today.
Thank you for the opportunity to testify on the governor’s proposed reorganization plan to transfer mental health and addiction functions from the Department of Human Services to the Department of Health. This is not a minor administrative issue; rather it represents one of the most radical changes ever in the organization of state departments in a century and deserves much more study than the allotted 60 days allow. While we appreciate the governor’s admission that there is a stunning lack of coordination and integration of services within his administration, this plan does not sufficiently support the conclusion that the solution is to put all of these services in one department.
We are also very concerned that even though these problems have been going on for many years, the governor chose to wait until the very end of his administration to rush through these changes, all of which would have to be carried out by the next governor. Gubernatorial transitions are already complicated enough; adding a significant change like this – which could have life or death consequences for New Jersey residents – would make it even more so.
To some extent, this issue is déjà vu all over again. It was only six years ago that the state formally transferred addiction services from the DOH to the DHS to “provide increased efficiency, coordination and integration of the State’s addiction prevention and treatment functions.” Rather than continue to bounce state services back and forth between departments, we need to recognize that there may be other factors that are much more important in improving the efficiency and effectiveness of these services.
One of the main reasons that the DHS was created in 1919 was too oversee psychiatric care. Ever since then, psychiatric hospitals and community mental health services have always been within the department. What we know from this extensive experience is that managing inpatient and community mental health services is very complex, and if it is not done properly it can have disastrous consequences for the consumer’s mental health, including death.
We are also concerned that the state could lose federal Medicaid funding if these services are transferred to the DOH, since Medicaid is administered by DHS. The state has been particularly successful in funding more of these services thanks to the Medicaid expansion, which increased the number of New Jerseyans enrolled in Medicaid by about a half million residents. Also, the department is in the middle of a major transition to fee-for-service funding for mental health and drug addiction services to also maximize Medicaid funds. There have been major problems in administering this transition, which need to be remedied before other major structural changes are implemented.
The governor says there needs to be more integration between mental health and physical health. We strongly agree, but the DHS is the largest provider of physical health in the state through Medicaid so why transfer behavioral health services to the DOH? It would appear that problem could more easily rectified by only relocating all licensing to the DOH rather than transferring all services to the department.
We are also extremely concerned that adding such a major new function to the DOH will divert it from its core mission as a regulatory and planning agency which oversees health in New Jersey. We believe that function is critical and will be especially needed in the future given the many changes that are going on in the health sector, such as consolidation of hospitals, the increase in for-profit hospitals, the growth in tiered network and value-based health services and the need for more accountability throughout the health care system to improve care and reduce costs. We are concerned that these critical functions will be reduced, rather than strengthened, as a result of adding an entirely new function to the DOH. Also, how can the department fairly evaluate the extent to which the state is meeting its health goals if the department itself becomes a major provider of health services?
We also disagree with the governor’s suggestion that since the DHS has a lot of staff and the Department of Health does not, there should be more of a balance. It should be pointed out that while the department does have about 11,000 staff now, that’s about half what it used to have when the department also included children services and corrections. In addition, most research in organizational theory shows that the size of an organization has very little to do with it its efficiency and effectiveness.
Lastly, such a major change in state government should not be made in the face of such uncertainty at the federal level. As we all know, there is a major effort to greatly reduce the amount of federal support the states receive to fund health care. The focus currently is on repealing the Affordable Care Act, but it’s also clear that Congress is very interested in many other health care cutbacks, including about $2 trillion in cuts to health funding over 10 years in the House’s proposed budget. Until we know what those changes are going to be, it would be premature to make major organizational changes in state government. For example, it appears quite likely that there’ll be a major reduction in federal funds to hospitals, in which case the DOH will have more than its hands full.
In conclusion, we believe the governor’s plan could create many more problems than it solves -if it solves any. On the other hand, we recognize that there may be some merit to transferring these services that we have not identified.
We therefore urge that you vote to oppose the governor’s plan and direct him to provide a thorough study, with public hearings and stakeholder input, of the advantages and disadvantages of transferring these services to the DOH from the DHS, taking into account what the mission of the departments should be in the future given the many changes that will likely be made in Washington and the health field in general, and recommending any organizational and statutory changes that may be needed.
We also recommend that the report evaluate the extent to which the governor’s office has the authority to better coordinate these services in lieu of transferring them from one department to another in anticipation that the next governor will decide to take more of a leadership role in managing state services, promoting transparency and encouraging public input.
Latest Trumpcare Bill: Like Deja Vu All Over Again
The latest Senate health bill that was released today is just as bad for New Jersey as the previous iterations, and would cause widespread loss of health care and increase suffering across the state.
