New Jersey Healthcare Exchange is Born and Crawls for Governor’s Desk

The healthcare exchange, a mandate of the U.S. Affordable Care Act (ACA)  would primarily affect the approximately 1.3 million New Jersians without health insurance, among then many employees of small businesses. For those unable to afford the premiums, there would be federal subsidies. ACA mandates that all individuals must posses health insurance or pay a tax penalty. The latter portion is one of the issues whose constitutionality is being reviewed at the U.S. Supreme Court. The USSC will rule on the subject around June this year.

Here is the bill as it moves toward Christie’s office:.S1319 1R.

At first glance, I see two major problems with the bill:

The first is the composition of the Board. By creating a board populated with political appointees, no matter how we dice it and regardless of the conflict-of-interest provisions, there will be influences exerted on the members and their decisions.

How? Insurance companies, insurance brokers, corporate healthcare providers bankroll elections of politicians. Politicians appoint board members, Board members support those who supported the politicians who appointed them. That is the Bermuda Triangle where public dollars disappear  every day. Board members should be Civil Service Classified Service professionals, insulated from any political influences, and possibly as part of the New Jersey Health Department.

If I am elected governor and there is already a Board in place and it is working well, I would consider grandfathering the current members into the CSCS.

The issue above is a major flaw in design but this is New Jersey and it is how our Legislature is used to function. They create an apparently good bill but there is always a poison pill in it somewhere.

The second problem is how the Board will operate: It is apparent that it will exclude health plans that do not meet a certain criteria of value. This is what is called an active plan which sounds good – at first it was my favorite but after some reading and reflection, I dropped it. The active exchange will inevitably lead to a tangle of lawsuits, a very good thing for New Jersey trial lawyers but not necessarily good for New Jersey. Instead, I would have the board accept all plans but establish a rating: It could be AAA, AA, AB, etc., according to value, quality, access to care, etc. This system would be much less likely to generate legal challenges and insurers would strive to upgrade their offerings.

As I have stated elsewhere, at some point I would introduce a powerful public option in the exchange but it is a bit early for that now.

Governor Christie has said that he would prefer to wait for the USSC to rule on the constitutionality of ACA. Either way, this bill – or law if he signs it – needs work.