BY RAYMOND J. CASTRO

NEW JERSEY POLICY PERSPECTIVE

COMMENTARY

Gov. Christie’s veto of the New Jersey Health Benefit Exchange Act is a major setback for the 1.3 million New Jerseyans who are uninsured and the thousands more who can’t afford what little health coverage they have.

While two states already have an exchange and 12 states have moved ahead with efforts to establish an exchange, the fate of quality affordable health coverage in New Jersey lies in the hands of the U.S. Supreme Court. If the high court overturns the Affordable Care Act, the governor has no plan on how to solve the un-insurance crisis. No matter what the Supreme Court decides, more state leadership is urgently needed, as this crisis is threatening our state’s health and economy.

Even if the Supreme Court upholds health care reform, Gov. Christie wants to change New Jersey’s exchange in ways that will hurt consumers while benefiting the insurance industry.

For example, the bill had clear conflict of interest prohibitions for all board members of the exchange, and made clear that the board must represent consumers’ interests. Removing potential conflicts of interest is particularly important, since the board will steer billions of dollars in federal funds to selected insurers and health providers.

The governor however wants “all stakeholders” to be represented on the board – in other words, he wants to make sure groups that stand to benefit financially are in the mix. By doing so, Gov. Christie is putting the fox in the henhouse.

While input from all stakeholders is sensible and necessary, they need not all be on the board. In fact, the bill’s sponsors established a separate advisory committee, made up of all stakeholders ,that would give all interested parties input free of the fear of financial conflicts.

Gov. Christie also sides with the insurance industry by objecting to the bill’s criteria for including insurance plans in the exchange. The bill requires that the board take into account both cost and choice in deciding whether a plan can participate. But the governor apparently wants to eliminate cost as a criterion. Again, he is sides with the insurers, not consumers.

The cost issue is critical because New Jersey already has the nation’s third highest rates in the individual insurance market. This helps explain why we have so many uninsured and underinsured people — they simply cannot afford the insurance that is available.

The bill’s cost provision would allow the exchange to negotiate with the insurers to obtain the best deal for consumers — just like big businesses do. Insurers oppose this provision, because it means some of them won’t be allowed to participate in the exchange.

While it’s clear the governor envisions a very different, less consumer-friendly health insurance exchange, there were a few rays of hope in his veto message.

He made clear that he will fully comply with the federal law if the Supreme Court upholds it – a refreshing change from some of his past rhetoric. In addition, some of his objections to the bill should be easily resolved, such as the salary of the board members and making sure the state has the federal funds it needs to establish the basic health program, which would extend Medicaid-like health coverage to more low income individuals. And by making his specific objections known in the veto message, he has at least created a framework for negotiations with the legislature that could ultimately lead to establishing a much-needed exchange in New Jersey. But that must be done sooner rather than later, and with the interests of consumers in mind.

Raymond J. Castro is the senior policy analyst at New Jersey Policy Perspective.