Gov. Phil Murphy approved a measure on Friday imposing what amounts to a 2.5 percent tax on health insurers, replacing one under the Affordable Care Act that expires the end of this year and, according to proponents, boosting health coverage for middle class families.
Under this new measure, the 2.5 percent “health insurance assessment” on health insurance company’s “net written premiums” – the premiums written by an insurance company over a given period of time – would generate $200 million to subsidize small businesses and individuals buying their own health plans.
The bill exempts small employer health plans, dental plans, and multiple employer welfare arrangements from the tax – most of it would be paid by large employers.
‘This action could not come at a more critical juncture, and will directly benefit our uninsured and underinsured populations at a time when many New Jerseyans have lost health coverage as a result of the COVID-19 pandemic,” the governor said in a Friday statement.
Both chambers approved the bill on Thursday with Democrats all in favor and Republicans opposed, and Murphy signed it just over a day after it was sent to his desk – three months ahead of ACA’s Nov. 1 open enrollment period for their 2021 plans.
A single individual earning up to $51,040, and a family of four earning up to $104,800 would qualify for the health care subsidy – which would average to $564 and $2,256 respectively.
Of the more than $200 million, an estimated $77 million would be deposited into the state’s reinsurance pool, which is meant to field costs of much more expensive claims.
“These are funds that are going to be used exclusively to make health insurance more affordable,” Marlene Caride, commissioner of the Department of Banking and Insurance – which regulates the state’s health plans – said on Friday.
“Now when the state launches its own Marketplace in the fall, we will be able to offer more financial help to our residents to improve affordability for those already covered on the Marketplace and families newly enrolling in health insurance.”
Proponents argue that the measure would help hundreds of thousands of state residents who’ve lost their jobs and employer-provided health care during the pandemic.
According to a July 17 report by Families USA, roughly 124,000 New Jersyans have lost their health care between February and May due to job losses.
And they point out that the assessment is not a new tax by any means – rather, it would replace an expense already being paid. The tax first went into effect in 2014 with Obamacare, and sunsets on Jan. 1, 2021, when this state-levy tax goes into effect.
Nonetheless, business groups like the New Jersey Business and Industry Association, and health care providers like the Home Care and Hospice Association of New Jersey, and the New Jersey Dental Association, all lobbied against the measure, saying the expenses would be passed onto New Jerseyans at a time when few, if any of them, could afford it.
“This bill would increase costs on businesses and nonprofits, large and small, which have continued to offer health benefit plans during the current COVID-19 pandemic while struggling themselves to remain afloat,” Chrissy Buteas, NJBIA’s chief government affairs officer, said in her July testimony against the bill.
A number of bills the governor signed over the past two years mirror many facets of the Affordable Care Act, such as a state-level individual mandate that requires residents to have health insurance or pay a penalty, which goes into the state’s reinsurance fund.
Other bills Murphy signed require health plans to include a certain framework of services they will cover, and keep someone on their parent’s health plan until the age of 26.