New Jersey Medicaid expansion seen as on schedule

TRENTON - New Jersey is gearing up for a huge expansion of its Medicaid health-care plan for the poor and, despite uncertainty over federal eligibility requirements, new enrollees are expected to begin receiving services by the Jan. 1 deadline, Human Services Commissioner Jennifer Velez said Tuesday.

Velez, who testified before the Assembly Budget Committee on her department's proposed $15 billion budget for the fiscal year that begins July 1, said she expected about 300,000 new Medicaid enrollees to be added to the 1.3 million who receive care under the program.

The state will get slightly more than $1 billion from the federal government under the Affordable Care Act to pay for the expansion.

In all, the Human Services Department is one of the few agencies of state government to see a substantial increase this year, about 8 percent. The increase is accounted for entirely by additional federal assistance.

"There is no getting around the fact that it is going to be challenging," she said of the phase-in.

Velez said one of the toughest obstacles has been redesigning computer systems to include the new eligibility standards for Medicaid assistance and to cope with the influx. The eligibility standards have not yet been finalized by the federal government, she said.

Gov. Christie has long been an opponent of the Affordable Care Act, which will extend health coverage to tens of millions of Americans who do not obtain it through their employers, cannot afford it on their own, or earn too much under current rules to obtain it under Medicaid.

Yet Christie announced in his budget address this year that the financial advantages to the state were so significant that he had decided to go along with a huge expansion of the Medicaid program that is a key component of the act.

In addition to enrolling hundreds of thousands of new people, the state also will be able to shift some costs that it now pays on its own to the federal government. The state Department of Treasury said that upward of 200,000 New Jersey adults who currently are receiving state funded health assistance will be picked up under the Medicaid expansion and paid for, at least initially, by the federal government, generating a savings to the state of $227 million per year.

By 2020, the federal share of the costs of the expanded program will drop to 90 percent.

"It's a big positive," said Neil Eicher, director of policy for the New Jersey Hospital Association. He said cuts in reimbursements to hospitals under the Affordable Care Act will be more than offset by the huge influx of additional patients and the revenue they would bring.

One unknown is whether there will be enough doctors to handle the additional patients. A study published in the Journal of Health Affairs last year found that only about two-thirds of doctors would take new Medicaid patients, apparently because of the lower payment rates. A greater percentage of doctors said they would take on new patients covered by Medicare or private insurance.

But in New Jersey, the study found, only 30 percent of doctors said they would take new Medicaid patients.

State Human Services officials say, however, that higher Medicaid payments to doctors mandated by the Affordable Care Act should be enough to induce enough doctors to participate.

And as a consequence, they say, they don't anticipate shortages.

The Affordable Care Act seeks to expand coverage to the uninsured by providing subsidies to people who earn too much to qualify for Medicaid to purchase health insurance on their own. Under the plan, these consumers would shop for health insurance through state insurance exchanges or markets, where they would be able to compare prices and coverage.

It also expands eligibility for Medicaid, which for decades has been jointly run by the federal government and the states, by increasing the income limit to 138 percent of the federal poverty level, about $32,000 a year for a family of four in New Jersey.

Last year, the U.S. Supreme Court upheld most of the Affordable Care Act, including its controversial requirement that individuals obtain health coverage or pay a tax penalty to the federal government.

But the court also struck down a requirement that the states be required to expand their Medicaid programs or lose all federal Medicaid funding, which traditionally has accounted for about 50 percent of the program's funding for most state governments.

Since then, several Republican governors who initially opposed the health care act have opted to join the Medicaid expansion, including Christie. Gov. Corbett in Pennsylvania, also a Republican, has so far declined to participate in the expansion, but has left open the possibility that he might.