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Exchange of ideas Insurers, lawmakers face tough choices on policy marketplace

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Joel C. Cantor, director, Rutgers Center for State Health Policy.
Joel C. Cantor, director, Rutgers Center for State Health Policy.

New Jersey's health insurers say they're looking forward to selling thousands of policies on the new health insurance exchange that arrives in 2014 via the federal Affordable Care Act. But the launch of an online insurance marketplace has stalled in Trenton as lawmakers debate whether New Jersey should run its own exchange, or let the federal government do the job.

Gov. Chris Christie in May vetoed a bill to create a state-run exchange, saying he was waiting for the U.S. Supreme Court to rule on the constitutionality of the ACA, and in a speech last week to the Brookings Institution, he said he wants "the most efficient and effective way to do it, from a cost perspective," even if that means letting Washington run New Jersey's exchange.

Joel C. Cantor, director of Rutgers University's Center for State Health Policy, said letting the federal government run the exchange would break with New Jersey's tradition of regulating health insurance itself. But he said Washington offers a hybrid option, in which the federal government would handle routine administrative functions.

"The harder part is where policy decisions need to be made, and that's where, I think, the state will want to have control," Cantor said.

The center has surveyed a wide range of stakeholders on the exchange issue, "and if there was anything close to a consensus … it was that New Jersey should take control of the exchange, and not cede authority to the federal government," he said.

New Jersey has more than 1 million people without insurance, and the center estimates that, under the ACA, more than half a million would get coverage in 2014 through the expansion of Medicaid and the sale of policies on the exchange.

State Sen. Joseph F. Vitale (D-Middlesex), co-sponsor of the exchange bill, said he will seek a compromise with Christie to enable New Jersey to operate its own exchange. Vitale wants to merge New Jersey's existing small-group and individual health insurance markets with the new exchange, where insurers will sell government-subsidized coverage to businesses and individuals.

Merging these markets "will provide strength in numbers," Vitale said.

The state's health insurers, meanwhile, want an exchange that functions as a clearinghouse, where insurers sell plans meeting federal and state regulations, and want to see industry stakeholders on the governing board — if a new level of oversight is created at all. Charles Catalano, Cigna's president and general manager for New Jersey, said the Department of Banking and Insurance already oversees the small-group and individual health insurance markets, and "DOBI is very qualified to manage the health exchange, as well. Why not work within that (system) instead of creating a whole new set of regulations and rules and rule makers?"

Mike Munoz, vice president of sales and marketing for AmeriHealth New Jersey, said the state should leverage its existing technology and processes to manage its exchange.

"If the exchanges are set up right — in a way that encourages competition — they should expand coverage, particularly for people who will be eligible for subsidies," said Larry Altman, who heads health reform at Horizon Blue Cross Blue Shield of New Jersey. Altman said ACA won't bring down the cost of health coverage, but policies will be more affordable with subsidies.

Meanwhile, Horizon is expanding pilot programs seeking to change the health care delivery system by rewarding health care providers that improve outcomes and quality, rather than driving up costs by doing more procedures, which Altman called "the longer-term solution."

Catalano also spoke of the importance of heading in that direction. "As we get more people into the system, we have an opportunity to influence people's lifestyle choices and health in a constructive way — all of which will help lower costs, or at least slow the acceleration of costs," he said.

The cost issue has kept the ACA and the exchanges on the front burner for business owners, who will have to make decisions about whether to continue offering coverage to employees or pay penalties for not doing so, depending on the size of their companies.

According to federal figures, 52.7 percent of Garden State employers with 50 or fewer workers offered health insurance in 2010 — well above the national average of 39.2 percent. The average annual cost of health insurance for a single worker of an under-50 employer was $5,615 in 2010, up from $3,694 in 2004; family coverage typically is more than double that figure.

Kelly Conklin, owner of Foley-Waite Associates, spends $5,300 a month on health insurance for the 10 employees of his Bloomfield custom workworking company. He wants the exchange to negotiate with insurance companies to get lower rates, "otherwise, the exchange is a venue for vendors, and nothing more."

E-mail to: beth@njbiz.com

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