New Jersey: Public Option Program
Upshot
Democratic state legislators introduced legislation for the third time to establish a public option program in New Jersey, though the S. 1428 was not ultimately passed. The program would have required the state to establish its own health insurance plan to be offered on the state-based Marketplace.
New Jersey operates a fairly robust individual market with four insurers participating on the Marketplace in 2022. The state also features certain consumer affordability programs that offer additional subsidy supports to households with annual incomes up to 600 percent FPL. These subsidies are on top of those provided by the federal government.
Background
New Jersey features a fairly robust individual market. As of 2022, four issuers offer plans on the state’s Marketplace and approximately 311,692 individuals enrolled in individual market plans (a record high for the state). In 2018, New Jersey was one of two markets in the U.S. to gain a new insurer in their Marketplace. Notably, the state enacted its own individual mandate in 2019 that requires all residents to carry health insurance or otherwise pay a fine.
The state also featured lower-than-average premiums compared to others in the northeast region in 2018. In 2019, premiums then decreased by an additional 9.3 percent, though increased the next year in 2020 by 8.7 percent – considerably larger than the national average. Premium increases appeared to stabilize thereafter in 2021 with an average premium increase of 3.3 percent.
New Jersey enacted measures in 2020 to make Marketplace plans more affordable. Since 2021, the state began conducting state-based assessments on individual and fully insured large group health plans, which are expected to generate $224 million in annual funding. Approximately a third of the funding will be used to finance the state’s reinsurance program, which helps fund insurance coverage for Marketplace consumers with high health care costs in the state. The remaining two thirds will make health insurance more affordable via state-funded premium subsidies for households earning up to 600 percent FPL.
More recently, New Jersey passed legislation earlier this year that creates the New Jersey Easy Enrollment Health Insurance Program. The program will make it easier for residents to obtain health insurance through the state’s Marketplace. Uninsured and underinsured residents will now be able to indicate on their tax return or through their unemployment insurance benefit claims whether they are interested in obtaining health insurance coverage. The state will then proactively connect with qualifying residents to facilitate their enrollment into a Marketplace plan. The legislation took effect immediately upon passage and will apply to returns filed for taxable years beginning after December 31, 2022.
Summary
The bill would establish a public option program in New Jersey. This means that the state would be required to establish and administer a program to provide a comprehensive health insurance coverage option to compete alongside private health insurers in the state. Notably, the bill does not direct the program to contract with private insurance companies to administer the plan. Additional details follow.
Board: The bill would create the New Jersey Public Option Health Care Board to advise the Commissioner of Health to implement the public option program. The board would include members across a range of stakeholder groups – including representatives of consumer advocacy organizations – and would meet at least four times each year.
Premiums: The Commissioner of Health and Commissioner of Banking and Insurance would establish premiums. Premiums must be determined in a manner to make the program viable but at the lowest possible cost to members.
Eligibility: Every resident in New Jersey would be eligible to enroll in the public option program. This would be true even for individuals who are otherwise eligible for NJ Family Care, Medicaid, Medicare, and other public health insurance programs in the state. Those with employer-sponsored insurance would be eligible to purchase coverage through the program as well. However, doing so may not make sense financially because of the employer coverage firewall that prevents people with access to affordable employer-sponsored coverage from receiving federal premium tax credits.
Payment rates: The Commissioner of Health would establish payment methodologies for health care services. The program would allow for a variety of different payment methodologies, including those established as part of a demonstration (e.g., value-based payment arrangements). All payment rates would be required to be reasonably related to the cost of efficiently providing health care services and assuring an adequate and accessibly supply of health care services. The program would be required to engage in “good faith” negotiations with health care providers to establish payment rates and methodologies.
Provider participation: Provider participation in the program would not be mandatory. In general, providers who are qualified to participate in Medicaid, NJ FamilyCare, or Medicare would be qualified to participate in the public option program. The Commissioner of Health would be required to establish formal procedures and standards for providers to be qualified to participate in the program.
The bill would also establish a “New Jersey Public Option Health Care Trust Fund,” whose funding would only be used for the purpose of supporting public option program activities. Funding would be generated through premiums, payments as a result of any federal waivers that generate savings, and other such revenue sources.