Call it Murphycare: N.J. to create its own health insurance exchange, governor announces

New Jersey is pursuing its own state-based health insurance exchange, Gov. Phil Murphy announced Friday.

The state filed a letter of intent with the federal government to join 12 other states in establishing a health exchange and moving away from using the federally-run exchange.

The existing health insurance marketplace is operated by the federal government, as per the Affordable Care Act, which was established in 2010.

But, instability at the federal level has pushed the state to pursue operating its own exchange by the fall of 2020, in time for people to buy plans that would be valid in 2021.

The state needs establish this exchange, as the federal government “continues to undermine and weaken the marketplace in their misguided efforts to dismantle and weaken the Affordable Care Act,” Murphy said.

“It allows us to better tailor our marketplace and meet the unique needs (of the state).”

Murphy also highlighted the ongoing lawsuit the state has joined against Texas, which is pursuing ruling the ACA unconstitutional.

Establishing the state exchange requires a regulatory overhaul, which needs the participation of the state’s Legislature, and filing a declaration intent with the federal government, Murphy said.

It is unclear what the cost of serring up and operating the state exchange would be in the long run.

A Murphy spokesman said existing user fees sent to the federal government would be kept in the state.

“The state is currently sending over $50 million to the federal government from user exchange fees,” the spokesman said.

“We will be able to use those funds to set up the state based exchange, and to do robust outreach and education.”

Department of Banking and Insurance Commissioner Marlene Caride, who also spoke during the announcement Friday, said the state needs to protect the stability achieved by legislation last year to maintain an individual mandate and establish a reinsurance program.

Murphy said the legislation has already proven successful through the small increase in premiums compared with other states who also rely on the federal exchange.

“We are subject to the whims of the (President Donald) Trump administration and directly impacted by the efforts to … destabilize the market,” Caride said.

In a statement following the announcement, Caride said, “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 protection for residents.”

The federal government reduced advertising funding of the ACA by 90 percent, funding for navigators by 75 percent and cut the enrollment period from three months to six weeks, according to Caride.

In that time period, insurers and local community groups and providers stepped up to provide navigators to help maintain the enrollment numbers from the state.

California, Connecticut and New York have state exchanges, Caride said, and are able to hold extended enrollment periods.

Murphy made the announcement at RWJBarnabas Health’s Saint Barnabas Medical Center in Livingston.

RWJBH CEO Barry Ostrowsky praised the governor’s leadership and his prioritization of health care.

Murphy was also joined by state Sen. Richard Codey (D-Livingston) and Assemblymen Herb Conaway (D-Delran) and John McKeon (D-Madison).

The state-based exchange would include the following ACA provisions:

  • Coverage of pre-existing conditions;
  • Allowing dependent coverage until age 26;
  • Coverage of 10 essential benefits, including outpatient care, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse disorders, prescription drugs, rehabilitative services, lab services, preventative and wellness, and pediatric services;
  • Prohibiting lifetime and annual limits;
  • Requiring coverage of preventative services at no cost.

The move was hailed by advocates and industry officials alike on Friday.

The New Jersey Policy Perspective said it could reduce premiums, and depending on how the system is set up, could follow the lead of other states which have reduced premiums for individuals not eligible for federal subsidies.

“These actions, combined with better outreach, will reduce  premiums in the individual marketplace by encouraging healthier New Jerseyans to participate in the Exchange. It should also reverse this year’s decrease in enrollment in the Exchange (from 265,000 to 240,000),” said NJPP health policy director Raymond Castro.

“Remarkably, the state Exchange can be established without additional state funds since insurer fees that otherwise would go to the federal government will stay in New Jersey, where they can be better used to meet the state’s unique needs.”

New Jersey Hospital Association president and CEO Cathleen Bennett also applauded the move.

“The proposals for minimum requirements for insurance policies are very important. We’ve seen a rise in plans that require more cost-sharing by the consumer, often leading to surprise medical bills for the patient,” she said.

“Covering more people with health insurance and making sure that coverage is adequate for their medical needs is essential to improve health status and begin addressing the affordability concerns in healthcare today.”