NJ Readies Individual Mandate, Reinsurance Ahead Of Bill Signing

The mandate and reinsurance program are intended to help stabilize New Jersey’s individual insurance market to stave off premium hikes expected because of the federal tax reform law’s elimination of the penalty on individuals who fail to obtain adequate coverage.

TRENTON — Legislation to create an individual mandate to require most New Jersey residents to obtain health coverage or pay a penalty is still awaiting Gov. Phil Murphy’s signature, but his administration reported Wednesday that it is already taking steps to implement the proposed requirement and related legislation to create a reinsurance program in anticipation he will sign both measures into law.

The individual mandate and the reinsurance program are intended to help stabilize the state’s individual insurance market to stave off massive premium hikes expected because of the federal tax reform law’s elimination of the tax penalty on individuals who fail to obtain adequate coverage, as well as the loss of federal reimbursement for subsidies required of insurers to keep out-of-pocket costs manageable for low- and moderate-income enrollees.

The Affordable Care Act’s penalty for those without insurance is scheduled to be eliminated in January under the federal Tax Cuts and Jobs Act signed by President Donald Trump in December. Congress also failed to reach an agreement to provide funding for the cost-sharing subsidies as part of its recent omnibus spending bill for the current fiscal year.

Without state action, individual market premiums sold on the federal health care exchange are expected to rise as much as 90 percent over the next three years, Marlene Caride, the acting commissioner of the Department of Banking and Insurance, told lawmakers on the Assembly Budget Committee hearing Wednesday.

Legislation to create the state individual mandate and the reinsurance program were both approved last week by the Democratic-controlled Legislature and are currently awaiting action by Murphy.

While Caride, a former state assemblywoman from North Jersey, said she couldn’t say how Murphy would act, she did reveal that the department’s staff were involved in crafting both bills and that the department has also solicited bids for actuarial services to help implement the measures and apply for a federal waiver needed to create the reinsurance program.

“That will give us an idea of what the costs will be and the parameters,” Caride said, noting that the department hopes to fill many of some 62 vacant staff positions in the upcoming fiscal year.

She also said members of the department have also spoken to counterparts in other states that have gone through the waiver process with the federal government to create reinsurance programs, which are intended to help stabilize rising premiums by covering some of the expenses for insuring high-cost individuals.

At least half of the projected $280 million cost for the reinsurance program is expected to be paid by the federal government, Caride told lawmakers. Another $100 million is expected to come from revenues generated from the state’s proposed penalty on residents who fail to obtain adequate health coverage, she said.

And while the application to seek the federal waiver is considered an arduous one, Caride said her department was prepared to move forward in hopes of getting the program established before the state’s insurers propose their premiums for the next enrollment period this winter.

“We’re ready to implement the (reinsurance) program if and when it’s signed by the governor,” Caride said.

Horizon Blue Cross Blue Shield of New Jersey and AmeriHealth New Jersey are the two insurers that currently sell insurance plans to residents in Burlington County on the federal marketplace. The insurer Oscar also re-entered the marketplace in New Jersey this year, but does not sell policies in Burlington.

Caride told lawmakers the department was also actively working to boost outreach and education related to health insurance in hopes of getting more individuals covered.

About 275,000 New Jerseyans obtained coverage through the ACA’s federal exchange this year, down from 295,000 who signed up for coverage last year.

The federal exchange allows residents who don’t get insurance through work and who earn too much to be eligible for a government plan like Medicaid to obtain commercial insurance, often with the federal government covering a portion of the costs.

Caride said boosting enrollment is a top priority for the administration.

“Data shows the more individuals that are insured the better you are able to stabilize the market and provide more affordable health care coverage,” she said. “If you’re able to increase the (insurance) pool, you’ll have more people covered and you’ll reduce uncompensated care.”

And while only three insurers currently offer insurance through the ACA’s exchange, Caride said the administration hopes that its actions might prompt more insurers to consider selling plans in New Jersey in the future.

“Ideally if we’re able to get federal funds and the (Affordable Care Act) waiver for the reinsurance program and we’re able to stabilize our current market ... that might encourage some other companies to come into the federal marketplace,” she said.

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