Even though national polls show that nine in ten Americans oppose Medicaid cuts, the Republicans in D.C. seem hell-bent on destroying Medicaid and effectively ending the Medicaid expansion, which would harm New Jersey more than other states.
In fact, the bill still ends the current federal funding level for the Medicaid expansion in 2021. This would likely result in about 560,000 New Jerseyans – or 10 percent of all non-elderly adults – losing their health coverage, the loss of up to $4 billion in federal funds each year and the elimination of tens of thousands of jobs.
In addition, it continues to cap and reduce funding for the entire Medicaid program by about $60 billion over 20 years in New Jersey. This radical proposal has nothing to do with improving the Affordable Care Act, but everything to do with a long-standing right-wing ideological attempt to gut Medicaid. This change would eventually result in massive health care cuts to the 1.6 million New Jerseyans who are covered through Medicaid, including hundreds of thousands of Garden State kids. New Jersey’s seniors and people with disabilities – who make up about two-thirds of all Medicaid funding – would be hit the hardest.
This bill would cause deeper harm in New Jersey than other states because the state has the eighth largest enrollment in the Medicaid expansion, and because the federal Medicaid matching rate in New Jersey would be reduced the lowest level possible: 50 percent.
While the new bill does increase premium subsidies in the health insurance marketplace as compared to earlier versions, most New Jerseyans would still receive less in subsidies than under current law. What’s more, any positive impact from premium subsidies would pale compared to the Medicaid cuts, because there are eight times as many people in Medicaid than there are receiving subsidies in New Jersey.
U.S. Senators Join NJPP on Health Care Call
Yesterday, U.S. Senators Bob Menendez and Cory Booker and the head of the New Jersey Hospital Association joined New Jersey Policy Perspective on a press conference call to discuss the devastating New Jersey impact of the Senate’s proposal to repeal the Affordable Care Act as outlined in a new NJPP Fact Sheet.
“For years, Republicans railed against the Affordable Care Act and pledged they would repeal and replace it with something better. But under the plan they put out last week, the only people who are better off are millionaires and health insurance company executives,” said Sen. Menendez. “Page by page, this Republican plan forces Americans to pay more for less comprehensive health care coverage. It eviscerates Medicaid, leaving over half a million low-income New Jerseyans with no options, and abandoning vulnerable children and pregnant women, families living paycheck to paycheck, and seniors with long-term care needs.”
“This week, the independent CBO shattered any illusion that the Senate Republican health repeal bill is any less cruel and craven than the version passed by the House,” said Sen. Booker. “As NJPP clearly points out, under the Senate Republican plan more than 500,000 New Jerseyans will be left without coverage, with our state losing $22 billion in federal funding over seven years. This repeal plan doesn’t just target the vulnerable, the elderly and the poor. It targets all of us. It undermines our character as a country and our highest ideals.”
“We can’t lose sight of those in New Jersey who would be most affected by the BCRA and its radical changes to the Medicaid program, including one in every three children in our state, more than 205,000 people with disabilities and more than half of the state’s nursing home residents who rely on Medicaid,” said New Jersey Hospital Association President and CEO Betsy Ryan. “The Better Care Reconciliation Act is most definitely not better for New Jersey residents and their health.”
The Senators did their segment of the call together from D.C., and streamed it on Facebook Live.
The call itself was also recorded; here’s a link to the full audio.
And, earlier in the day, NJTV News talked to NJPP’s Director of Health Policy Ray Castro about the proposal and how it would harm New Jersey.
Fast Facts: Medicaid Cuts in Senate Health Bill Would Harm New Jersey Even More Than Cuts in House Bill
To read a PDF version of this report, click here.
Given the concern of some Republican Senators regarding the proposed cuts to Medicaid in the American Health Care Act (AHCA) as passed by the House of Representatives, many expected that the Senate proposal (the “Better Care Reconciliation Act of 2017”) would be much less harmful. But the reverse is actually true – and the potential consequences for New Jersey are devastating.
The Congressional Budget Office analysis of the Senate bill finds that it’s strikingly similar to the House-passed bill – which was clearly terrible for New Jersey[1] – with 22 million Americans losing coverage by 2026 and $772 billion in federal Medicaid cuts over 10 years.[2]
While the CBO estimates that national coverage losses would continue to increase until 2026, when they peak at 22 million, in New Jersey the peak would occur in 2021 because of the likely end of the Medicaid expansion. By 2021, an estimated 520,000 New Jerseyans would lose health coverage under the Senate proposal.
