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State wants to repurpose $7.6M in ACA funds to meet 'urgent' health care needs

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Ken Kobylowski is the state's insurance commissioner.
Ken Kobylowski is the state's insurance commissioner.

Faced with a Thursday deadline to avoid losing $7.6 million in federal funds, the state of New Jersey is seeking permission to use the money for three purposes:

Responding to the high level of inquiries from Jerseyans about N.J. FamilyCare, the state's Medicaid program that is now undergoing a huge expansion; advising people with chronic diseases on their best health plan coverage options; and investing in IT to enable the state to exchange data with the federal health insurance exchange.

On Thursday, State Insurance Commissioner Ken Kobylowski made public a letter he sent Wednesday to Kathleen Sebelius, secretary of the federal Department of Health and Human Services, seeking permission to create new uses for the $7.6 million. The money is left over from a 2012 planning grant DOBI received from HHS to help plan the creation of a state-run exchange where New Jersey residents would buy health plans under the ACA. Gov. Chris Christie decided against building a state exchange, so New Jersey residents are buying coverage on Healthcare.gov — and the $7.6 million remains in limbo.

Kobylowski made it clear he's not optimistic that HHS will agree to repurpose the planning grant.

In his letter, the commissioner said, "Unfortunately, to date your department has determined that none of (the three suggested uses) represent 'allowable' uses of this grant, despite our good-faith efforts to show that they fall squarely within the guidance your own department has provided. While we have been told that a small portion would be allowable for other purposes, our experience to date has been that those needs are less than we initially anticipated. In short, we find ourselves with preliminary approval to use a small portion of this grant in ways that are unnecessary while we are unable to use the bulk of this funding to meet needs that are urgent."

John Sarno, president of the Employers Association of New Jersey, said DOBI's proposal for repurposing the $7.6 million "is an excellent policy choice."

He said one issue that is not fully appreciated is that it is imperative that the Healthcare.gov exchange, where Americans are now buying subsidized insurance plans, is successful.

"If the exchange does not succeed for the carriers, then they will have to raise prices," Sarno said.

He predicted that if enrollment is too low on the exchange, the insurance carriers will raise premiums both for subsidized plans sold on the exchange and for policies sold in the traditional insurance market.

Sarno said low enrollment could turn the exchange into a high-risk pool, rather than the broad insurance market that was envisioned where enough insurance policies are sold and premiums collected to make coverage affordable.

"Everyone is a stakeholder in the exchange not becoming a high-risk pool," Sarno said.

In his letter, Kobylowski said his department last July sent HHS a detailed proposal for using the grant money. He said DOBI proposed using the bulk of the funding, $4.9 million, "to enhance the capacity of the NJFamilyCare call center to respond to inquiries from residents regarding the requirement of the Affordable Care Act and its new coverage options." Kobylowski said the money would enable the call center to "increase staffing, quickly and temporarily, to meet the additional demand."

The letter said DOBI also sought $2.4 million for data system interfaces.

Kobylowski said HHS initially advised DOBI that only $410,000 of DOBI's proposal was likely to be approved. He said that last October, DOBI submitted a revised proposal to use $780,000 "so the New Jersey Department of Health could develop a system to track persons with infectious diseases as their incomes fluctuate and to assist them in maintaining seamless coverage as their eligibility for various types of public assistance and subsidies changes."

He said HHS at this point deemed $960,000 of the repurposing to be allowed, but rejected the NJFamilyCare call center expansion and the infectious disease tracking.

"New Jersey consistently has sought the flexibility to use this grant to meet the unique needs of our residents, and we have been advised repeatedly that the permissible uses for this grant are limited — highlighting a fundamental flaw of the Affordable Care Act," Kobylowski said. "Given the ease with which the federal government continues to grant itself flexibility in regard to myriad statutory and other provisions of the Affordable Care Act, it is my view that providing a modicum of flexibility to New Jersey should not be a burden."

Maura Collinsgru, health policy advocate for New Jersey Citizen Action, pointed out that DOBI didn't ask HHS for permission to use the money for outreach to help more people buy coverage on the exchange — something she contended is imperative to decrease the ranks of the uninsured in New Jersey.

"There is not one mention of promoting the health exchange marketplace, where more than 600,000 people in New Jersey who are uninsured are going to qualify for benefits," she said.

Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute, said what the state needs is a flexible common sense approach for the $7.6 million.

"New Jersey  residents need information about how to get health insurance. If this isn’t resolved the money goes back to the U.S Treasury for other purposes," Schwimmer said. "Our congressional delegation should get behind Commissioner Kobylowski’s proposal to spend the funds to support Medicaid enrollment and data transfer between New Jersey and the federal government."

"The important thing," she added, "is that this money goes to help New Jerseyans get health coverage. That’s the bottom line. "

Raymond Castro, senior policy analyst for New Jersey Policy Perspective, said New Jersey "is again requesting to use the funds for activities that were already denied by the federal government, rather than being proactive and using the funds for crucial outreach and education activities that would likely be approved by the federal government. Furthermore, many of the state’s proposed activities relate only to NJ FamilyCare and do not support the federal marketplace, which was the intent of the grant."

"That is very unfortunate since the state has made it clear that it will not help individuals who have been denied NJ FamilyCare but are eligible for insurance in the federal Marketplace," Castro continued. "This hands-off approach is inexcusable and insensitive to the needs of uninsured New Jerseyans."   

Castro said it was surprising that the letter does not even mention using these funds for outreach and education, which is sorely needed in the marketplace.

"Hundreds of organizations in New Jersey and elected officials in Trenton and D.C. have urged the governor to use these funds for this purpose," Castro said. "There is a very good reason for that: Polls consistently show that most of the uninsured are not aware of the subsidies that are available to make insurance affordable in the marketplace, so they do not plan to seek help they need. Where are New Jersey’s uninsured to turn? The state will not help them, and now it is clear nothing will be done to help the federal government reach them."

Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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