March 24, 2008

A New Jersey lawmaker has come out with a long-range plan to require all residents in the state to own health insurance.

New Jersey state Sen. Joseph Vitale, D-Woodbridge, wants to start out by getting a higher percentage of eligible children enrolled in the state’s NJ FamilyCare Program for children in homes earning up to 350% of the federal poverty level, or $74,200 per year for a family of 4, and the state’s NJ FamilyCare Advantage program, which permits higher-income families to buy coverage for their children at a discount.

Vitale, chairman of the New Jersey Senate Health Committee, wants to require that all residents ages 18 and younger have health coverage, use tax records to locate children in need of coverage, and set up an automatic public health plan enrollment system for children who come to hospitals and doctors’ offices without health coverage.

He unveiled his proposal at a news conference with New Jersey state Sen. Robert Singer, R-Ocean, the highest ranking Republican on the Senate Health Committee.

Vitale also is proposing changes in the rules governing the individual and small group health insurance markets.

One change that could have an immediate effect on health insurers and insurance producers would be a relaxation of New Jersey’s community rating rules for individual coverage.

Today, carriers can consider age when setting rates only when they are selling relatively unpopular “bare-bones” policies.

Vitale’s proposal calls for making conventional individual medical coverage more affordable for younger individuals, by letting insurers charge conventional coverage rates that are up to 350% higher for older insureds than for younger insureds.

Other proposal provisions would:

--Attempt to increase individual market competition by requiring small employer carriers to sell individual coverage.

--Require individual and small employer carriers to set rates so that the anticipated ratio of claims to premiums would be at least 80%.

--Require brokers to notify employers in writing about commissions, service fees and other revenue.

Vitale says he hopes to introduce a bill implementing those measures in the near future.

In about a year, Vitale says, he hopes to launch a second phase of the initiative, which would involve setting up a self-funded, state-sponsored, partly subsidized health plan.

After affordable health care was available through the state-sponsored plan, “the state [would] move to require all state residents to have health insurance,” he says.

The state has to make individuals take responsibility for their own health care, and it also has to make sure that coverage is affordable, Vitale says. “Unless we put access at a price point where people can afford it, we cannot, in good conscience require health coverage for all individuals in the Garden State.”

Vitale developed his proposal in response to surveys indicating that 1.4 million New Jersey residents, or about 20% of all state residents, lack health coverage.

About 275,000 of the uninsured state residents are children.

At this point, most open criticism of the proposal is coming for consumer groups that have concerns about the possible introduction of an individual health coverage purchase mandate.

Officials at the New Jersey Chamber of Commerce, Trenton, N.J., have praised the proposal, and especially the market reform components.

“Sen. Vitale took an impossible task and moved forward with it,” says Jim Leonard, a vice president at the chamber.

Horizon Blue Cross Blue Shield of New Jersey, Newark, N.J., the largest health carrier in the state has “not had an opportunity to see the details of Sen. Vitale’s proposal,” a company spokesman says. “We hope that discussions on comprehensive health care reform will not only look at the financing and market structure of our state’s system, but also the cost and quality of the delivery of health care in New Jersey.”

At the America's Health Insurance Plans, Washington, “obviously, we believe expanding access to health care coverage should be a top priority,” AHIP spokesman Robert Zirkelbach says.

But AHIP has not yet seen a detailed description of the program and is not yet ready to talk about specific proposal provisions, Zirkelbach says.