New Jersey: Awesomesauce! Gov. Murphy announces NJ moving to state exchange in 2021!

This one came completely out of left field, but it's a pleasant surprise.

Last year, New Jersey Governor Phil Murphy, along with the Democratically-controlled state legislature, passed several sweeping laws and policies designed to either protect the ACA from sabogate efforts by the Trump Administration or to cancel out existing sabotage measures.

The laws passed included:

  • Establishing a robust reinsurance program to lower insurance premiums,
  • Reinstating the ACA's individual mandate penalty,
  • Canceling out Trump's expansion of Association Health Plans (Short-Term plans were already banned), and
  • Protecting enrollees from out-of-network "surprise plans" (this one didn't really have anything to do with the ACA itself, but is an important issue regardless)

In addition, Murphy issued an executive order directing state agencies to help protect/promote the ACA including:

  • State entities have to provide ACA exchange/enrollment info and assistance
  • State insurance regulators taking a more active role in reviewing ACA exchange plan design

The results of all of this--particularly the one-two punch of the mandate penalty and reinsurance program--are pretty impressive: Unsubsidized 2019 premiums dropped 9.3% this year instead of increasing by over 12%, saving unsubsidized enrollees roughly $1,500 apiece.

In terms of actual enrollment impact, the jury's still out--on-exchange enrollment dropped 7.1% year over year, but other states dropped considerably more, and New Jersey's off-exchange numbers haven't been released yet (they should show up sometime in April...New Jersey is one of the few states to release quarterly reports on off-exchange enrollment), so we'll see.

In any event, today, Gov. Murphy surprised most of the healthcare wonk community by making another big announcement:

Governor Murphy Announces New Jersey to Transition to State-Based Exchange

Acting to improve health care access for New Jersey residents, Governor Murphy today announced 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.

...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.

New Jersey joins two other states which have made similar announcements recently--last year Nevada announced that they were moving off of the federal exchange starting this fall (NV had their own disastrous exchange the first year of open enrollment, but scrapped it and moved to the Mothership the next year); and New Mexico made their announcement to make the move (starting in 2021 like New Jersey is) last fall.

In addition...

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.

Hmmm...according to the analysis from the Commonwealth Fund I wrote about the other day, the first two of these are already covered under New Jersey law...but that may only be partly true. For instance, New Jersey already supposedly allowed young adults to stay on their parents' plans up to age 30 before the ACA (vs. 26)...but only if they were unmarried and didn't have any children.

In any event, this is fantastic news all around. I'm impressed by how quickly and aggressively the New Jersey legislature and Governor are moving on all of these items.