On March 15, the New Jersey legislature is scheduled to vote on legislation that would establish its state Affordable Insurance Exchange, a process that 28 other states have begun, according to a new White House report.
Unless the Supreme Court rules that the individual mandate in the health care reform law (PPACA) is unconstitutional, state leaders have until January 1, 2014, to have functioning insurance Exchanges. If states fail to form their own Exchanges by the deadline, they will default to the federal Exchange.
The actions of the New Jersey state legislature are a microcosm of what’s happening in many states. Bills have recently made their way out of Committees in both the Senate and Assembly, and the full legislature is set to vote on these bills on March 15. Among the key items debated during the committee hearings:
- Who pays for the administration of the Exchange? While federal grants will cover the cost of the Exchange through 2014, starting in 2015 the Exchanges must be self-sufficient. The current NJ bills levy an assessment on all group health insurance policies to fund the Exchange, whether the policies are sold through the exchange or not. This provision is not very popular with the insurance industry and business advocacy groups such as the New Jersey Business and Industry Association.
- Who sits on the Insurance Exchange Board? The current bills exclude individuals employed by health insurers and healthcare providers from participation on the governing board. While this approach will help to avoid conflicts of interest, it will rob the Board of needed expertise, a problem Craig Hasday addressed in a recent post.
- What level of control will the Exchange have? Should the Exchange Act as an “Active Purchaser” or a “Clearinghouse?” An active purchaser model would require an additional level of bureaucracy and expertise in order for the Exchange to negotiate directly with insurers to offer policies on the exchange. The clearinghouse model would allow all qualified insurers to offer federally qualified policies in a “Travelocity”-type setting. Right now, both bills use the active purchaser model.
New Jersey Governor Chris Christie is usually eager to take a stand, but he has been noticeably absent from this conversation, so it’s unknown whether he will to sign these bills in the event that they pass.
Nice summary Jim. New Jersey’s exchange must be set up to encourage competition and make a wide array of insurance plans available for small businesses and individuals. I am not optimistic that the exchange created by this bill will do that.
Christine is right on target. As a business advocate, Christine should be listened to. More regulations and bureaucracy have been shown to decrease competition rather than increase competition. Politicians should be looking at the overall decline in the number of insurance companies underwriting health insurance. When was the last time a new insurance company entered the health care market?
As mentioned in my post, Governor Christie has been non-committal on the establishment of a New Jersey health insurance Exchange. With the state legislature voting today on creating the exchange, a spokesman from the state Department of Banking and Insurance has indicated that the governor won’t make his decision until the Supreme Court rules on whether PPACA is constitutional.