Chris Christie’s decision on health-benefits exchange probably won’t change insurance choices

After years of debate over whether the state would play an active role operating a health-benefit exchange under the Affordable Care Act, Gov. Chris Christie’s decision last Friday to completely hand over responsibility to the federal government will probably make little difference in determining what insurance plans will be available in New Jersey starting Jan. 1.

Some expressed concern that New Jersey insurers will now have to deal with two different layers of government bureaucracy — which might eventually lead state officials to consider taking a more active role in the exchanges. The decision by Christie applies only to 2014 and could be revisited.

Still, much work remains to be done by insurers and government agencies between now and Oct. 1, when the exchanges are scheduled to start enrolling individuals and small businesses. And, state-healthcare advocates say they will continue to be involved, working with federal officials on behalf of New Jersey to make sure eligible residents sign up for coverage.

Initial veto

Once Christie decided in December to veto the second of two bills that would have established a state-run exchange, there was little difference between having a state exchange and a federal-state partnership, said Raymond J. Castro, senior policy analyst for New Jersey Policy Perspective, a think tank focused on low-and middle-income residents.

In making the announcement, Christie emphasized several areas where the state is cooperating with federal officials, including the state decision in December to pick a benchmark for the essential health benefits to be provided through the exchange.

Both options allow any plan that meets the essential health benefits benchmark to be offered on the exchange, Castro said.

What is the exchange?

The exchange will be a marketplace to buy insurance for those who aren’t covered by their employers or don’t receive government-provided insurance like Medicare and Medicaid.

The primary way to access the exchange will be a website where consumers and small business owners will be able to compare plans and determine whether they are eligible for subsidies.

The exchange is expected to clearly list differences between what each health plan offers and how much it will cost. Some people will also be able to turn to “navigators,” organizations that will provide information about what options are available.

Castro expects that the benefits offered by the plans will be similar, but said costs will differ.

For instance, plans with lower monthly premiums may cost more, once higher deductibles — the out-of-pocket costs before insurance payments start — are taken into account.

Federal oversight

The federal government will now be in charge of all aspects of New Jersey’s exchange, including determining which plans are offered and what will be done to reach out to consumers; operating the exchange website; designing the insurance application; picking and funding the “navigators” that will guide residents through the process; determining eligibility for subsidies; and enforcing the mandate that everyone eligible for the benefits through the exchange must purchase coverage or pay a penalty.

The exchange is scheduled to start enrolling residents on Oct. 1, so that they can receive health coverage starting on Jan. 1, 2014.

Joel Cantor, director of Rutgers University’s Center for State Health Policy, said the state role in a federal exchange will still be important.

He co-wrote a 2011 report estimating that 362,000 additional state residents will buy insurance through the exchange and through the individual insurance market.

“There’s still a huge role for the states, even in the entirely federally facilitated model,” Cantor said. “The state will still have a role in reviewing premium rates” to ensure that they comply with state law.

Cantor noted that both healthcare activists and health insurers had advocated for a state role in the exchange. He noted that New Jersey’s government has been actively involved in health insurance for decades.

“There’s a long history of a very active market — stakeholders have been comfortable with that,” Cantor said. “They wanted to stay in that comfort zone. The state will still play the insurance regulatory role, so those relationships won’t be lost.”

More involvement

He noted that the federal exchange would be adding a layer of rules.

“There’s going to be a new regulator on the block, as well as the existing one,” Cantor said. “There’s logic to having only one, but it is what it is.”

Castro agreed.

“Having two different governmental groups to have to deal with insurers is a little more complicated,” Castro said, adding that having a federal exchange may slightly increase the chance for “some bumps in the road. There are going to be some glitches come Oct. 1, but I’m sure it’s going to be ready.”

He added that it won’t be clear whether it was wise to choose a federal exchange until it’s had some time to operate.

“If the prices are under control, fine, then maybe we don’t need a lot of consumer protections,” Castro said, adding that he was skeptical that this will be the case.

Wardell Sanders, president of the New Jersey Association of Health Plans, said the state might find that it wants to take a more active role in applying its regulations.

Crunch time approaches

With less than eight months until the launch date for enrolling residents and businesses, insurers will be busy.

Sanders noted that the insurers still must determine the contents of the plans they will offer and develop the premium rates.

Some legislators still hope that the state will have some influence over the shape that the federal exchange takes.

State Sen. Nia H. Gill (D-Essex and Passaic) and Assemblyman Herb Conaway Jr. (D-Burlington) sent a letter to federal officials calling on them to consider the content of the exchange bills vetoed by Christie.

Gill also called for legislative oversight of implementation of the exchange, but Castro questioned whether that is possible since Christie vetoed the exchange bill in December.

The ‘gold standard’

The decision not to have an active state role in the exchange may prove to be a missed opportunity, according to Renee Steinhagen, executive director of the New Jersey Appleseed Public Interest Law Project, an organization focused on underserved groups.

Steinhagen said that “New Jersey has the gold standard” in insurance regulations and that the state could have built on those rules if it had operated an exchange.

She said consumer advocates now must work directly with the federal government to ensure that as many residents as possible sign up for the exchange.

Steinhagen noted that many conservative governors have vocally opposed the exchanges and have chosen federal exchanges with the long-term hope of undermining the 2010 Affordable Care Act. She said it could have the opposite effect, establishing a federal infrastructure that could be used to increase national regulation of healthcare.

Christie’s letter to Sebelius

Christie struck a more conciliatory stance than other Republican governors in his letter to U.S. Health and Human Services Secretary Kathleen Sebelius.

“As we move toward open-enrollment on the new, federally designed and operated exchange, my administration looks forward to working with your department as you begin implementing this next phase of the federal healthcare mandate,” Christie wrote.

He added that Banking and Insurance Commissioner Kenneth E. Kobylowski would serve as the coordinator with the federal government on matters regarding the exchange, while Division of Medical Assistance and Health Services Director Valerie Harr would serve as the state liaison on determining eligibility for Medicaid and the Children’s Health Insurance Program.

U.S. Department of Health and Human Services spokesman Fabien Levy responded to Christie’s letter.

“Whether run by the State, the Federal government or a partnership of the two, consumers in all 50 states will have access to quality, affordable coverage next year with the establishment of the Health Insurance Marketplace,” he replied. “We will continue to work in partnership with states and provide them with the flexibility, time and resources needed to implement the law.”

New Jersey for Health Care spokeswoman Dena Mottola Jaborska, the organizing director for New Jersey Citizen Action, said she was pleased that Christie acknowledged a need to work with the federal government.

“It does sound that the governor is open to some level of partnership and that is really great, we need that,” she said. “Perhaps in the future, the partnership can be expanded and the state can expand its involvement.”

She said she expects the federal government to put out a request for proposals for “navigator” organizations in April, and that organizations would apply and be selected in May or June.

They would then start work in the summer for the fall launch of exchange enrollment. She expects roughly 100 different organizations to serve as “navigators.”

“You’re going to want different groups,” with differing expertise on how to reach populations, such as Latino residents, she said.

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NJ Spotlight, an independent online news service on issues critical to New Jersey, makes its in-depth reporting available to NewsWorks.