Testimony in support of a Health Insurance Assessment in New Jersey

Subscribe to xpostfactoid

The New Jersey Senate and Assembly are holding hearings this afternoon on a bill, S2676/A4389, that would replace the national ACA tax on health insurers repealed by Congress late last year with a state tax that would raise some $300 million per year. The bill dedicates the funds to improving health insurance affordability, focusing mainly on low-income New Jerseyans.

The bulk of the money will likely be used to add state subsidies to federal subsidies for health plans sold in the ACA marketplace -- possibly as early as 2021 --  with a portion going to fund the existing reinsurance program that reduces individual market premiums for those who earn too much to qualify for subsidies.

BlueWaveNJ, of which I am a member, submitted the testimony below on behalf of the bill.

July 22, 2020

AFI:  Chairman McKeon and Members of the Committee

Senate Commerce:  Senator Pou and Members of the Committee

BlueWaveNJ, a member of the NJ for Health Care coalition, supports A4389 or S2676 as amended.  At a time when states are under intense fiscal pressure while millions of Americans and hundreds of thousands of New Jerseyans are losing employer-sponsored health insurance, a dedicated source of revenue to improve health care access and affordability is a vital need. Replacing the expiring federal health insurance assessment with a state assessment will meet that need and enable us to make health insurance more affordable to low income New Jerseyans.

In 2018, in the wake of premium increases in New Jersey’s individual market exceeding 20%, BlueWaveNJ supported and testified in favor of a state reinsurance program for the individual market. That program, in concert with the state individual mandate implemented at the same time, reduced 2019 premiums to 9% below their 2018 level and helped draw unsubsidized New Jerseyans back into the individual market. While off-exchange enrollment dropped 14% in 2018, the year of steep premium increases, by the fourth quarter of 2019 off-exchange enrollment was 6.5% higher than in Q4 2018.

Reinsurance, however, does not reduce premiums for subsidized enrollees in the ACA marketplace, who make up the majority of individual market enrollees in the state.*  When it comes to insuring low income state residents, New Jersey’s performance lags that of peer states. The state uninsured rate for people under age 65, 9% in 2018, ranked 21^st among the 35 states that have enacted the ACA Medicaid expansion. According to a Families USA analysis, among New Jerseyans below age 65, 19% of those with incomes below 139% of the Federal Poverty Level (and so in Medicaid range) were uninsured in 2017, as were 16% of those in the 139-300% FPL income range.

Those totals have likely soared during the pandemic. According to an Urban Institute estimate, at 15% unemployment, between 489,000 and 831,000 people in the state will lose access to employer-sponsored insurance, and 30% of them will become uninsured. The state unemployment rate was 16.6% in June. A Families USA analysis estimates that 124,000 New Jerseyans had already lost health insurance from March to May 2020.

Loss of access to health insurance triggered by the pandemic, like pre-pandemic lack of insurance, will fall most heavily on lower income New Jerseyans. We already know that persistent racial and economic gaps have made accessing health care difficult for hundreds of thousands of our New Jersey neighbors during the COVID crisis. Closing these gaps must be a priority when considering how the HIA funds are used. The revenue gained through a state health insurance assessment must be targeted primarily at boosting affordability for low income New Jerseyans.

Ensuring that all children in the state are covered is one vital means of addressing these disparities. Expanding Medicaid enrollment among those eligible and enhancing the affordability of marketplace coverage (or substitute coverage, such as in a Basic Health Program) for lower income enrollees are also priorities to which this revenue source should be dedicated.

The amended bill requires that the health insurance assessment funds support programs to increase affordability, reduce racial disparities and decrease the number of uninsured, particularly for low and moderate income New Jerseyans who make up the majority of our uninsured. BlueWaveNJ supports that goal and the ongoing effort of the coalition to expand coverage for all children in our state. 

For these reasons, we join with our NJ for Health Care coalition partners in support of A4389. We urge the Committee to vote “yes” on A4389 and to do all you can to support the goal of ensuring all New Jerseyans have access to quality, affordable health care.  

BlueWaveNJ is a grassroots group committed to helping secure economic justice and equal opportunity for all Americans and all New Jerseyans.

---

*  For subsidized marketplace enrollees, benchmark silver premiums cost a fixed percentage of income, and base premium reductions tend to make plans that cost less than the benchmark more expensive as premium subsidies shrink.

Click here to subscribe to xpostfactoid