And when it comes to Medicaid cuts and New Jersey, there are some substantive differences between the Senate and House bills:
Everyone in the Medicaid Expansion Would Likely Become Immediately Ineligible
Under the House bill, everyone who was in the Medicaid expansion before 2020 would be eligible for the current 90 percent federal match indefinitely, as long as they remained in the expansion. For that reason, it was assumed that New Jersey would continue to assist them until they left. The end result would be that nearly all the 540,000 New Jerseyans in the expansion would lose coverage in the matter of a couple of years, as NJPP noted in a recent report.[3]
Under the Senate bill, however, the federal match is reduced starting in 2021, eventually dropping to the regular Medicaid match of 50 percent. This change would make the state more likely to terminate everyone in the expansion starting in 2021, resulting in a larger loss of federal funding loss – $22 billion in the Senate version versus $20.6 billion in the House bill – over seven years. By 2026, New Jersey would be losing about $4 billion annually, which would cause havoc in the health care system and the loss of thousands of jobs.
Maintaining the Medicaid Expansion Would Cost New Jersey Billions, Making it Essentially Impossible
Under the Senate bill, the state’s cost to replace lost federal funds would be relatively modest in the first year but would very quickly increase to nearly $2 billion dollars a year starting 2024, making the prospect of maintaining coverage for these more than half a million New Jerseyans very expensive – and highly unlikely.
What’s more, continuing the Medicaid expansion would be more difficult for New Jersey than most other states. It has one of the largest enrollments in the Medicaid expansion and the federal matching rate that would be available to New Jersey under the bill would be only 50 percent, the 42nd lowest rate in the nation. And New Jersey is already in a state of near bankruptcy, with many other urgent and significant funding needs.
Senate Bill Has Deeper Medicaid Cuts That Would Most Harm Seniors and People with Disabilities
New Jersey could lose about $60 billion in federal funds over 20 years under the Senate bill,[4] because it includes much deeper cuts to Medicaid through the per-capita funding caps.
Both bills adjust these caps upward each year based on the medical component of Consumer Price Index (CPI-M) for adults and children, and add one percentage point on top for seniors and people with disabilities. The problem with using the CPI-M is that its growth (3.7 percent) is likely to be significantly less than what is projected for actual Medicaid spending (4.4 percent), which is how the bill generates billions of dollars in federal savings and shifts those costs to states.
The Senate bill does the same – until 2025. Then it changes the caps’ annual adjustments to be tied to the CPI–U, which is expected to grow even less (2.4 percent) than CPI-M, leaving an even larger gap between the cap increases and actual spending on Medicaid. In other words, after 2025 states would only be reimbursed for about half their increased Medicaid spending for the foreseeable future.
Even worse, after 2025 this lower index would apply to all groups, including seniors and people with disabilities. They would be particularly vulnerable in New Jersey because they consist of nearly two-thirds (61 percent) all the state’s Medicaid expenditures.
Cutting Health Care to Pay for Tax Cuts for the Wealthy is Robin Hood in Reverse
Incredibly, these Medicaid cuts that would imperil the health care of thousands of the most vulnerable people in the state are being proposed mainly to pay for massive tax cuts to the wealthy and corporations which amounts to about $15 billion in New Jersey over ten years.[5]
Due to the proposed tax cut for net investment and the additional tax cut for high earners, the top five percent of income tax filers would receive a $9.7 billion tax cut over ten years. These tax cuts are most concentrated at the very top, with the wealthiest 1 percent of New Jersey taxpayers receiving 73 percent of the tax cut. These taxpayers, with an average annual income of $2.9 million would receive an average tax cut of $23,000 a year.[6]
Endnotes
[1] New Jersey Policy Perspective, House-Passed Health Bill Would End Coverage for More Than Half a Million New Jerseyans, June 2017.
[2] Congressional Budget Office, Cost Estimate: H.R. 1628, June 2017.
[3] Ibid 1
[4] Based on NJPP extrapolation of the lower bound national estimate in AARP Public Policy Institute, The Senate Health Reform Bill Slashes Medicaid Severely, June 2017.
[5] The estimates for the insurance fee and the tax on prescription drugs are preliminary based on extrapolation of CBO national budget estimates. Further research is needed to determine how these taxes are implemented in New Jersey.
[6] Institute on Taxation and Economic Policy, Affordable Care Act Repeal Includes a $31 Billion Tax Cut for a Handful of the Wealthiest Taxpayers: 50-State Breakdown, March 2017.