Two bills that look to stabilize the individual health insurance market and Affordable Care Act (ACA) exchange are headed to the desk of New Jersey Gov. Phil Murphy, a Democrat.
The New Jersey legislature approved a bill to make the state the second with its own individual mandate requiring residents to have health insurance.
The legislature also approved a bill that would ask the federal government to allow the state to create a reinsurance program to help offset the costs to insure people in the market with the most expensive health insurance.
Both pieces of legislation come in response to Republican efforts in Washington to cut into the ACA, which critics charge is further destabilizing the ACA exchanges.
Since Congress approved ending the federal individual mandate penalty as part of its tax package in December, Democratic-leaning states have looked for ways to stabilize the market. Maryland and California are also discussing an individual mandate, but until now Democratic efforts haven’t led to passed legislation.
While Democrats are looking for ways to stabilize the individual market, Republicans have been taking apart the ACA, despite failing to repeal the law. The Trump administration stopped cost-sharing reduction (CSR) payments to insurers, limited the open enrollment period and looks to expand short-term catastrophic plans and association health plans (AHPs).
CMS has also granted waivers to three states for work requirements for Medicaid recipients and more states have shown interest.
Earlier this month, CMS also issued a final rule that would allow states to select their own essential health benefits under the ACA.
With Republicans picking apart the ACA while Democrats try to protect as much of the law as possible on the state level, there could be vastly different health insurance marketplaces depending on a state’s leadership.
In New Jersey, the individual mandate plan would require health insurance. Those who don’t have coverage would face a fine of 2.5% of their household income or $695 per adult and $347 per children, whichever is greater.
The idea goes that an individual mandate keeps healthier people in the risk pool, which offsets the sickest members. Once the federal individual mandate penalty ends in 2019, Massachusetts is currently the only state that would still have a mandate.
Payers say individual insurance will cost even more without the individual mandate. The Congressional Budget Office predicted that premiums will increase by 10% annually in most years because of people dropping coverage and projected 13 million people will lose or drop insurance over the next decade.
New Jersey’s proposed reinsurance program would help payers cover the sickest members with the highest healthcare costs. Without these provisions, ACA advocates say, premiums will skyrocket.
The question now is whether New Jersey’s efforts to stabilize the individual health insurance market will become part of a growing wave of Democratic-leaning states passing legislation to stabilize the exchanges.