Speaking at a press conference at the Saint Barnabas Medical Center in Livingston, Governor Murphy announced Friday that the State of New Jersey will move to a State-Based Health Exchange for the year 2021.
The action will allow New Jersey greater control over its health insurance market and the ability to establish stronger protections against the Trump Administration’s sabotage of the ACA. The Governor has also proposed codifying in state law the protections provided by the Affordable Care Act.
“New Jersey has not shied away from the work required to secure the protections afforded by the Affordable Care Act and to provide access to quality affordable health care that our residents deserve – in fact, in partnership with the Legislature our state has stepped up,” Murphy said.
“Together with the Legislature, we have the ability to further protect New Jersey from actions taken by the Trump Administration to roll back the hard-fought protections afforded by the ACA and I would argue we have an obligation to do so.”
“New Jersey’s work has demonstrated results for consumers and created greater access to quality affordable coverage. However, because we are operating on the federal exchange we are subject to the whims of the Trump administration and directly impacted by its efforts to damage and destabilize the market,” said Department of Banking and Insurance Commissioner Marlene Caride.
“Moving to a state-based exchange is the right next step in our work to improve access to coverage and care. The federal government has cut the enrollment period, and slashed funding for outreach, advertising and navigators that provide critical assistance to residents in our communities. Funding sent to Washington to utilize the federal exchange will be better utilized right here in New Jersey, where we can establish policies that create greater stability, access and improved protections for residents.”
Transitioning to a State-Based Exchange (SBE) will give the state more control over the open enrollment period; access to data that can be used to better regulate the market, conduct targeted outreach and inform policy decisions; and allow user fees to fund exchange operations, consumer assistance, outreach and advertising.
By redirecting the assessment on premiums, currently paid to the federal government to utilize a Federally-Facilitated Exchange (FFE), New Jersey can operate an exchange that is tailored and efficient for New Jersey residents.
The SBE itself can be created through Executive Action, beginning with today’s submission of a Declaration Letter by the state to the federal Centers for Medicare and Medicaid Services (CMS).
To fund the operation of the SBE, legislation will be required to transfer the current federal exchange user fee, which is presently set at 3.5% of premiums, to a 3.5% State-Based Exchange user fee for plan year 2021 – a rate that raises over $50 million a year. Maintaining the existing user fee in the individual market at 3.5% of premium in New Jersey will allow the state to dedicate funding towards outreach and enrollment efforts, which have been reduced at the federal level, as it transitions to an SBE for 2021.
The Murphy Administration is also proposing to secure the protections in the ACA by codifying major provisions of the federal law.
The Texas v. Azar case, currently pending appeal in the Fifth Circuit, threatens the ACA. While the ACA remains fully in effect following the district court decision, the law is clearly under threat. New Jersey had many of the ACA consumer protections in State law before the ACA was passed. However, state law has not been updated in all respects to incorporate the ACA protections. In the event the ACA were overturned in the courts, or further destabilized at the federal level, significant reforms to New Jersey law are required to maintain the ACA consumer protections.
The Administration proposes codifying many of the primary ACA consumer insurance protections including:
– Prohibiting preexisting conditions exclusions
– Requiring dependent coverage to age 26
– Requiring coverage of Essential Health Benefits
– Prohibiting lifetime and annual limits
– Requiring coverage without cost sharing for preventative services.
The Governor today sent a Declaration Letter notifying CMS of New Jersey’s intent to create a State-Based Exchange for 2021. The letter may be found here.