Thursday, May 10, 2018

"New Jersey is poised to fight off ACA sabotage. Is Gov. Murphy on board?"

As Ive noted before, while the New Jersey legislature has passed bills establishing a state individual mandate and a reinsurance program, Gov. Murphy has not committed to signing them. I have an op-ed up on NJ Spotlight arguing that the need is urgent.:
The Congressional Budget Office forecast that mandate repeal in itself would generate premium increases of 10 percent per year throughout the next decade. An analysis of the impact on states commissioned by Covered California the state's ACA marketplace, put New Jersey in the highest risk category, where premiums are forecast to rise as much as 90 percent over three years if action is not taken to strengthen the markets. Early insurer rate requests filed in Virginia and Maryland are showing sky-high increases. Maryland's insurance commissioner is warning of a death spiral and placing hope on the state's reinsurance waiver proposal.
If there's any sticking point, it's probably related to cost. Here is an outtake with someone more detail than I had space for:
The bill's sponsors, working with the federal Center for Medicaid and Medicare Services (CMS), estimated that a program that would reduce premiums by 15% would cost about $280 million. The federal government is expected to pick up 50-60% of the cost, and mandate revenue is expected to be in the $90-100 million range. Assemblyman John McKeon (D-27), the bills' lead sponsor in the Assembly, cited these calculations in an April 18 Budget Committee hearing, and acting DOBI commissioner Marlene Caride confirmed them.

Those estimates leave up to $40 million per year that the state would be responsible for, over and above the dedicated mandate revenue (though if the waiver proposal targets just a 10% reduction in premiums, as allowed by the reinsurance bill, the excess cost could be zero or close to it). As originally introduced,  the bill had a provision empowering the DOBI commissioner to impose a surcharge on all insurers in the state, including self-funded plans, to help fund the program. That provision did not make it into the final version.

Laurie McCabe, chief of staff to NJ Senator Joseph Vitale (D-19), the bills' lead sponsor in the Senate, said that the Governor indicated that he wants assurance that there will be a recurring revenue source to fund whatever portion of the program's cost is not covered by the federal contribution and the mandate revenue. That funding does not need to be budgeted until Fiscal Year 2021.

Senator Vitale does not believe the funding will prove to be a major barrier. In analyzing the cost, he said, "we were very conservative."  The $40 million gap is "a worst case scenario." As to assuring  a revenue stream, Vitale said, "We'll identify a source when we have more information...let's wait till we get the waiver and see what we get from the federal government and from the mandate penalty. We have time to figure that out -- there is no rush."

Vitale believes that Murphy will sign the bills. His understanding is that "they are just going through their normal process of  analysis of counsel's office -- making sure the bill does what it says it does. I know it does, but they're looking at it with a fresh set of eyes and they're doing what they should do."

"I would be extraordinarily disappointed if the bills don't get signed," he added.

Vitale has assured the governor's team that the legislature will produce a funding mechanism if it proves necessary once the waiver proposal is finalized and approved. But the Governor may seek to have such a funding mechanism built into the reinsurance bill. If so, he would need to issue a conditional veto, in which case the Assembly and Senate would be required to vote on an amended bill in their next voting sessions. For the Senate, that would be June 7, unless a special session is called. A waiver proposal seeking federal funding for 2019 is due on June 4, and insurers are required to file their rate requests by June 20. 
With a will, these timing pressures can be worked out. But it would be a scramble.

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